2.2.0.7 false Collaboration Agreements 0214 - Disclosure - Collaboration Agreements true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 Pure Standard http://www.xbrl.org/2003/instance pure xbrli 0 $ 2 Collaboration Agreements [Abstract] 0 us-gaap_ResearchAndDevelopmentArrangementContractToPerformForOthersAbstract us-gaap true na duration No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string No definition available. false 3 Collaboration Agreements 1 us-gaap_ResearchAndDevelopmentArrangementContractToPerformForOthersTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>14. Collaboration Agreements</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Novartis Pharma AG: </i></b>The Company entered into an agreement with Novartis in which the Company granted to Novartis an exclusive worldwide license (excluding Canada) to develop and market FOCALIN<sup style="font-size: 85%; vertical-align: text-top">®</sup> (d-methylphenidate, or d -MPH) and FOCALIN XR<sup style="font-size: 85%; vertical-align: text-top">®</sup>, the long-acting drug formulation for attention deficit disorder, or ADD, and attention deficit hyperactivity disorder, or ADHD. The Company also granted Novartis rights to all of its related intellectual property and patents, including formulations of the currently marketed RITALIN LA<sup style="font-size: 85%; vertical-align: text-top">®</sup>. Under the agreement, the Company is entitled to receive up to $100.0 million in upfront and regulatory achievement milestone payments. To date, the Company has received upfront and regulatory achievement milestone payments totaling $55.0 million. The Company also sells FOCALIN<sup style="font-size: 85%; vertical-align: text-top">®</sup> to Novartis and currently receives royalties of between 35% and 30% on sales of all of Novartis’ FOCALIN XR<sup style="font-size: 85%; vertical-align: text-top">® </sup>and RITALIN<sup style="font-size: 85%; vertical-align: text-top">®</sup> family of ADHD-related products. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The agreement will continue until the later of (i) the tenth anniversary of the first commercial launch on a country-by-country basis or (ii) when the last applicable patent expires with respect to that country. At the expiration date, the Company shall grant Novartis a perpetual, non-exclusive, royalty-free license to make, have made, use, import and sell d-MPH and Ritalin<sup style="font-size: 85%; vertical-align: text-top">®</sup> under its technology. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the agreement may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">Novartis at their sole discretion, effective 12 months after written notice to the Company, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">by: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party materially breaches any of its material obligations under the agreement, </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company if Novartis fails to pay amounts due under the agreement two or more times in a 12-month period, </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">c.</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party, on a product-by-product and country-by-country basis, in the event of withdrawal of the d-MPH product or Ritalin<sup style="font-size: 85%; vertical-align: text-top">®</sup> product from the market because of regulatory mandate, </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">d.</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party files for bankruptcy. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by the Company then all licenses granted to Novartis under the agreement will terminate and Novartis will also grant the Company a non-exclusive license to certain of their intellectual property related to the compounds and products. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by Novartis then all licenses granted to Novartis under the agreement will terminate. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by Novartis because of a material breach by the Company, then Novartis can make a claim for damages against the Company and the Company shall grant Novartis a perpetual, non-exclusive, royalty-free license to make, have made, use, import and sell d-MPH and Ritalin<sup style="font-size: 85%; vertical-align: text-top">®</sup> under the Company’s technology. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">When generic versions of long-acting methylphenidate hydrochloride and dexmethylphenidate hydrochloride enter the market, the Company expects Novartis’ sales of Ritalin LA<sup style="font-size: 85%; vertical-align: text-top">®</sup> and Focalin XR<sup style="font-size: 85%; vertical-align: text-top">®</sup> products to decrease and therefore its royalties under this agreement to also decrease. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Array BioPharma Inc.: </i></b>The Company has a research collaboration agreement with Array BioPharma Inc., or Array, focused on the discovery, development and commercialization of novel therapeutics in cancer and inflammation. As part of this agreement, the Company made an upfront payment in September 2007 to Array of $40.0 million, which was recorded as research and development expense, in return for an option to receive exclusive worldwide rights for compounds developed against two of the four research targets defined in the agreement, except for Array’s limited U.S. co-promotional rights. In June 2009, the Company made an additional upfront payment of $4.5 million to expand the research targets defined in the agreement, which was recorded as research and development expense. Array will be responsible for all discovery and clinical development through Phase I or Phase IIa and be entitled to receive, for each compound, potential milestone payments of approximately $200.0 million if certain discovery, development and regulatory milestones are achieved, and $300.0 million if certain commercial milestones are achieved as well as royalties on net sales. