Exhibit 10.42
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (this "AGREEMENT") dated as of
June 17, 2005, (the "EFFECTIVE DATE") is by and between Avalon Pharmaceuticals,
Inc. ("AVALON"), a Delaware Corporation, having a place of business at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and MedImmune, Inc. ("MEDIMMUNE"),
a Delaware corporation, having a place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Avalon and MedImmune may each be referred to herein
individually as a "PARTY" and collectively as the "PARTIES."
WHEREAS, Avalon has developed and controls certain chemical genomics
technology related to facilitating drug discovery and development;
WHEREAS, MedImmune wishes to obtain the benefit of Avalon's chemical
genomics technology for use in identifying compounds useful for treating
inflammatory and autoimmune disorders; and
WHEREAS, Avalon and MedImmune have agreed to collaborate, on the terms and
conditions set forth herein, on the discovery and development of compounds for
treating inflammatory and autoimmune disorders of humans.
NOW THEREFORE, in consideration of the mutual promises and covenants set
forth below and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS.
1.1 "AFFILIATE(S)" means any Person that, directly or indirectly, owns, is
owned by, or is under common ownership with a Party to this Agreement
or any Person actually controlled by, controlling, or under common
control with a Party to this Agreement. For the purposes of this
definition, "ownership" or "control" means a Person owns or controls at
least (a) fifty percent (50%) of the voting stock of a corporation, or
(b) in the absence of the ownership of at least fifty percent (50%) of
the voting stock of a corporation or in the case of non-corporate
entity, has the power to direct or cause the direction of the
management and polices of such corporation or non-corporate entity, as
applicable.
1.2 "ANALOG" of a given Compound means a chemical compound derived by
addition to or manipulation of the structure of such Compound.
1.3 "AVALON CHEMICAL LIBRARY" means the set of Compounds that Avalon owns
or controls that are employed during Stage II of the Research Program
and from which a Compound Hit is selected.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.4 "AVALON COMPOUND KNOW-HOW" means any Avalon Know-How covering the Lead
Compounds, Optimized Lead Compounds and Compound Families.
1.5 "AVALON COMPOUND PATENT RIGHTS" means any Avalon Patent Rights covering
the Lead Compounds, Optimized Lead Compounds and Compound Families.
1.6 "AVALON CORE TECHNOLOGY" means all proprietary apparatuses, materials,
methods, processes, information, data, databases and analyses
Controlled by either Avalon or its Affiliates as of the Effective Date
or coming into the Control of Avalon or its Affiliates during the Term
relating to the use of HITS, METS, RACETraCK and/or TSAR and all
related screening methods and processes, including methods and
processes useful or helpful to induce a desired profile across a gene
signature set and its correlation with the inhibition or activation of
a target.
1.7 "AVALON INDEMNIFIED PARTY" shall have the meaning set forth in SECTION
11.1.
1.8 "AVALON TARGET KNOW-HOW" means *
1.9 "AVALON KNOW-HOW" means all apparatuses, materials (including the
Avalon Chemical Library), processes, information, data, databases and
analyses controlled by either Avalon or its Affiliates as of the
Effective Date or coming into the control of Avalon or its Affiliates
during the Term relating to the Research Program, including Joint
Inventions that are also Avalon Core Technology and including
information, analyses and material (including RNA) derived from HITS,
METS, RACETraCK and TSAR or relating to any Compound, Compound Families
and/or Compound Hits, Avalon Target Know-How, or information relating
to cell signaling pathways involving a Target, that is at any time
identified or developed under the Research Program, or to any Analogs
of any such Compounds.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.10 "AVALON PATENT RIGHTS" means Patent Rights that Avalon owns or Controls
as of the Effective Date or that come into the Control of Avalon during
the Term relating to the Research Program, including Avalon's interest
in the Joint Inventions that are also Avalon Core Technology and
including information, analyses and material (including RNA) derived
from HITS, METS, RACETraCK and TSAR or relating to any Compound,
Compound Families and/or Compound Hits, Avalon Target Know-How, or
information relating to cell signaling pathways involving a Target,
that is at any time identified or developed under the Research Program,
or to any Analogs of any such Compounds including those patents and/or
patent applications set forth on Exhibit C attached hereto and
incorporated by reference.
1.11 "AVALON TECHNOLOGY" means the Avalon Patent Rights, Avalon Know-How,
the Avalon Target Know-How and any and all intellectual property rights
in data, information, materials and inventions created and/or invented
solely by employees of Avalon or persons obligated to assign such data,
information, materials and inventions to Avalon.
1.12 "BREACHING PARTY" has the meaning defined in SECTION 10.3.1(a).
1.13 "CALENDAR QUARTER" means the respective periods of three consecutive
calendar months ending on March 31, June 30, September 30 or December
31, for so long as this Agreement is in effect.
1.14 "CHANGE OF CONTROL" means any of the following: (a) the sale or
disposition of all or substantially all of the assets of a Party to a
Third Party, (b) the acquisition by a Third Party, other than an
employee benefit plan (or related trust) sponsored or maintained by a
Party or any of its Affiliates, of more than 50% of such Party's
outstanding shares of voting capital stock, or (c) the merger or
consolidation of a Party with or into another corporation, other than a
merger or consolidation of a Party in which holders of shares of such
Party's voting capital stock immediately prior to the merger or
consolidation will have at least 50% of the ownership of voting capital
stock of the surviving corporation immediately after the merger or
consolidation.
1.15 "CLINICAL CANDIDATE" means *
1.16 "COLLABORATION TECHNOLOGY" has the meaning defined in SECTION 7.2.1(c).
1.17 "COMMERCIALLY REASONABLE EFFORTS" means *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.18 "COMPOUND" means *
1.19 "COMPOUND FAMILY" means a *
1.20 "COMPOUND HIT" means a *
1.21 "CONFIDENTIAL INFORMATION" means with respect to each Party, non-public
proprietary data or information that belongs, in whole or in part, to
such Party or its Affiliates and/or information designated as
Confidential Information of such Party hereunder, including, but not
limited to, information relating to a Party's research programs,
development, marketing and other business practices and finances.
1.22 "CONTRACT YEAR" means, during the Term, the twelve-month time period
from the Effective Date to the anniversary of the Effective Date.
1.23 "CONTROL" or "CONTROLLED" means, with respect to any (a) material,
technology, item of information, method, data or other know-how, or (b)
intellectual property right, either ownership thereof or possession
(other than by ownership) of the ability by Avalon or MedImmune, as the
case may be, to grant the other party access and/or a license as
provided herein without breaching the terms of an agreement or other
arrangement with a Third Party.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.24 "DEVELOPMENT AND COMMERCIALIZATION PROGRAM" means all activities
performed by MedImmune to develop a Clinical Candidate into a Product,
obtain Regulatory Approval of such Product and commercialize such
Product, including marketing and selling.
1.25 "DISCLOSING PARTY" has the meaning defined in SECTION 8.1.
1.26 "EFFECTIVE DATE" has the meaning set forth in the preamble.
1.27 "FDA" means the United States Food and Drug Administration, and any
successor agency(ies) thereto.
1.28 "FIELD" means *
1.29 "FIRST COMMERCIAL SALE" means, with respect to any Product and any
country of the world, the first sale of such Product under this
Agreement to a Third Party in such country, after such Product has been
granted Regulatory Approval by the competent Regulatory Authorities in
such country.
1.30 "FTE" or "FULL TIME EQUIVALENT" means a full time equivalent scientific
person year consisting *
1.31 "FTE RATE" means *
1.32 "HIGH THROUGHPUT INTEGRATED TRANSCRIPTIONAL SCREENING" or "HITS" means
that portion of the Avalon Patent Rights and/or Avalon Know-How that
encompasses a highly modified quantitative polymerase chain reaction
platform used to screen large numbers of compounds by determining the
compounds' effect on the expression of a given set of genes.
1.33 "INDEMNIFYING PARTY" has the meaning defined in SECTION 11.3.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.34 "IND" means an Investigational New Drug Application, as defined in the
United States Food Drug & Cosmetics Act, that is required to be filed
with the FDA before beginning clinical testing of a Product in human
subjects, or an equivalent foreign filing.
1.35 "JOINT INVENTIONS" has the meaning set forth in SECTION 7.1.3.
1.36 "KNOW-HOW" means information and data, including, but not limited to,
materials, formulae, procedures, processes, protocols, techniques and
results of experimentation and testing.
1.37 "LEAD COMPOUND" means a Compound Hit that has been selected for Lead
Compound Optimization, based upon data obtained through secondary
screening in various assays performed by the Parties as outlined in the
Research Program.
1.38 "LEAD COMPOUND OPTIMIZATION" means the chemical modification of a Lead
Compound, undertaken by or on behalf of either Party, in order to
enhance the Lead Compound's properties, including potency, in vivo
efficacy, pharmacokinetic profile, solubility and other physical
chemical characteristics, and/or decreased toxicity.
1.39 "MANAGEMENT COMMITTEE" or "MC" shall have the meaning set forth in
SECTION 3.1.
1.40 "MEDIMMUNE ANTIBODIES" means *
1.41 "MEDIMMUNE CELLS" *
1.42 "MEDIMMUNE INDEMNIFIED PARTY" shall have the meaning set forth in
SECTION 11.2.
1.43 "MEDIMMUNE KNOW-HOW" means all materials, processes, information, data,
databases and analyses controlled by either MedImmune or its Affiliates
as of the Effective Date, or coming into the control of MedImmune or
its Affiliates during the Term, relating to the MedImmune Antibodies,
and MedImmune Cells, including any information relating to cell
signaling pathways involving a Target, and, in all instances, not
encompassing any Avalon Patent Rights and/or Avalon Know-How.
1.44 "MEDIMMUNE PATENT RIGHTS" means Patent Rights that MedImmune owns or
controls as of the Effective Date or that come into the control of
MedImmune during the term of
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
this Agreement, which Patent Rights claim
any MedImmune Invention relating to the MedImmune Antibodies and
MedImmune Cells and not encompassing any Avalon Patent Rights and/or
Avalon Know-How.
1.45 "MEDIMMUNE TECHNOLOGY" means the MedImmune Antibodies, MedImmune Cells,
MedImmune Patent Rights, MedImmune Know-How and any and all
intellectual property rights in data, information, materials and
inventions created and/or invented solely by employees of MedImmune or
any Third Party obligated to assign such data, information, materials
and inventions to MedImmune.
1.46 "MEDIMMUNE TERMINATION NOTICE" shall have the meaning set forth in
SECTION 10.3.2.