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The Company’s option will terminate upon the earlier of either a termination of the agreement, the date the Company has exercised its options for compounds developed against two of the four research targets defined in the agreement, or September 21, 2012, unless the term is extended. The Company may unilaterally extend the option term for two additional one-year terms until September 21, 2014 and the parties may mutually extend the term for two additional one-year terms until September 21, 2016. Upon exercise of a Company option, the agreement will continue until the Company has satisfied all royalty payment obligations to Array. Upon the expiration of the agreement, Array will grant the Company a fully paid-up, royalty-free license to use certain intellectual property of Array to market and sell the compounds and products developed under the agreement. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the agreement may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company at its sole discretion, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">materially breaches any of its material obligations under the agreement, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">files for bankruptcy. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by the Company at its sole discretion or by Array for a material breach by the Company, then the Company’s rights to the compounds and products developed under the agreement will revert to Array. If the agreement is terminated by Array for a material breach by the Company, then the Company will also grant to Array a non-exclusive, royalty-free license to certain intellectual property controlled by the Company necessary to continue the development of such compounds and products. If the agreement is terminated by the Company for a material breach by Array, then, among other things, the Company’s payment obligations under the agreement could be either reduced by 50% or terminated entirely. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>PTC Therapeutics, Inc.: </i></b>In September 2007, the Company invested $20.0 million, of which $1.1 million represented research and development expense, in Series F-2 Convertible Preferred Stock of PTC Therapeutics, Inc., or PTC, and, in December 2009, the Company invested an additional $1.5 million in Series G Convertible Preferred Stock of PTC. In September 2007, the Company also entered into a separate research and option agreement whereby PTC would perform discovery research activities. Under the agreement, both parties could subsequently agree to advance research on certain discovery targets and enter into a separate pre-negotiated collaboration and license agreement which would replace the original research and option agreement. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">On July 16, 2009, the Company and PTC agreed to advance research on one discovery target and entered into a pre-negotiated collaboration and license agreement under which PTC was eligible to receive quarterly research fees, as defined in the agreement, and was entitled to receive potential milestone payments of approximately $129.0 million if certain development, regulatory and sales-based milestones were achieved. The agreement also entitled PTC to receive tiered royalties on worldwide net sales. Under the agreement, the Company may transfer certain research and development activities from PTC to the Company and upon such transfer the Company will no longer fund such quarterly research fees to PTC. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The pre-negotiated collaboration and license agreement was terminated in August 2010 by the mutual agreement of the Company and PTC in accordance with the termination provisions in the agreement, ending the obligation of the Company to make payments under the agreement beyond any quarterly research fees already incurred. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The Company continues to hold investments in Series F-2 Convertible Preferred Stock and Series G Convertible Preferred Stock of PTC. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Acceleron Pharma: </i></b>The Company has a worldwide strategic collaboration with Acceleron Pharma, or Acceleron, for the joint development and commercialization of ACE-011, currently being studied for treatment of chemotherapy-induced anemia, metastatic bone disease and renal anemia. The collaboration combines both companies’ resources and commitment to developing products for the treatment of cancer and cancer-related bone loss. The agreement also includes an option for certain discovery stage programs. Under the terms of the agreement, the Company and Acceleron will jointly develop, manufacture and commercialize Acceleron’s products for bone loss. The Company made an upfront payment to Acceleron in February 2008 of $50.0 million, which included a $5.0 million equity investment in Acceleron, with the remainder recorded as research and development expense. In addition, in the event of an initial public offering of Acceleron, the Company will purchase a minimum of $7.0 million of Acceleron common stock. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Acceleron will retain responsibility for initial activities, including research and development, through the end of Phase IIa clinical trials, as well as manufacturing the clinical supplies for these studies. In turn, the Company will conduct the Phase IIb and Phase III clinical studies and will oversee the manufacture of Phase III and commercial supplies. Acceleron will pay a share of the development expenses and is eligible to receive development, regulatory approval and sales-based milestones of up to $510.0 million for the ACE-011 program and up to an additional $437.0 million for each of the three discovery stage programs. The companies will co-promote the products in North America. Acceleron will receive tiered royalties on worldwide net sales. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The agreement will continue until the Company has satisfied all royalty payment obligations to Acceleron and the Company has either exercised or forfeited all of its options under the agreement. Upon the Company’s full satisfaction of its royalty payment obligations to Acceleron under the agreement, all licenses granted to the Company by Acceleron under the agreement will become fully paid-up, perpetual, non-exclusive, irrevocable and royalty-free licenses. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the agreement may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company at its sole discretion, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">materially breaches any of its material obligations under the agreement, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">files for bankruptcy. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by the Company at its sole discretion or by Acceleron for a material breach by the Company, then all licenses granted to the Company under the agreement will terminate and the Company will also grant to Acceleron a non-exclusive license to certain intellectual property of the Company related to the compounds and products. If the agreement is terminated by the Company for a material breach by Acceleron, then, among other things, (A) the licenses granted to Acceleron under the agreement will terminate, (B) the licenses granted to the Company will continue in perpetuity, (C) all future royalties payable by the Company under the agreement will be reduced by 50% and (D) the Company’s obligation to make any future milestone payments will terminate. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>Cabrellis Pharmaceuticals Corp.: </i></b>The Company, as a result of its acquisition of Pharmion, obtained an exclusive license to develop and commercialize amrubicin in North America and Europe pursuant to a license agreement with Dainippon Sumitomo Pharma Co. Ltd, or DSP. Pursuant to Pharmion’s acquisition of Cabrellis Pharmaceutics Corp., or Cabrellis, prior to the Company’s acquisition of Pharmion, the Company will pay $12.5 million for each approval of amrubicin in an initial indication by regulatory authorities in the United States and the E.U. to the former shareholders of Cabrellis. Upon approval of amrubicin for a second indication in the United States or the E.U., the Company will pay an additional $10.0 million for each market to the former shareholders of Cabrellis. Under the terms of the license agreement for amrubicin, the Company is required to make milestone payments of $7.0 million and $1.0 million to DSP upon regulatory approval of amrubicin in the United States and upon receipt of the first approval in the E.U., respectively, and up to $17.5 million upon achieving certain annual sales levels in the United States. Pursuant to the supply agreement for amrubicin, the Company is to pay DSP a semiannual supply price calculated as a percentage of net sales for a period of ten years. In September 2008, amrubicin was granted fast-track product designation by the FDA for the treatment of small cell lung cancer after first-line chemotherapy. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The amrubicin license expires on a country-by-country basis and on a product-by-product basis upon the later of (i) the tenth anniversary of the first commercial sale of the applicable product in a given country after the issuance of marketing authorization in such country and (ii) the first day of the first quarter for which the total number of generic product units sold in a given country exceeds 20% of the total number of generic product units sold plus licensed product units sold in the relevant country during the same calendar quarter. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the amrubicin license may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company at its sole discretion, </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">materially breaches any of its material obligations under the agreement, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">files for bankruptcy, </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(iii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">DSP if the Company takes any action to challenge the title or validity of the patents owned by DSP, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(iv)</td> <td width="1%"> </td> <td> <div style="text-align: justify">DSP in the event of a change in control of the Company. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by the Company at its sole discretion or by DSP under circumstances described in clauses (ii)(a) and (iii) above, then the Company will transfer its rights to the compounds and products developed under the agreement to DSP and will also grant to DSP a non-exclusive, perpetual, royalty-free license to certain intellectual property controlled by the Company necessary to continue the development of such compounds and products. If the agreement is terminated by the Company for a material breach by DSP, then, among other things, DSP will grant to the Company an exclusive, perpetual, paid-up license to all of the intellectual property of DSP necessary to continue the development, marketing and selling of the compounds and products subject to the agreement. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b><i>GlobeImmune, Inc.: </i></b>In September 2007, the Company made a $3.0 million equity investment in GlobeImmune, Inc., or GlobeImmune. In April 2009 and May 2009, the Company made additional $0.1 million and $10.0 million equity investments, respectively, in GlobeImmune. In addition, the Company has a collaboration and option agreement with GlobeImmune focused on the discovery, development and commercialization of novel therapeutics in cancer. As part of this agreement, the Company made an upfront payment in May 2009 of $30.0 million, which was recorded as research and development expense, to GlobeImmune in return for the option to license compounds and products based on the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs as well as oncology compounds and products resulting from future programs controlled by GlobeImmune. GlobeImmune will be responsible for all discovery and clinical development until the Company exercises its option with respect to a drug candidate program and GlobeImmune will be entitled to receive potential milestone payments of approximately $230.0 million for the GI-4000 program, $145.0 million for each of the GI-6200, GI-3000 and GI-10000 programs and $161.0 million for each additional future program if certain development, regulatory and sales-based milestones are achieved. GlobeImmune will also receive tiered royalties on worldwide net sales. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The Company’s options with respect to the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs will terminate if the Company does not exercise its respective options after delivery of certain reports from GlobeImmune on the completed clinical trials with respect to each drug candidate program, as set forth in the initial development plan specified in the agreement. If the Company does not exercise its options with respect to any drug candidate program or future program, the Company’s option with respect to the oncology products resulting from future programs controlled by GlobeImmune will terminate three years after the last of the options with respect to the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs terminates. Upon exercise of a Company option, the agreement will continue until the Company has satisfied all royalty payment obligations to GlobeImmune. Upon the expiration of the agreement, on a product-by-product, country-by-country basis, GlobeImmune will grant the Company an exclusive, fully paid-up, royalty-free, perpetual license to use certain intellectual property of GlobeImmune to market and sell the compounds and products developed under the agreement. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the agreement may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company at its sole discretion, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">materially breaches any of its material obligations under the agreement, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">files for bankruptcy. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">If the agreement is terminated by the Company at its sole discretion or by GlobeImmune for a material breach by the Company, then the Company’s rights to the compounds and products developed under the agreement will revert to GlobeImmune. If the agreement is terminated by the Company for a material breach by GlobeImmune, then, among other things, the Company’s royalty payment obligations under the agreement will be reduced by 50%, the Company’s development milestone payment obligations under the agreement will be reduced by 50% or terminated entirely and the Company’s sales milestone payment obligations under the agreement will be terminated entirely. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>Agios Pharmaceuticals, Inc.: </b>On April 14, 2010, the Company entered into a discovery and development collaboration and license agreement with Agios Pharmaceuticals, Inc., or Agios, which focuses on cancer metabolism targets and the discovery, development and commercialization of associated therapeutics. As part of the agreement, the Company paid Agios a $121.2 million non-refundable, upfront payment, which was expensed by the Company as research and development in the second quarter of 2010. The Company also made an $8.8 million equity investment in Agios Series B Convertible Preferred Stock, representing approximately a 10.94% ownership interest in Agios and is included in other non-current assets in the Company’s Consolidated Balance Sheet. The Company receives an initial period of exclusivity during which it has the option to develop any drugs resulting from the Agios cancer metabolism research platform and may extend this exclusivity period by providing Agios additional funding. The Company has an exclusive option to license any resulting clinical candidates developed during this period and will lead and fund global development and commercialization of certain licensed programs. With respect to each product in a program that the Company chooses to license, Agios could receive up to $120.0 million upon achievement of certain milestones plus royalties on sales, and Agios may also participate in the development and commercialization of certain products in the United States. Agios may also receive a one-time milestone payment of $25.0 million upon dosing of the final human subject in a Phase II study, such payment to be made only once with respect to only one program. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Unless the agreement is earlier terminated or the option term is extended, the Company’s option will terminate on April 14, 2013. However, if certain development targets are not met, the Company may unilaterally extend the option term: (a) for up to an additional one year without payment; (b) subject to certain criteria and upon payment of certain predetermined amounts to Agios, for up to two additional years thereafter. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Following expiration of the option, the agreement will continue in place with respect to programs to which the Company has exercised its option or otherwise is granted rights to develop. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its payment obligation with respect to each product in each country. Upon the expiration of the agreement with respect to a product in a country, all licenses granted by one party to the other party for such product in such country shall become fully paid-up, perpetual, sub licensable, irrevocable and royalty-free. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">Prior to its expiration as described above, the agreement may be terminated by: </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(i)</td> <td width="1%"> </td> <td> <div style="text-align: justify">the Company at its sole discretion after October 14, 2010, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="4%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(ii)</td> <td width="1%"> </td> <td> <div style="text-align: justify">either party if the other party: </div></td> </tr> </table> </div> <div style="margin-top: 10pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">a.</td> <td width="1%"> </td> <td> <div style="text-align: justify">materially breaches the agreement and fails to cure such breach within the specified period, or </div></td> </tr> <tr style="font-size: 8pt"> <td> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="8%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">b.</td> <td width="1%"> </td> <td> <div style="text-align: justify">files for bankruptcy. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The party terminating under (i) or (ii)(a) above has the right to terminate on a program-by-program basis leaving the agreement in effect with respect to remaining programs. If the agreement or any program is terminated by the Company for convenience or by Agios for a material breach or bankruptcy by the Company, then, among other things, depending on the type of program and territorial rights: (a) certain licenses granted by the Company to Agios shall stay in place, subject to Agios’ payment of certain royalties to the Company: and (b) Celgene will grant Agios a non-exclusive, perpetual, royalty-free license to certain technology developed in the conduct of the collaboration and used in the program (which license is exclusive with respect to certain limited collaboration technology). If the agreement or any program is terminated by the Company for a material breach or bankruptcy by Agios, then, among other things, all licenses granted by Celgene to Agios will terminate and: (i) Celgene’s license from Agios will continue in perpetuity and all payment obligations will be reduced or will terminate; (ii) Celgene’s license for certain programs will become exclusive worldwide: and (iii) with regard to any program where the Company has exercised buy-in rights, Agios shall continue to pay certain royalties to Celgene. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has determined that Agios is a variable interest entity; however, the Company is not the primary beneficiary of Agios. Although the Company would have the right to receive the benefits from the collaboration and license agreement and it is probable that this agreement incorporates the activities that most significantly impact the economic performance of Agios for up to six years, the Company does not have the power to direct the activities under the collaboration and license agreement as Agios has the decision-making authority for the Joint Steering Committee and Joint Research Committee until the Company exercises its option to license a product. The Company’s interest in Agios is limited to its 10.94% equity ownership and it does not have any obligations or rights to the future losses or returns of Agios beyond this ownership. The collaboration agreement, including the upfront payment and series B convertible preferred stock investment, does not entitle the Company to participate in future returns beyond the 10.94% ownership and it does not obligate the Company to absorb future losses beyond the $8.8 million investment in Agios Series B Convertible Preferred Stock. In addition, there are no other agreements other than the collaboration agreement that entitle the Company to receive returns beyond the 10.94% ownership or obligate the Company to absorb additional losses. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Describe the terms of significant agreements under research and development arrangements accounted for as a contract to perform research and development for others (including royalty arrangements, purchase provisions, license agreements, and commitments to provide additional funding), aggregated by similar arrangements or individually if necessary to understand the effects on the financial statements. Include also the amount of costs incurred under a research and development arrangement accounted for as a contract to perform research and development for others. Aggregation of similar arrangements by type may be appropriate. 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