1.47 "MICROARRAY-BASED EXPANDED TRANSCRIPTIONAL SCREENING" or "METS" means
that portion of the Avalon Patent Rights and/or Avalon Know-How
encompassing the production and use of gene microarray platforms used
for the in-depth characterization of cell treatments.
1.48 "NDA" means a New Drug Application, as defined in the Food Drug &
Cosmetic Act, that is required to be approved by the FDA before
marketing a Product, or an equivalent foreign filing.
1.49 "NET SALES" means *
All of the foregoing deductions from the gross invoiced sales prices of
Licensed Products shall be determined in accordance with GAAP. In the
event that MedImmune, its
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Affiliates or Sublicensees make any adjustments to such deductions
after the associated Net Sales have been reported pursuant to this
Agreement, the adjustments shall be reported and reconciled in the next
report and payment of any royalties due.
*
No royalties shall accrue on the disposition of Product in reasonable
quantities by MedImmune, its Affiliates or sublicensees as samples
(promotion or otherwise) or as donations (for example, to non-profit
institutions or government agencies for a non-commercial or
humanitarian purpose).
Proceeds from any Product used in a clinical trial will only be
included in Net Sales to the extent MedImmune receives cash
compensation for such Product.
1.50 "NOTIFYING PARTY" has the meaning set forth in SECTION 7.2.4.
1.51 "OPTIMIZED LEAD COMPOUND" means a Lead Compound that has undergone Lead
Compound Optimization.
1.52 "OPTIONS" has the meaning set forth in SECTION 5.3.
1.53 "OPTION AGREEMENT(s)" has the meaning set forth in SECTION 5.3.
1.54 "PATENT RIGHTS" means any and all (a) patents, (b) pending patent
applications, including, without limitation, all provisional
applications, substitutions, continuations, continuations-in-part,
divisions, renewals, and all patents granted thereon, and (c) all
patents-of-addition, reissues, reexaminations and extensions or
restorations by existing or future extension or restoration mechanisms,
including, without limitation, supplementary protection certificates or
the equivalent thereof.
1.55 "PHASE I CLINICAL TRIAL" means a human clinical trial in the United
States that would satisfy the requirements of US 21 CFR 312.21(a), or
in any other country that would satisfy the analogous, relevant
standards in such country.
1.56 "PHASE II CLINICAL TRIAL" means a human clinical trial in the United
States that would satisfy the requirements of US 21 CFR 312.21(b), or
in any other country that would satisfy the analogous, relevant
standards in such country.
1.57 "PHASE III CLINICAL TRIAL" means a human clinical trial in the United
States that would satisfy the requirements of US 21 CFR 312.21(c), or
in any other country that would satisfy the analogous, relevant
standards in such country.
1.58 "PIVOTAL REGISTRATION CLINICAL TRIAL" means a human clinical trial the
results of which are intended to generate safety and efficacy data
necessary to support Regulatory
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Approval in the proposed therapeutic indication, as more fully defined
in 21 CFR Section 312.21(c) in the United States and equivalent
submissions with similar requirements in other countries.
1.59 "PRODUCT" means *
1.60 "PROGRAM BUDGET" has the meaning defined in SECTION 5.1.1 and as more
fully set forth in Exhibit B attached hereto.
1.61 "PROJECT TEAM" has the meaning defined in SECTION 3.1(c)(ii).
1.62 "PROPOSED DISCLOSURE" has the meaning defined in SECTION 8.5.
1.63 "RAPID ASSESSMENT OF COMPOUND EFFICACY, TRANSCRIPTIONAL CHANGE AND
KINETICS" or "RACETraCK" means those Avalon Patent Rights and/or Avalon
Know-How which are directed to and/or encompasses the use of HITS or
METS in conjunction with animal disease models to evaluate in vivo
Compound activity.
1.64 "RECEIVING PARTY" has the meaning defined in SECTION 8.1.
1.65 "REFERENCE ANTIBODIES" means any non-proprietary (to either Party) *
including, but not limited to, variants, chimeric antibodies, human
antibodies, humanized antibodies, recombinant antibodies, grafted
antibodies and single chain antibodies, whether provided by MedImmune
or otherwise.
1.66 "REFERENCE CELLS" means any non-proprietary (to either Party) * whether
provided by MedImmune or otherwise.
1.67 "REFERENCE COMPOUND" means any non-proprietary (to either Party)
compound that has a known chemical structure and known activity.
1.68 "REGULATORY APPROVAL" means the technical, medical and scientific
licenses, registrations, authorizations and approvals (including,
without limitation, approvals of New Drug Applications (NDAs),
supplements and amendments, pre- and post- approvals,
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
pricing and Third Party reimbursement approvals, and labeling
approvals) of any national, supra-national, regional, state or local
regulatory agency, department, bureau, commission, council or other
governmental entity, necessary for the commercial manufacture,
distribution, marketing, promotion, offer for sale, use, import, export
and sale of a Product in a regulatory jurisdiction.
1.69 "REGULATORY AUTHORITY" means any national (e.g., the United States Food
and Drug Administration), supra-national (e.g., the European
Commission, the Council of the European Union, or the European Agency
for the Evaluation of Medicinal Products), regional, state or local
regulatory agency, department, bureau, commission, council or other
governmental entity in each country of the world involved in the
granting of Regulatory Approval for the Product.
1.70 "RESEARCH PROGRAM" means the Research Program as approved by the MC and
to be attached hereto as Exhibit A, which may be amended from time to
time by the MC.
1.71 "SEC" has the meaning defined in SECTION 8.3.
1.72 "SELECTED COMPOUND HIT" has the meaning set forth in SECTION 1.20.
1.73 "SIGNATURE SET" means a set of genes explicitly identified by METS
during the Research Program, which provides a unique profile indicative
of the inhibition or activation of a Target.
1.74 "STAGE I", "STAGE II" and "STAGE III" shall have the respective
meanings set forth in Exhibit A.
1.75 "TARGET" means genes and/or proteins in the * . Should MedImmune
exercise the First Option and/or the Second Option under Section 5.3,
"Target" will be amended in such Option Agreement(s) to refer to the
particular target for which the First Option and/or Second Option is
being exercised throughout the Option Agreement, including, but not
limited to, the definition of Avalon Target Know-How.
1.76 "TARGET BIOMARKERS" means a set of genes identified by METS during the
Research Program which may be used to identify a therapeutic or
prophylactic response in a patient, or predict patient sensitivity to
Reference Antibodies or MedImmune Antibodies, Compound Hits, Lead
Compounds, Lead Compound Analogs, Optimized Lead Compounds, Clinical
Candidates and/or Products.
1.77 "TECHNOLOGY ACCESS FEE" shall have the meaning set forth in SECTION
5.2.1.
1.78 "TERM" shall have the meaning set forth in SECTION 10.1.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
1.79 "TERRITORY" means the world.
1.80 "THIRD PARTY" means any person or entity other than Avalon, MedImmune
or their respective Affiliates.
1.81 "T-SAR" means transcriptional structure activity relationship.
1.82 *
1.83 *
1.84 "VALID CLAIM" means a claim (i) of any issued, unexpired United States
or foreign patent that shall not have been donated to the public,
disclaimed, abandoned nor held invalid or unenforceable by a court or
government agency of competent jurisdiction in an unappealed or
unappealable decision, or (ii) in the case of any United States or
foreign patent application, that shall not have been canceled,
withdrawn, or abandoned or pending for more than seven years from the
earliest priority date of such application.
2. LICENSES.
2.1 LICENSES TO MEDIMMUNE.
(a) Subject to the terms and conditions of this Agreement, and
for the Term, Avalon grants to MedImmune an exclusive (except to the
extent necessary and/or useful for Avalon to perform its obligations
under this Agreement), nontransferable license under the Avalon
Compound Patent Rights, Avalon Compound Know-How and/or Avalon Target
Know-How in the Territory relating to Clinical Candidates(s), with the
right to sublicense, to make, have made, use, have used, sell, have
sold, offer to sell, have offered to sell, or import or have imported,
Products and Target Biomarkers.
(b) Subject to the terms and conditions of this Agreement,
Avalon hereby grants to MedImmune a nonexclusive, nontransferable and
non-sublicensable license in the Territory under the Avalon Patent
Rights and Avalon Know-How and/or Avalon Target Know-How to perform its
obligations under the Research Program. The license granted to
MedImmune in this SECTION 2.1(b), except for MedImmune's license to the
Avalon Target Know-How, which shall be governed by Section 10.4(d),
shall expire upon cessation of all MedImmune's obligations under the
Research Program or upon termination of the Agreement, whichever is
earlier.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
(c) Subject to the terms and conditions of this Agreement, and
for the Term, Avalon grants to MedImmune an exclusive, irrevocable,
non-transferable license under the Avalon Patent Rights, Avalon
Know-How and/or Avalon Target Know-How in the Territory for Novel Gene
Target(s), with the right to sublicense, to make, have made, use, have
used, sell, have sold, offer to sell, have offered to sell, or import
or have imported any pharmaceutical product; provided, however, *
(d) MedImmune shall have no ownership, use or other rights in
or to Avalon Patent Rights and/or Avalon Know-How or Avalon Compound
Patent Rights, Avalon Compound Know-How and/or Avalon Target Know-How,
including METS profiling data, Signature Sets, databases and other
information, and any analyses thereof and all Avalon Core Technology
obtained from the activities conducted in any portion or Stage of the
Research Program, except as explicitly set forth in this Agreement,
including, but not limited to, Section 10.4(d). Without limiting the
generality of the foregoing, MedImmune shall not use Signature Sets in
any transcription based screen to identify compounds and/or compound
activity or function.
(e) Notwithstanding anything to the contrary in this
Agreement, but subject to SECTION 2.1(f), the Parties acknowledge and
agree that *
For the purposes hereof, a KNOWN GENE is any gene within a Signature
Set for which at least a partial genomic sequence has been publicly
disclosed and for which the expression thereof has been publicly
disclosed as it relates to the Target signaling pathway; and a *
(f) *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
2.2 LICENSES TO AVALON.
(a) Subject to the terms and conditions of this Agreement,
MedImmune hereby grants to Avalon a nonexclusive, nontransferable and
non-sublicensable license in the Territory under the MedImmune
Technology solely to perform its obligations under the Research
Program. Except as expressly set forth in this Agreement, Avalon shall
not use the MedImmune Technology for any other purpose. The license
granted to Avalon in this SECTION 2.2: (a) shall expire upon cessation
of all Research Program activities or (b) upon termination of the
Agreement, whichever is earlier
(b) MedImmune hereby grants to Avalon an exclusive, worldwide,
perpetual, irrevocable, royalty free and fully paid up license to use,
for any purpose, MedImmune's interest in Joint Inventions that
constitute Avalon Core Technology. This license shall survive the
termination or expiration of this Agreement.
2.3 SUBLICENSING TO THIRD PARTY CONTRACTORS. Notwithstanding any provision
to the contrary in this Agreement, if pursuant to SECTION 3.1(c)(iii),
the MC approves the use of one or more Third Parties to perform certain
tasks for either Party under the Research Program, the Party entering
into a contract with such Third Party for the performance of such
services, may, as part of such contract, grant to such Third Party a
nonexclusive, nontransferable, nonsublicensable license or sublicense,
as applicable, under the Avalon Patent Rights and/or Avalon Know-How or
the MedImmune Technology, as applicable, only to the extent and only
for so long as such license or sublicense is necessary for such Third
Party to perform such tasks under the Research Program. A Party
entering into any Third Party licenses or sublicenses, as applicable,
must require the Third Party to execute a confidential disclosure
agreement with terms and covenants relating to the protection of
confidential information and intellectual property reasonably
acceptable to the other Party. Notwithstanding anything to the
contrary, no rights in or to the Avalon Core Technology may be licensed
or sublicensed without the express prior written consent of Avalon.
Notwithstanding anything to the contrary, no rights in or to the
MedImmune Technology may be licensed or sublicensed without the express
prior written consent of MedImmune.
2.4 NO OTHER LICENSES. The Parties expressly understand and agree that the
only licenses granted under this Agreement are the licenses expressly
granted under this Agreement and that there is no implied license or
license by estoppel.
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3. MANAGEMENT OF COLLABORATION.
3.1 MANAGEMENT COMMITTEE
(a) Formation and Composition of the Management Committee. The
MC shall have general supervision over the strategic direction and
management of the Research Program. The MC shall conduct its first
meeting no later than forty-five (45) days after the Effective Date.
The MC shall comprise two representatives each from Avalon and
MedImmune. Each Party shall appoint its representatives to the MC from
time to time, and may substitute one or more of its representatives to
the MC, in its sole discretion, effective upon written notice to the
other Party of such change. The two MC members appointed by each Party
shall have a combined, single vote on all actions before the MC, and
unanimous agreement of both Parties is required for approval of any
actions, subject to SECTION 3.2 below. The initial members of the MC
for MedImmune are *
(b) Meetings. MedImmune shall be responsible for organizing
and chairing the MC meetings. The MC shall meet not less than once each
Calendar Quarter during the duration of the Research Program, on such
dates and at such times as agreed to by the Parties. In-person meetings
shall take place in Avalon's offices or such other locations on which
the Parties mutually agree. Upon the mutual agreement of the Parties,
any MC meeting may be conducted by telephone or videoconference. At
such meetings, the MC shall discuss the activities conducted under the
Research Program and the results thereof. Each Party shall be
responsible for its own costs in connection with the meetings of the
MC. In addition to the MC members, each Party may invite other
employees and/or consultants to attend and participate in such meetings
upon notice to and approval by the MC, such approval not to be
unreasonably withheld or delayed. Any consultant shall be bound to
terms of confidentiality at least as restrictive as those contained
herein.
(c) Purpose and Powers of Management Committee. The MC shall
have responsibility for the following identified matters, which may be
amended, subtracted from or added to or from time to time upon the
mutual written agreement of the Parties:
(i) Preparing and providing the minutes of each MC meeting
to the Parties pursuant to SECTION 3.1(e).
(ii) Forming and supervising a team of members from each
Party, who have been nominated by their respective Party (the "PROJECT
TEAM"), which will monitor, and coordinate the performance of the
Research Program. The MC may periodically make amendments or
supplements to the Research Program, as it deems necessary to
accomplish the purposes of the Research Program, subject to the
provisions of SECTION 3.2 and ARTICLE 5.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
(iii) Approving the utilization of one or more Third
Parties to perform certain tasks for either Party under the Research
Program.
(iv) Identifying * to be used in Stage I of the
Research Program.
(v) Deciding on further Compound screening based on
pilot screen.
(v) Selecting Lead Compounds for Lead Optimization,
based on criteria developed and approved by the MC in writing prior to
the end of Stage III of the Research Program and making recommendations
of such Lead Compounds to MedImmune's Executive Committee. Such
selection criteria will include, but will not be limited to,
intellectual property analysis.
(vi) Reporting on the progress of the Research Program
to Avalon and MedImmune.
(vii) Review and approval of the Program Budget and
proposed changes to the Program Budget.
(viii) Defining, in writing, the criteria for achievement
of the milestone event "Proof of Concept of a Compound Hit or Lead
Compound" in an animal model" set forth in SECTION 5.2.2 no later
than * from the Effective Date or such other time unanimously agreed
to by the members of the MC.
(ix) Defining, in writing, the criteria for selection of
a Clinical Candidate no later than * from the Effective Date or such
other time as unanimously agreed upon by the members of the MC.
(d) Minutes. Within * following each MC meeting, a
representative of each Party to the MC, on an alternating basis, shall
prepare and provide to each Party a copy of the minutes of such meeting
which shall set forth, in reasonably specific detail, the state of the
Research Program and any approval, determination or other action agreed
to by all of the members of the MC, provided that such minutes are
reasonably acceptable to both Parties. The minutes shall be approved at
the next meeting of the MC, if not sooner.
(e) Notwithstanding anything to the contrary, the decisions or
actions of the MC shall not in any way change the terms of this
Agreement or constitute an amendment this Agreement, unless in
compliance with SECTION 14.5 of this Agreement.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
3.2 MANAGEMENT COMMITTEE DISPUTES. Any disputes or disagreements arising
from the planning or performance of the Research Program that cannot be
resolved by the members of the MC shall be resolved in accordance with
this SECTION 3.2. *
3.3 MEDIMMUNE EXECUTIVE COMMITTEE. The MedImmune Executive Committee shall
review and approve recommendations from the MC of Lead Compounds
selected for Lead Optimization prior to the initiation of Stage III.
4. RESEARCH AND DEVELOPMENT.
4.1 GENERAL. Under the terms and conditions set forth herein, Avalon shall
perform, with collaboration from MedImmune, a research program for the
discovery, identification, screening, characterization and optimization
of Compounds and Products active against Targets (collectively, the
"RESEARCH PROGRAM"). The Research Program is set forth in Exhibit A
attached hereto.
4.2 TERM OF THE RESEARCH PROGRAM. Unless this Agreement is earlier
terminated, the Research Program shall terminate when the optimization
of the final Lead Compound selected for Lead Compound Optimization has
been completed. It is expected that the Research Program will take
approximately * to complete, which can be extended upon the mutual
written agreement of the Parties or terminated by MedImmune in
accordance with SECTION 10.3.2.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
4.3 CONDUCT OF THE RESEARCH PROGRAM. Avalon and MedImmune shall each use
its respective Commercially Reasonable Efforts to perform its
obligations under the Research Program. All activities to be undertaken
in the performance of the Research Program shall be carried out by
employees of the Parties and/or their respective Affiliates, provided,
however, that if either Party is able to reasonably demonstrate, and
the MC agrees, that it would be in the best interests of both Parties
to contract with one or more Third Parties to perform certain tasks
under the Research Program, the Party responsible for such task may
enter into a contract with a Third Party to perform such task, which
contract shall be subject to the prior written approval of the MC and
to obligations of confidentiality at least as stringent as those
contained in this Agreement; provided that entering into an agreement
with a Third Party shall not relieve a Party from the performance of
its obligations under this Agreement. In determining whether to utilize
the services of any Third Party in conducting activities under the
Research Program, the Parties shall consider what would be the most
efficient and cost-effective means for accomplishing the proposed
activity, any relevant intellectual property issues that may impede a
Third Party's ability to perform the proposed activity or that may
warrant limiting the performance of the proposed activity to one of the
Parties, and other relevant factors.
4.4 NO LIABILITY OF AVALON. Notwithstanding the foregoing or any other
provision of this Agreement, MedImmune acknowledges and agrees that the
Research Program is experimental in nature and that Avalon does not
make any representations or warranties regarding the success of the
Research Program, and Avalon shall have no liability to MedImmune as a
result of any failure to achieve or delay in achieving any results
under the Research Program or any Development and Commercialization
Program provided that Avalon has used Commercially Reasonable Efforts.
5. RESEARCH PROGRAM FUNDING, PAYMENTS AND ROYALTIES.
5.1 RESEARCH PROGRAM FUNDING. MedImmune shall be solely responsible for
funding the Research Program in accordance with the Program Budget (as
defined herein).
5.1.1 Budget. The budget detailing the expected costs per Contract Year
for performing the Research Program (the "PROGRAM BUDGET") is attached
hereto as Exhibit B. The Parties understand and agree that MedImmune
shall not be obligated to make any payments to Avalon under this
SECTION 5.1 beyond those amounts set forth in the Program Budget or
otherwise approved in advance by the MC in writing, if such expenditure
is greater than * of the agreed upon expenditure level. At the end of
each Contract Year and/or the termination or expiration of the Research
Program, if applicable, the Parties shall reconcile the amounts paid by
MedImmune to Avalon. Any overpayment due to MedImmune shall be refunded
to MedImmune within * after such reconciliation.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
5.1.2 Payment. MedImmune agrees to provide funding to Avalon *
5.1.3 Reporting and Records. Avalon shall provide MedImmune with a
quarterly update of results obtained by MedImmune under the Research
Program. During the Research Program, each Party shall maintain, and
shall require its Affiliates, sublicensees and any Third Party
permitted to perform work under the Research Program in accordance with
SECTION 4.3 to maintain, records in sufficient detail and in good
scientific manner appropriate for regulatory purposes and the purpose
of establishing and perfecting intellectual property (including patent
rights), which shall fully and properly reflect all work done and
results achieved in the conduct of the Research Program. All agreements
entered into with a Third Party will have provisions that provide that
any intellectual property rights will either be owned by or assigned to
MedImmune or Avalon, as the case may be.
5.1.4 Visitation. Upon not less than one week prior written notice,
during the Research Program, MedImmune shall have the right to visit
the premises where research is being performed under the Research
Program. In such case, Avalon agrees to make scientists performing
research under the Research Program reasonably available to discuss the
research and progress thereof under the Research Program with
MedImmune.
5.2 MEDIMMUNE PAYMENTS AND ROYALTIES; OPTION.
5.2.1 Technology Access Fee. After the Effective Date and receipt of an
invoice from Avalon, MedImmune shall pay to Avalon a technology access
fee of $1,500,000 (the "TECHNOLOGY ACCESS FEE") no later than June 24,
2005.
5.2.2 Milestone Payments. MedImmune shall pay to Avalon the following
milestone payments upon the each occurrence of the applicable milestone
event described below on a Product-by-Product basis, subject to SECTION
3.1(c) (viii). Milestone payments shall be payable by MedImmune to
Avalon within * after achievement of the relevant Milestone and receipt
of an invoice for such amounts. Each such milestone payment is paid
only once upon the first achievement of the corresponding milestone
event on a Product-by-Product basis.
Milestone Payment Milestone Event
----------------- ---------------
* Selection of Compound Famil(y/ies) for Lead Compound Optimization
* Proof of concept of a Compound Hit or Lead Compound in an animal model
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
* Selection of a Clinical Candidate
* First dosing in a human being in a Phase I Clinical Trial
* First dosing in a human being in a Pivotal Registration Clinical Trial or the date of
agreement by the FDA that a trial not originally designated as a Pivotal Registration
Clinical Trial could be used for registration
* Filing of an NDA for a Product
* Approval of an NDA for a Product
* First Commercial Sale in Europe
* First Commercial Sale in Japan
* Clinical validation of the first Target Biomarker (this milestone payment will not be
due if achievement of this milestone event is part of a Development Program for a Product)
5.2.3 Royalty. In consideration for the license by Avalon to MedImmune
hereunder, MedImmune shall pay to Avalon within * of the close of each
Calendar Quarter a royalty in an amount equal to the following
percentages of the specified portions of the annual aggregate Net Sales
of Products sold by MedImmune, its Affiliates, and its sublicensees
throughout the Territory as reported in a Calendar Quarter as provided
below:
Net Sales Royalty
--------- -------
Amounts from * up to and including * *
Amounts in excess of * *
(a) The obligation of MedImmune to pay royalties using the
rates set forth in this SECTION 5.2.3 on Net Sales of Product in any
country of the Territory will continue, on a country-by-country and
Product-by-Product basis, until the later of (i) the expiration of the
period during which the manufacture, use, sale offer for sale or import
of a Product sold in such country would infringe a Valid Claim under
Avalon Compound Patent Rights in such country, or (ii) the date which
is * from the date of First
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Commercial Sale of such Product in such country (such time period, the
"ROYALTY PERIOD").
(b) For the avoidance of doubt: (i) no royalty is due for any
Product in any country after the end of the Royalty Period for such
country and in calculating Net Sales for determining the applicable
royalty rate under SECTION 5.2, Net Sales of a Product do not include
net sales in a country after the end of the Royalty Period for such
country; and (ii) during the term of any applicable Royalty Period in
any country, MedImmune shall have no right to sell or market any
Product, directly or indirectly, without paying to Avalon the royalties
set forth in this section.
(c) *
(d) *
5.2.4 Method of Payment. All payments under this Agreement shall be
made payable to "Avalon Pharmaceuticals" and sent to the address
identified in SECTION 14.4, or by wire transfer to an account
designated in writing by Avalon. Each payment shall reference this
Agreement and identify the obligation under this Agreement that the
payment satisfies.
5.2.5 Payments in U.S. Dollars. All payments due under this Agreement
shall be drawn on a United States bank and shall be payable in United
States dollars. Such payments shall be without deduction of exchange,
collection, or other charges, and, specifically, without deduction of
withholding or similar taxes or other government imposed fees or taxes.
5.2.6 Conversions. For any given Calendar Quarter, if any portion of
Net Sales would be otherwise determined in currency other than U.S.
Dollars then, for the purposes of calculating such Net Sales, such
currency will be converted to U.S. Dollars in the following manner:
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
(a) Net Sales will be determined in the original currency for
each country for each of the three (3) months during the Calendar
Quarter; then
(b) the Net Sales values for each month as calculated under
SECTION 5.2.6(a) for each country will be separately converted into
U.S. Dollars based on the average rate of exchange for that month
(based on daily noon buying rates for cable transfers in New York City
certified by the Federal Reserve Bank of New York, available on the
website for the Board of Governors of the Federal Reserve System (or
any successor entity)) ; and then
(c) the portion of Net Sales attributable to that currency for
that Calendar Quarter will be the sum of the three (3) monthly values
calculated under SECTION 5.2.6(b).
5.2.7 Late Payments. Any payments by MedImmune that are not paid on or
before the date such payments are due under this Agreement shall bear
interest at the lesser of the greatest amount permitted by law or *
prorated from the date when such payment was due.
5.2.8 Fully Earned, Non-Refundable and Non-Creditable. All payments
made by MedImmune under this Agreement due and owing to Avalon shall be
deemed to be fully earned, non-refundable and non-creditable at the
time payment is made, subject to Section 6.2.
5.3 OPTION. MedImmune and Avalon may be interested in pursuing additional
collaborations. Avalon grants to MedImmune options (the "FIRST OPTION"
and the "SECOND OPTION," and together, the "OPTIONS") to enter into up
to two additional collaboration and license agreements (the "OPTION
AGREEMENT(S)") concerning targets other than the Target; provided that:
(a) MedImmune may exercise either or both of the Options by delivery of
written notice to Avalon accompanied by (i) the payment of * for each
Option Agreement, which amount shall constitute the Technology Access
Fee for each of the Option Agreements, and (ii) a description of the
proposed subject matter of the Option Agreement. Each of the Option
Agreements shall be identical to this Agreement in form and substance,
except concerning the Technology Access Fee, the subject matter of each
Option Agreement and conforming definitional changes, the lack of this
Option provision, and except as mutually agreed to by the Parties. The
subject matter of each Option Agreement shall be left to the discretion
of MedImmune, unless Avalon has already entered into or is in the
process of entering into an agreement with a Third Party or unless
Avalon is pursuing a research or development program that may preclude
Avalon from entering into an Option Agreement with MedImmune concerning
the proposed subject matter. In the event that Avalon notifies
MedImmune of such determination, then such Option exercise shall not
count against the two exercises permitted hereunder, and Avalon shall
have no liability for failing to enter into an Option Agreement
pursuant to such Option exercise or for failing to disclose any of the
facts to MedImmune underlying
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Avalon's determination. In the event that the Parties do not enter into
an Option Agreement, any payments provided by MedImmune to Avalon shall
be refunded to MedImmune within * . MedImmune shall have the right to
exercise the First Option by delivery of written notice to Avalon under
this SECTION 5.3 until * and shall have the right to exercise the
Second Option by delivery of written notice to Avalon under this
SECTION 5.3 *
6. ACCOUNTING AND RECORDS.
6.1 ROYALTY REPORTS; RECORDS. During the Term and following the first
Commercial Sale by MedImmune or its Affiliates or sublicensees, as the
case may be, of a Product in the Territory, MedImmune shall furnish to
Avalon, within * after the close of each Calendar Quarter, a written
report or reports covering each Calendar Quarter, which report will set
forth separately for each Product, in reasonable detail, the
calculation of the royalties and/or other payments due from MedImmune,
its Affiliates and sublicensees, including, for example, in the case of
royalty payments, the gross amount billed or invoiced for the sale or
distribution of the Product, itemized deductions against such gross
amount, and Net Sales on a country-by-country and Product-by-Product
basis. Such report shall contain reference to Net Sales by country in
United States Dollars. MedImmune shall have the right to make
corrections to the reports for each Calendar Quarter for any errors in
calculation of any royalty or other payment due under this Agreement.
Upon the expiration of * following the end of any Calendar Quarter, the
calculation of royalties and/or other payments due from MedImmune with
respect to such Calendar Quarter shall be binding and conclusive upon
Avalon, and MedImmune, its Affiliates or sublicensees, as the case may
be, shall be released from any liability or accountability with respect
to such royalties and/or other payments for such Calendar Quarter. *
If no payment is due for any such Calendar Quarter, MedImmune shall so
report. MedImmune agrees to discuss any report and the information
contained therein in good faith with Avalon, should questions regarding
such reports arise. MedImmune shall keep, and shall require its
Affiliates and sublicensees to keep, accurate records in sufficient
detail to enable royalties payable hereunder (and all related
calculations) to be determined. Such records will be maintained until
Avalon's right to audit under Section 6.2 has expired.
6.2 RIGHT TO AUDIT. Upon the written request of Avalon and with at least *
prior written notice, but not more than * , and at Avalon's expense,
MedImmune shall permit an independent certified public accounting firm
of internationally recognized standing, selected by Avalon and
acceptable to MedImmune, which acceptance will not
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
be unreasonably refused, to have access during normal business hours to
those records of MedImmune as may be reasonably necessary to verify the
accuracy of the milestone payments or the royalty reports furnished by
MedImmune pursuant to SECTION 6.1 of this Agreement in respect of any
year ending not more than * prior to the date of such request. The
report prepared by such independent certified public accounting firm
will disclose only the conclusions of the accounting firm regarding the
audit and specify the amount of any underpayment or overpayment, and
will not include copies of any books or records reviewed. A copy of
such report will be sent or otherwise provided to MedImmune by such
accounting firm at the same time it is sent or otherwise provided to
Avalon. No other information obtained by the accounting firm will be
shared with Avalon. If the accounting firm's report shows underpayment
of royalties, within * after MedImmune 's receipt of such report,
MedImmune shall remit to Avalon the amount of such underpayment. If the
underpayment is in excess of * , then MedImmune shall also remit to
Avalon an amount equal to Avalon's substantiated out-of-pocket costs of
the audit. Any overpayment of royalties shall be refunded to MedImmune
by Avalon within * of the date Avalon receives the written report of
the accounting firm. Avalon shall treat all financial information
subject to review under this SECTION 6.2 as Confidential Information of
MedImmune and shall cause its accounting firm to retain all such
financial information in confidence under terms at least as restrictive
as those set forth in ARTICLE 8.
7. PATENT PROSECUTION; ENFORCEMENT; INFRINGEMENT, OWNERSHIP OF INVENTIONS.
7.1 OWNERSHIP.
7.1.1 Avalon shall solely own all right, title and interest in and to
the Avalon Technology, subject to the licenses granted to MedImmune in
this Agreement and SECTION 10.4.
7.1.2 MedImmune shall solely own all right, title and interest in and
to the MedImmune Technology, subject to the license granted to Avalon
in SECTION 2.2 of this Agreement.
7.1.3 Subject to SECTION 7.1.4, all right, title and interest in and to
any inventions made by one or more employees or contractors of
MedImmune together with one or more employees or contractors of Avalon
during the Research Program ("JOINT INVENTIONS"), including Third
Parties performing work under the Research Program, shall belong
jointly to MedImmune and to Avalon, such that each party shall have an
undivided interest therein. Subject to the licenses granted under this
Agreement, and the payment obligations under this Agreement, each party
shall have the right to exploit and grant rights to Joint Inventions
without the consent or approval of the other Party and without
accounting to the other Party. For the avoidance of doubt, MedImmune
shall have no
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
rights regarding Joint Inventions that are Avalon Core Technology
except to the extent necessary to enable MedImmune to perform its
obligations under SECTION 2.2(b). Additionally, for the avoidance of
doubt, Avalon shall have no right to use Joint Inventions to the extent
such Joint Inventions consist of, in whole or in part, Avalon Target
Know-How, Target Biomarker(s) and/or Novel Gene Target(s).
7.1.4 Each Party agrees promptly to disclose to the other party any
Joint Invention and to execute such documents and perform such other
acts as may reasonably request to obtain, perfect and enforce such
rights to such inventions and the assignment thereof. MedImmune and
Avalon will obtain appropriate assignments from its employees,
contractors and Affiliates to effect the intent of this SECTION 7.1.4.
7.1.5 Inventorship shall be determined in accordance with United States
patent law.
7.2 PATENT RIGHTS.
7.2.1 Prosecution and Maintenance of Patent Rights.
(a) Avalon Core Technology. Avalon shall have the sole right,
but not the obligation, to prepare, file, prosecute and maintain,
throughout the world, all patent applications relating to the Avalon
Core Technology.
(b) MedImmune Patent Rights. MedImmune, at its own discretion
and expense through patent counsel selected by MedImmune, shall have
the sole right, but not the obligation, to prepare, file, prosecute and
maintain, throughout the world, all MedImmune Patent Rights, including
any interference, opposition or related proceedings for such Patent
Rights.
(c) Collaboration Technology. MedImmune shall have the first
right, but not the obligation, to prepare, file, prosecute and
maintain, throughout the world, all patents directed to (i) Avalon
Target Know-How, (ii) Avalon Compound Know-How, (iii) Avalon Compound
Patent Rights, and (iv) Patent Rights in all Joint Inventions, in each
case excluding all patents directed to Avalon Core Technology
(collectively, "COLLABORATION PATENT RIGHTS"). MedImmune shall give
Avalon an opportunity to review and comment upon the text of these
applications before filing, shall consult with Avalon with respect to
such applications, and shall supply Avalon with a copy of the
applications as filed, together with notice of its filing date and
serial number. MedImmune shall keep Avalon advised of the status of the
actual and prospective patent filings (including, without limitation,
the grant of any Collaboration Patent Rights), and shall provide
advance copies of any official correspondence related to the filing,
prosecution and maintenance of such patent filings. MedImmune shall use
commercially reasonable efforts to prepare, file, prosecute and
maintain Collaboration Patent Rights in a diligent manner. If MedImmune
elects not to file a patent application or to cease the prosecution
and/or maintenance of any Collaboration Patent Right (excluding Avalon
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Target Know-How), MedImmune shall provide Avalon with written notice
immediately upon the decision to not file or continue the prosecution
of such patent application or maintenance of such patent and at least *
before ceasing prosecution and/or maintenance of a particular
Collaboration Patent Right and, in such case, shall permit Avalon, at
Avalon's sole discretion, to file and/or continue prosecution and/or
maintenance of such Collaboration Patent Right at Avalon's own expense.
If Avalon so elects to file and/or continue prosecution or maintenance,
MedImmune shall execute such documents and perform such acts, at
Avalon's expense, as may be reasonably necessary to permit Avalon to
file, prosecute and/or maintain such Collaboration Patent Rights.
Notwithstanding the forgoing, Avalon shall not file or prosecute any
patent applications that disclose Avalon Target Know-How without the
prior express written permission of MedImmune, in MedImmune's sole
discretion.
7.2.2 Enforcement of Intellectual Property.
(a) Enforcement of Patent Rights and Know-How. Each Party
shall give prompt notice to the other Party of knowledge of either (i)
any infringement of the Avalon Patent Rights directed to the Avalon
Core Technology or the Collaboration Patent Rights, or (ii) any
misappropriation or misuse of Avalon Know-How or MedImmune Know-How
that comes to such Party's attention.
(b) With respect to Avalon Patent Rights, Patent Rights in
Joint Inventions directed to the Avalon Core Technology and/or Avalon
Know-How directed to the Avalon Core Technology, Avalon shall have the
sole right, but not the obligation, to take action to obtain a
discontinuance of such infringement or bring suit against the Third
Party infringer.
(c) With respect to all other Patent Rights and Know-How,
MedImmune shall have the first right, but not the obligation, to take
action to obtain a discontinuance of such infringement or bring suit
against the Third Party infringer within * from the date of said
notice. MedImmune shall provide Avalon with prompt written notice
within the * period as to whether MedImmune will take action against
the Third Party infringer. MedImmune shall bear all the expenses of any
suit brought by it claiming infringement of any such Patent Rights
and/or Know-How. If, after the expiration of the * period, MedImmune
has not obtained a discontinuance of infringement, filed suit against
any Third Party infringer, or provided Avalon with information and
arguments demonstrating to Avalon's reasonable satisfaction that there
is insufficient basis for the allegation of infringement, then Avalon
shall have the right, but not the obligation, to bring suit against
such infringer under such Patent Rights and/or Know-How and to join
MedImmune as a party plaintiff, provided that Avalon shall bear all the
expenses of such suit. MedImmune shall cooperate with Avalon in any
suit for infringement of such Patent Rights and/or Know-How brought by
Avalon against a Third Party,
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
and shall have the right to consult with Avalon and to participate in
and be represented by independent counsel in such litigation at its own
expense.
7.2.3 Disbursement of Damages Award and Settlement. The Party
prosecuting or participating in any such lawsuit under SECTION 7.2.2
hereof shall be entitled to deduct its costs and expenses from any
damages that are awarded. The balance remaining from any such recovery
shall be divided between the Parties as follows *
The Parties shall cooperate fully in any such lawsuit and each Party
shall not take or omit any action that would interfere with prosecution
of such a lawsuit. Before any action is taken that will affect the
validity of any rights (including the Avalon Patent Rights) or before
such lawsuit is settled or compromised, the Parties shall promptly
consult and reasonably cooperate in good faith with one another to
minimize the extent to which the rights granted by this Agreement
(including the Avalon Patent Rights) are materially adversely affected
by any such act, settlement or compromise.
7.2.4 Infringement of Intellectual Property Rights of Third Parties. If
either Party becomes aware of an allegation by a Third Party of
infringement resulting from the practice of the Avalon Patent Rights or
MedImmune Patent Rights, or in the event of the initiation of any legal
action by or against MedImmune or Avalon with regard to any alleged
infringement of the Avalon Patent Rights or MedImmune Patent Rights,
such Party (the "NOTIFYING PARTY") shall promptly notify the other
Party of all relevant facts and circumstances known by the Notifying
Party in connection therewith. The Parties shall meet to discuss in
good faith whether or not both Parties agree that such Third Party
rights are necessary to conduct the Research Program or to make, have
made, use, offer for sale, sell, supply or import a Product, and which
Party if any shall institute an action against said Third Party or
secure such Third Party rights. If either MedImmune or Avalon institute
an action pursuant hereto, such instituting Party shall in a timely
manner keep the other Party informed and provide copies to such other
Party of all pleadings and other documents as such other Party may
reasonably request regarding all such proceedings or actions instituted
by said instituting party. Each Party shall control the defense of any
infringement action brought against such a Party by a Third Party, and
if such an action is brought against both Parties, the Parties shall
cooperate with each other in the defense thereof.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
8. CONFIDENTIALITY.
8.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, the Parties agree that, for
the term of this Agreement and for ten (10) years thereafter, each
Party (the "RECEIVING PARTY"), receiving hereunder any Confidential
Information of the other Party (the "DISCLOSING PARTY") shall keep such
Confidential Information confidential and shall not publish or
otherwise disclose or use such Confidential Information for any purpose
other than as provided for in this Agreement except for Confidential
Information that the Receiving Party can establish:
(a) was already known to the Receiving Party (other than under
an obligation of confidentiality), at the time of disclosure by the
Disclosing Party and such Receiving Party has documentary evidence to
that effect;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure or development, as the case
may be, and other than through any act or omission of a Party in breach
of this confidentiality obligation;
(d) was disclosed to that Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation
to the Disclosing Party not to disclose such information to others;
(e) was independently discovered or developed by or on behalf
of the Receiving Party without the use of the Confidential Information
belonging to the other Party and the Receiving Party has documentary
evidence to that effect.
8.2 AUTHORIZED DISCLOSURE AND USE.
8.2.1 Disclosure. Notwithstanding the foregoing SECTION 8.1, each Party
may disclose Confidential Information belonging to the other Party to
the extent such disclosure is reasonably necessary to:
(a) file or prosecute patent applications claiming Avalon or
MedImmune Inventions;
(b) prosecute or defend litigation arising under this
Agreement;
(c) exercise rights hereunder provided such disclosure is
covered by terms of confidentiality similar to those set forth herein;
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(d) comply with applicable governmental laws and regulations;
(e) permit disclosure by MedImmune to governmental or other
regulatory agencies in order to gain or maintain approval to conduct
clinical trials or to market Product, but such disclosure may be made
only to the extent necessary to obtain such authorizations; and
(f) permit Avalon to share terms of this agreement under
appropriate Confidentiality Agreement with bona fide potential
investors and related parties or in connection with a disposition or
proposed disposition of Avalon's assets or stock.
(g) is deemed necessary by MedImmune to be disclosed to
sublicensees, Affiliates, agents, consultants, or other Third Parties
for the research, development, manufacture, use or commercialization of
Product, or in connection with a licensing transaction related to
Product or loan, financing or investment or acquisition, merger,
consolidation or similar transaction (or for such entities to determine
their interest in performing such activities), in each case on the
condition that any Third Parties to whom such disclosures are made
agree to be bound by confidentiality and non-use obligations
substantially similar to those contained in this Agreement.
Notwithstanding the disclosures permitted under subsections (d), (e),
(f) and (g), if the information, documents or materials covered by such
subsection are otherwise protected by obligations of confidentiality,
then the confidentiality obligations of SECTION 8.1 shall still apply,
consistent with such disclosures. In the event a Party shall deem it
necessary to disclose pursuant to this SECTION 8.2.1, Confidential
Information belonging to the other Party, the Disclosing Party shall to
the extent possible give reasonable advance notice of such disclosure
to the other Party and take reasonable measures to ensure confidential
treatment of such information.
8.2.2 Use. Each Party shall have the right to refuse to accept the
other Party's Confidential Information. Each Party shall use at least
the same standard of care with regard to the Confidential Information
of the other Party as it uses to protect its own confidential
information. Each Party shall have the right to use the other Party's
Confidential Information in carrying out its respective
responsibilities under this Agreement in the conduct of the Research
Program or a Development Program, or for any purpose under this
Agreement.
8.3 SEC FILINGS. Either Party may disclose the terms of this Agreement to
the extent required, in the reasonable opinion of such Party's legal
counsel, to comply with applicable laws, including without limitation
the rules and regulations promulgated by the United States Securities
and Exchange Commission (the "SEC"). Notwithstanding the foregoing,
before disclosing this Agreement or any of the terms hereof pursuant to
this SECTION 8.3, the Parties will consult with one another on the
terms of this Agreement to be redacted in making any such disclosure.
If a Party discloses this Agreement or any of
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the terms hereof in accordance with this SECTION 8.3, such Party
agrees, at its own expense, to seek confidential treatment of portions
of this Agreement or such terms, as may be reasonably requested by the
other Party.
8.4 PUBLICATIONS. During the term of the Research Program, each Party will
submit to the other Party for review and approval all proposed
academic, scientific and medical publications and public presentations
relating to the Research Program, Lead Compounds, Clinical Candidates,
or Products for review in connection with preservation of Patent Rights
and/or to determine whether Confidential Information should be modified
or deleted. Written copies of such proposed publications and
presentations shall be submitted to the non-publishing Party no later
than * before submission for publication or presentation and the
non-publishing Party shall provide its comments with respect to such
publications and presentations within * of its receipt of such written
copy. The review period may be extended for an additional * in the
event the non-publishing Party can demonstrate a reasonable need for
such extension including, but not limited to, the preparation and
filing of patent applications. By mutual agreement, this period may be
further extended. Avalon and MedImmune shall each comply with standard
academic practice regarding authorship of scientific publications and
recognition of contribution of other parties in any publications
relating to the Research Program, Lead Compounds, Clinical Candidates,
or Products. In no event, however, will Avalon publish or release any
information regarding the MedImmune Antibodies, MedImmune Cells and/or
Avalon Target Know-How without the prior, express written consent of
MedImmune.
8.5 PUBLIC ANNOUNCEMENTS. On the Effective Date, the Parties shall issue a
press release relating to this Agreement or activities conducted
hereunder in the form attached hereto as Exhibit D. A Party may issue
any subsequent press releases or other written public disclosures
relating to this Agreement or activities conducted hereunder (each a
"PROPOSED DISCLOSURE") upon prior written approval of the other Party,
such approval not to be unreasonably withheld; provided, however, that
each Party will use commercially reasonably efforts to submit to the
other Party a draft of such Proposed Disclosure for review and comment
by the other Party at least * prior to the date on which such Party
would like to release such Proposed Disclosure. No approval of the
other Party shall be required if a subsequent press release solely
discloses information that has previously been approved. Neither Party
shall use the name, trademark, trade name or logo of the other Party or
its employees in any publicity or news release relating to this
Agreement or its subject matter, without the prior express written
permission of the other Party. Neither Party shall disclose the
existence or terms of this Agreement except as provided in SECTIONS 8.2
AND 8.3.
8.6 NO IMPLIED RIGHTS. Except as otherwise set forth in this Agreement,
nothing herein shall be construed as giving either Party any right,
title, interest in or ownership of the Confidential Information of the
other Party. For the purposes of this Agreement, specific
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
information disclosed as part of Confidential Information shall not be
deemed to be in the public domain or in the prior possession of the
Receiving Party merely because it is embraced by more general
information in the public domain or by more general information in the
prior possession of the Receiving Party.
9. REPRESENTATIONS AND WARRANTIES.
9.1 REPRESENTATIONS AND WARRANTIES OF AVALON. Avalon, subject to this
ARTICLE 9, hereby represents, warrants, and covenants to MedImmune
that, as of the Effective Date:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of its
incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by has been duly authorized by all requisite corporate action and does
not require any shareholder action or approval;
(c) it has the power, authority and right to execute and
deliver this Agreement and to execute the licenses and otherwise
perform its obligations hereunder;
(d) it shall at all times comply with all applicable material
laws and regulations relating to its activities under this Agreement;
(e) it has no knowledge of any rights of any Third Parties
that would be infringed by the practice of the Avalon Patent Rights
and/or Avalon Know-How in connection with activities to be conducted
hereunder;
(f) it has the right to use the Avalon Chemical Library as
contemplated in this Agreement;
(g) there are no claims, judgments or settlements against
Avalon pending or to its knowledge, threatened, seeking to invalidate
the Avalon Patent Rights and/or Avalon Know-How; and
(h) there are no royalty payments owed by Avalon to Third
Parties for the Avalon Compound Patent Rights, Avalon Compound
Know-How, Avalon Patent Rights and/or Avalon Know-How.
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9.2 REPRESENTATIONS AND WARRANTIES OF MEDIMMUNE. MedImmune, subject to this
ARTICLE 9, hereby represents, warrants, and covenants to Avalon that,
as of the Effective Date:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of its
incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by has been duly authorized by all requisite corporate action and does
not require any shareholder action or approval;
(c) it has the power and authority to execute and deliver this
Agreement and to execute the licenses and otherwise perform its
obligations hereunder;
(d) it shall at all times comply with all applicable material
laws and regulations relating to its activities under this Agreement;
(e) senior management of MedImmune has no knowledge of any
rights of any Third Parties that would be infringed or are being
infringed by the use of the MedImmune Patent Rights, the MedImmune
Know-How and/or the MedImmune Antibodies in connection with the
activities contemplated to be conducted under this Agreement; and
(f) it has no notice of any claims, judgments or settlements
against MedImmune pending, or to its knowledge, threatened, seeking to
invalidate the MedImmune Technology.
9.3 NO INCONSISTENT AGREEMENTS. Neither Party has in effect and after the
Effective Date neither Party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its
obligations under this Agreement or violate any law or regulation of
any court, governmental body or administrative or other agency having
jurisdiction over it.
9.4 DISCLAIMER. THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE ALL OF WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED.
9.5 LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY OR THEIR
AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE,
CONSEQUENTIAL OR TREBLE DAMAGES, WHETHER BASED
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ON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY; PROVIDED, HOWEVER, THAT
THIS LIMITATION SHALL NOT LIMIT THE INDEMNIFICATION OBLIGATION OF SUCH
PARTY UNDER THE PROVISIONS OF ARTICLE 11 FOR SUCH DAMAGES CLAIMED BY A
THIRD PARTY.
10. TERM AND TERMINATION.
10.1 TERM. The term of this Agreement will commence on the Effective Date
and extend, unless this Agreement is terminated earlier in accordance
with this ARTICLE 10 or until the earlier of (i) fifty (50) years or
(ii) such time as MedImmune's obligation to pay royalties with respect
to the sale of such Product in all countries expires in accordance with
SECTION 5.2.3 (the "TERM"). For the avoidance of doubt, the Parties
acknowledge and agree that certain licenses may survive the termination
or expiration of this Agreement in accordance with the provisions of
Sections 10.4 and 10.5.
10.2 EXPIRATION. If, at any time after the expiration of Stage III of the
Research Program, MedImmune has determined not to select a Clinical
Candidate, this Agreement shall expire effective as of the date that
MedImmune provides written notice that no Clinical Candidate will be
selected; provided, however, that if one or more Options have been
exercised in accordance with SECTION 5.3, then the applicable
provisions of this Agreement shall survive to the extent necessary to
give effect thereto. Subject to SECTION 10.4(d), in the event of
expiration of this Agreement pursuant to this SECTION 10.2, all
licenses granted hereunder will automatically expire, and expiration of
this Agreement shall not relieve the Parties of any obligation accruing
prior to such expiration.
10.3 TERMINATION.
10.3.1 Material Breach.
(a) If either Party believes that the other Party (the
"BREACHING PARTY") is in material breach of this Agreement (including
without limitation any material breach of the representations or
warranties made in SECTION 9.1 and SECTION 9.2 of this Agreement), then
the non-breaching Party may deliver notice to the Breaching Party
specifying the material breach. For all breaches other than a failure
to make a payment, the allegedly Breaching Party shall have * to either
cure such breach or, if cure cannot be reasonably effected within
such * period, to deliver to the other Party within that period a plan
for curing such breach, which may or may not be accepted by such other
Party in such other Party's sole discretion. Such a plan shall set
forth a program for achieving cure as rapidly as practicable. Following
delivery of such plan, the Breaching Party shall use diligent efforts
to carry out the plan and cure the breach as promptly as practicable.
For any breach arising from a failure to make a payment, the
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
allegedly Breaching Party shall have * to cure such breach.
Notwithstanding the foregoing, if MedImmune reasonably and in good
faith disputes whether a payment is due or the amount of such payment,
MedImmune shall have the right to pay to Avalon only the undisputed
amount, and either Party shall have the right to initiate dispute
resolution under ARTICLE 13 to determine whether the amount in dispute
is payable. In such event, the disputed payment or amount thereof shall
not be due until there is a final determination as to the amount that
is payable by MedImmune, and interest shall be due on any amounts
determined to have been payable to Avalon in accordance with the
provisions of SECTION 5.2.7.
(b) An election of remedy by a Party for a material breach of
this Agreement under this SECTION 10.3 on one occasion shall not
constitute a waiver as to any other remedy that may be available to
such Party under this SECTION 10.3 as to any material breach on another
occasion.
10.3.2 Termination by MedImmune.
MedImmune shall have the right to terminate this Agreement in the
entirety or with respect to one or more countries in which MedImmune
and/or its Affiliates is not then and shall not thereafter,
manufacture, have manufactured, market, have marketed, sell, have sold,
import or have imported any Product (provided that if MedImmune and/or
its Affiliates are then marketing or selling Product in such country,
it shall have the right to sell off left over inventory in accordance
with its then-current practices and subject to the payment of royalties
to Avalon under Section 5.2.3, at the option of MedImmune and/or its
Affiliates, as the case may be), for any reason other than material
breach by Avalon, upon * prior written notice to Avalon, if such
termination notice is provided to Avalon during the Research Program,
or (ii) upon * prior written notice to Avalon, if such termination
notice is provided to Avalon after the Research Program terminates
(such notice, the "MEDIMMUNE TERMINATION NOTICE"). Upon any termination
of this Agreement with respect to one or more countries (and not in its
entirety), the Territory shall thereafter exclude the countries to
which the MedImmune Termination Notice applies.
10.3.3 Termination for Insolvency.
(a) If voluntary or involuntary proceedings by or against a
Party are instituted in bankruptcy under any insolvency law, or a
receiver or custodian is appointed for such Party, or proceedings are
instituted by or against such Party, in each of the foregoing cases
only if it is for dissolution of such Party, which proceedings, if
involuntary, shall not have been dismissed within * after the date of
filing, then this Agreement may be terminated by the other Party.
(b) All rights and licenses granted under this Agreement are,
and shall be deemed to be, for purposes of Section 365(n) of the United
States Bankruptcy Code,
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
licenses of rights to "intellectual property" as defined under Section
101(56) of the United States Bankruptcy Code. The Parties agree that in
the event of the commencement of a bankruptcy proceeding by or against
one Party hereunder under the United States Bankruptcy Code, the other
Party shall be entitled to complete access to any such intellectual
property, and all embodiments of such intellectual property, pertaining
to the rights granted in the licenses hereunder of the Party by or
against whom a bankruptcy proceeding has been commenced, subject,
however, to payment of the fees, milestone payments and royalties set
forth in this Agreement through the effective date of any termination
hereunder.
10.4 EFFECT OF TERMINATION OR EXPIRATION.
(a) Product. In the event of termination of this Agreement
other than under SECTION 10.3.1 for Avalon's uncured material breach,
MedImmune shall have * to complete the manufacture of any Product and *
to sell or otherwise dispose of any Products in stock or in the course
of manufacture at the time of termination, all subject, however, to
payments of royalty and accounting as provided herein, even if such
royalty obligations arise from transactions subsequent to the effective
date of termination, and termination of this Agreement shall not
relieve the Parties of any obligation accruing prior to such
termination.
(b) If MedImmune terminates this Agreement under SECTION
10.3.1(a) for Avalon's uncured material breach, at MedImmune's option
and upon written notice to Avalon, MedImmune's license pursuant to
SECTION 2.1 shall become a perpetual license; provided, however,
MedImmune shall continue to fulfill all of MedImmune's financial
obligations hereunder, excluding milestone but including royalty
obligations as specified herein. MedImmune may reduce such payment
and/or royalty obligations by the amount of monetary damage suffered by
MedImmune as a direct result of Avalon's breach of this Agreement.
Avalon shall, as soon as practicable after such termination, return or
cause to be returned to MedImmune all Information in tangible form, and
all substances or compositions delivered or provided by MedImmune, as
well as any other material provided by MedImmune in any medium.
(c) If Avalon terminates this Agreement under SECTION
10.3.1(a) for MedImmune's uncured material breach, at Avalon's option
and upon written notice to MedImmune, all rights and licenses granted
in this Agreement to MedImmune shall automatically expire and
expiration of this Agreement shall not relieve the Parties of any
obligations accruing prior to such expiration.
(d) If MedImmune or Avalon terminates this Agreement in its
entirety for any reason (other than MedImmune's uncured material breach
under SECTION 10.3.1(a)) or upon the expiration of this Agreement, *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
(e) Sublicenses. In the event that this Agreement is
terminated by Avalon under SECTION 10.3.1(a), Avalon agrees to grant to
existing sublicensees designated by MedImmune (other than an Affiliate
of MedImmune) direct licenses with Avalon, which license shall be of
the same scope sublicensed to such sublicensee, substituting the name
of such sublicensee for MedImmune, provided that such sublicensee (i)
agrees to be bound to Avalon under the terms and conditions of this
Agreement and (ii) the sublicensee is not in breach of its sublicense
agreement with MedImmune.
(f) Accrued Rights and Obligations. Except for termination for
breach of diligence obligations under ARTICLE 12 for which a sole
remedy is provided therein and any dispute subject to dispute
resolution under ARTICLE 13, termination or expiration of this
Agreement shall not (i) release either Party from any liability which,
at the time of such termination or expiration, has already accrued or
which is attributable to a period prior to such termination or
expiration or (ii) preclude either Party from pursuing any rights and
remedies it may have hereunder or at law or in equity with respect to
any breach of, or default under, this Agreement. Without limiting the
generality of the foregoing, if MedImmune terminates this Agreement
during the Research Program other than for Avalon's uncured material
breach under SECTION 10.3.1, MedImmune shall be liable to Avalon for
all reasonable, non-cancellable costs and expenses directly related to
the Research Program. In addition, the Parties understand and agree
that monetary damages may not be a sufficient remedy for any breach of
this Agreement and that the non-breaching Party may be entitled to
injunctive relief as a partial remedy for any such breach, except for
termination for breach of diligence obligations under ARTICLE 12 for
which a sole remedy is provided therein and any dispute subject to
dispute resolution under ARTICLE 13.
10.5 SURVIVAL. Except as expressly provided herein, the following provisions
shall survive expiration or termination of this Agreement: *
..
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
11. INDEMNIFICATION AND INSURANCE.
11.1 INDEMNIFICATION BY MEDIMMUNE. MedImmune shall defend, indemnify and
hold harmless Avalon and its Affiliates and their respective directors,
officers, employees, shareholders and agents (each, an "AVALON
INDEMNIFIED PARTY") from and against any and all Third Party claims,
suits or demands for liabilities, damages, losses, costs and expenses
(including the reasonable fees of attorneys and other professionals)
arising out of or resulting from (i) the development, manufacture, use,
distribution or sale of any Product by MedImmune, its Affiliates,
distributors, co-marketers or sublicensees, their agents or any person
or entity that prepares or manufactures Product for or on behalf of any
of the foregoing or any person or entity who receives or obtains
Product from any source; (ii) Development and Commercialization Program
work performed by or on behalf of MedImmune other than by Avalon or a
Third Party mutually agreed upon by Avalon and MedImmune; (iii) the
performance by MedImmune of any of MedImmune's obligations under the
Research Program and/or (iv) any MedImmune representation or warranty
set forth herein being untrue in any material respect when made, or the
failure of MedImmune to perform any covenant hereunder, except in each
case of (i) - (iii) above, to the extent caused by the negligence or
willful misconduct of Avalon or any Avalon Indemnified Party.
11.2 INDEMNIFICATION BY AVALON. Avalon shall defend, indemnify and hold
harmless MedImmune, and its Affiliates and their respective directors,
officers, employees, shareholders, sublicensees and agents (each, a
"MEDIMMUNE INDEMNIFIED PARTY") from and against any and all Third Party
claims, suits or demands for liabilities, damages, losses, costs and
expenses (including the reasonable fees of attorneys and other
professionals) arising out of or resulting from (i) the performance of
Avalon's obligations under the Research Program, or (ii) any Avalon
representation or warranty set forth herein being untrue in any
material respect when made, including, but not limited to, Third Party
claims of infringement, or the failure of Avalon to perform any
covenant hereunder, except in the case of (i) above, to the extent
caused by the negligence or willful misconduct of MedImmune or any
MedImmune Indemnified Party.
11.3 PROCEDURE. Each Party will promptly notify the other in the event it
becomes aware of a claim for which indemnification may be sought
hereunder. In case any proceeding (including any governmental
investigation) shall be instituted involving any Party in respect of
which indemnity may be sought pursuant to this ARTICLE 11, such Party
(the "INDEMNIFIED PARTY") shall promptly notify the other Party (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party and
Indemnified Party shall meet to discuss how to respond to any claims
that are the subject matter of such proceeding. The Indemnifying Party
shall retain counsel reasonably satisfactory to the Indemnified Party
and shall pay the fees and expenses of such counsel related to such
proceeding. The Indemnifying Party shall have the sole right to control
the defense of any such claim or action. In any such proceeding, the
Indemnified Party shall have the right to retain its own counsel, but
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the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless the Indemnifying Party and the Indemnified
Party shall have mutually agree in writing to the retention of such
counsel. The Indemnifying Party shall not be liable for any settlement
of any proceeding effected by the Indemnified Party without its written
consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify
the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. The Indemnifying Party may settle any
such claim, demand, action or other proceeding or otherwise consent to
an adverse judgment (a) with prior written notice to the Indemnified
Party but without the consent of the Indemnified Party where the only
liability is the payment of money and the Indemnifying Party makes such
payment or (b) with the prior written consent of the Indemnified Party,
which will not be unreasonably withheld or delayed.
11.4 INSURANCE. Prior to the first sale or use in humans, whichever is
earlier, of a Product, MedImmune shall maintain and carry in full force
and effect product liability insurance (including contractual liability
coverage on MedImmune's indemnification obligations under this
Agreement), which shall provide coverage with *
..
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
12. DILIGENCE OBLIGATIONS.
12.1 ANNUAL DEVELOPMENT AND COMMERCIALIZATION PROGRAM PLAN. Upon initiation
of a Development and Commercialization Program, MedImmune shall submit
to Avalon a Development and Commercialization Program plan setting
forth in reasonable detail the activities to be pursued in that
Development and Commercialization Program during the first twelve (12)
months. Thereafter, annual updates of the Development and
Commercialization Program plan for each Contract Year in which there is
expected to be Development and Commercialization Program activity shall
be submitted to Avalon by no later than three months prior to the end
of the previous Contract Year. MedImmune shall have sole discretion for
making all decisions relating to the Development and Commercialization
of Products, provided that actions or omissions undertaken by MedImmune
in its sole discretion shall not relieve it of its obligations under
this Agreement, including its obligations to use Commercially
Reasonable Efforts in connection with the Development and
Commercialization Program as set forth in SECTION 12.3.
12.2. DEVELOPMENT AND COMMERCIALIZATION PROGRAM REPORTS. During performance
of any Development and Commercialization Program, MedImmune shall
submit to Avalon semi-annual reports setting forth in reasonable detail
the past half calendar year's activities, and the prospective
activities for the next half calendar year.
12.3 MEDIMMUNE'S COMMERCIALLY REASONABLE EFFORTS.
12.3.1 During the Term, subject to Avalon's performance of its
diligence obligations set forth in SECTION 12.4 and provided that
MedImmune has not exercised its right to terminate this Agreement under
ARTICLE 10, MedImmune shall use Commercially Reasonable Efforts to
select one or more Clinical Candidates, initiate, conduct and monitor
Development and Commercialization Programs for such Clinical
Candidates, and commercialize Products developed from such Development
and Commercialization Programs.
12.3.2 If in any Contract Year, MedImmune or its Affiliate and/or a
Sublicensee and/or a collaborator of MedImmune (including work of
Avalon under the Research Program), alone or together, has achieved any
one of the following with respect to Product, and MedImmune in such
Contract Year has not discontinued Product development, then MedImmune
shall be deemed to have complied with MedImmune's obligations under
SECTION 12.3.1 for such Contract Year:
(A) * ;
(B) * ;
(C) * ;
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
(D) * ;
(E) * ;
(F) * ;
(G) * ;
(H) * ;
(I) * ;
(j) *
; or
(K) * .
12.3.3 Subject to SECTION 12.3.4, in the event that MedImmune fails to
comply with the obligations of SECTION 12.3.1 with respect to any
Contract Year and, in addition, has not achieved any of the milestones
set forth in SECTIONS 12.3.2(a) through 12.3.2(k) during such Contract
Year, Avalon shall have the right, as the sole and exclusive remedy for
MedImmune's failure to comply therewith, to terminate this Agreement
pursuant to SECTION 10.3.1(a) by written notice to MedImmune
within * after the end of the applicable Contract Year, unless
MedImmune cures such failure prior to the expiration of * after such
notice. If MedImmune provides to Avalon a notice that MedImmune has
decided to discontinue Product development, then MedImmune shall be
deemed to have terminated this Agreement pursuant to SECTION 10.3.2.
12.3.4 If MedImmune receives a notice under SECTION 12.3.3, MedImmune
shall have the right to contest such notice by requesting arbitration
under SECTION 13.2, and if MedImmune requests such arbitration, this
Agreement shall be terminated pursuant to SECTION 12.3.3 only if in
such arbitration there is a final determination that MedImmune has not
met MedImmune's obligation under SECTION 12.3.1 in the applicable
Contract Year and, in addition, in such Contract Year none of the
events of SECTION 12.3.2(a) through 12.3.2(k) has occurred.
12.3.5 It is expressly understood that MedImmune will not be
obligated *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
. In the event that MedImmune fails to meet its obligations under
SECTION 12.3 in Europe or Japan, then Avalon shall have the right to
terminate MedImmune's licenses with respect to such Product in Europe
or Japan as the case may be by written notice to MedImmune in
accordance with SECTION 10.3.
12.4 AVALON'S COMMERCIALLY REASONABLE EFFORTS. During the Term, Avalon
agrees to use Commercially Reasonable Efforts to perform research in
accordance with the Research Program.
13. DISPUTE RESOLUTION.
13.1 GOOD FAITH NEGOTIATIONS. In the event of any dispute, disagreement or
claim between the Parties as to the interpretation of any provision of
this Agreement or the performance of obligations hereunder other than
Management Committee disputes under SECTION 3.2, the matter, upon
written request of either Party, shall first be referred to the Chief
Executive Officer of Avalon, or such other person holding a similar
position designated by Avalon from time to time, and the Chief
Executive Officer of MedImmune, or such other person holding a similar
position designated by MedImmune from time to time, for resolution.
These individuals shall, within * of when the matter is referred to
them, attempt in good faith to resolve the dispute. These individuals
may obtain the advice of other employees as they deem necessary or
advisable in order to make the decision.
13.2 ARBITRATION. Any dispute, disagreement or claim (other than a dispute
that involves the validity, scope or enforceability of patents that
arise under the patent laws of a country or a dispute under ARTICLE 3)
that cannot be resolved by the respective officers of the Parties under
SECTION 13.1 above within * after its submission, shall be settled by
binding arbitration held in Washington, DC in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
except that (a) there shall be three U.S.-licensed attorneys acting as
arbitrators, (b) the arbitration proceedings shall be subject to the
confidentiality provisions of ARTICLE 8 of this Agreement and (c) the
Parties will bear their own costs in preparing for the arbitration.
Whenever a Party decides to institute arbitration proceedings, it shall
give written notice to that effect to the other. The demand for
arbitration may be filed by either Party within a reasonable time after
the controversy or claim has arisen; provided, however, in no event
shall a demand for arbitration be made after the date when institution
of a legal or equitable proceeding based upon such claim, dispute or
other matter in question would be barred by the applicable statute of
limitations or the provisions of this Agreement. Each Party shall
select one arbitrator. The Party initiating recourse to arbitration
shall include in its notice of arbitration its appointment of an
arbitrator, and the other Party shall select the second arbitrator
within * of the date it receives such notice. The two arbitrators
selected by the Parties shall select the third arbitrator. At least one
of the arbitrators shall be a
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
licensed attorney who has represented pharmaceutical companies for at
least ten (10) years and is knowledgeable concerning the type of
subject matter at issue in the dispute. Discovery in any arbitration
proceeding under this SECTION 13.2 shall be permitted with respect to
the performance by the Parties of their obligations under this
Agreement and such other matters as the arbitrators may determine (it
being the intent of the Parties that full discovery occur with respect
to the salient facts). The arbitrators shall render a decision within
* of the completion of the arbitration. The arbitrators shall award
costs and expenses, including reasonable attorneys' fees, to the Party
in whose favor the arbitral award has been granted. The award of the
arbitrators shall be in writing and shall be binding on the Parties,
and judgment upon the award rendered by the arbitrators may be entered
in any federal court having jurisdiction. Any decision or award made by
the arbitrators shall be in accordance with the terms and conditions of
this Agreement and shall not be inconsistent with the rights and
obligations of the Parties as set forth in this Agreement. Nothing in
this Agreement bars the right of either Party to obtain preliminary or
permanent injunctive relief against threatened conduct that will cause
it loss or damage, in accordance with the rules for obtaining
injunctive relief in any jurisdiction, including the applicable rules
for obtaining restraining orders and preliminary injunctions. The
Parties hereby waive their right to a jury trial in connection with any
matter submitted for resolution by arbitration hereunder, except as
provided in the last sentence hereof. Notwithstanding the foregoing,
disputes regarding the validity, inventorship, scope or enforceability
of patents shall be submitted to a court of competent jurisdiction in
the country where such patent has issued or such patent application is
filed.
14. MISCELLANEOUS.
14.1 ASSIGNMENT. Neither this Agreement nor any interest hereunder shall be
assignable by either Party without the prior written consent of the
other Party, except for assignment in connection with a Change of
Control of a Party or in connection with a transfer by MedImmune of all
or substantially all of the assets to which this Agreement is related.
This Agreement shall be binding upon the successors and permitted
assigns of the Parties and the name of a Party appearing herein shall
be deemed to include the names of such Party's successors and permitted
assigns to the extent necessary to carry out the intent of this
Agreement. Any assignment not in accordance with this SECTION 14.1
shall be void.
14.2 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be
necessary or reasonably appropriate in order to carry out the purposes
and intent of the Agreement or to better assure and confirm unto such
other Party its rights and remedies under this Agreement.
14.3 FORCE MAJEURE. Neither Party shall be liable to the other for delay or
failure in the performance of the obligations on its part contained in
this Agreement if and to the extent that such failure or delay is due
to circumstances beyond its control which it could not have avoided by
the exercise of reasonable diligence. It shall notify the other Party
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
promptly should such circumstances arise, giving an indication of the
likely extent and duration thereof, and shall use all commercially
reasonable efforts to resume performance of its obligations as soon as
practicable, provided, however, that neither Party shall be required to
settle any labor dispute or disturbance. Actions taken by a Party to
resume performance of its obligations with respect to the Research
Program shall be taken in consultation with the MC.
14.4 CORRESPONDENCE AND NOTICES. Correspondence, reports, documentation,
notices and any other communication in writing between the Parties
pursuant to this Agreement shall be delivered by hand, sent by
registered mail, return receipt requested, postage prepaid or sent by
facsimile transmission (receipt verified) to the employee or
representative of the other Party who is designated by such other Party
to receive such written communication. Notices shall be deemed
effective given and received upon personal delivery, the fifth day
following mailing sent by registered or certified mail, or upon
transmission of facsimile (with telephonic notice).
All correspondence to Avalon shall be addressed as follows:
Avalon Pharmaceuticals
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Avalon Pharmaceuticals
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All correspondence to MedImmune shall be addressed as follows:
MedImmune, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President, Corporate Development
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to the same address: Legal Affairs
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14.5 AMENDMENT. No amendment, modification or supplement of any provision of
this Agreement shall be valid or effective unless made in writing and
signed by a duly authorized officer of each Party.
14.6 WAIVER. No provision of the Agreement shall be waived by any act,
omission or knowledge of a Party or its agents or employees except by
an instrument in writing expressly waiving such provision and signed by
a duly authorized officer of the waiving Party. Such waiver shall not
be deemed a waiver of any other right hereunder or of any other breach
or failure by a Party whether of similar nature or otherwise.
14.7 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be, as to such jurisdiction and
to the extent practicable, modified so as to make it valid, legal and
enforceable and to maintain as nearly as practicable the intent of the
Parties without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
14.8 DESCRIPTIVE HEADINGS; INTERPRETATION. The section headings contained in
this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms. The words "include," "includes" and "including" shall be deemed
to be followed by the phrase "but not limited to." All references
herein to Articles, Sections and Exhibits shall be deemed references to
Articles and Sections of, and Exhibits to, this Agreement unless the
context shall otherwise require. All Exhibits attached to this
Agreement shall be deemed incorporated herein by reference as if fully
set forth herein. Words such as "herein," "hereof," "hereto," "hereby"
and "hereunder" refer to this Agreement and to the Exhibits, taken as a
whole. Except as otherwise expressly provided herein: any reference in
this Agreement to any law shall include corresponding provisions of any
successor law and any regulations and rules promulgated pursuant to
such law or such successor law.
14.9 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the substantive laws of the State of New York, without
regard to conflict of law principles thereof.
14.10 ENTIRE AGREEMENT. This Agreement and the Exhibits thereto, constitute
the full and entire understanding and agreement among the Parties with
regard to the subject matter hereof and no Party shall be liable or
bound to any other Party in any manner by any
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representations, warranties, covenants, or agreements except as
specifically set forth herein or therein. Nothing in this Agreement,
express or implied, is intended to confer upon any Party, other than
the Parties hereto and their respective successors and assigns, any
rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided herein.
14.11 INDEPENDENT CONTRACTORS. It is expressly agreed that the Parties are
independent contractors under this Agreement. Nothing herein contained
shall be deemed to create an employment, agency, joint venture or
partnership relationship between the Parties hereto or any of their
agents or employees, or any other legal arrangement that would impose
liability upon one Party for the act or failure to act of the other
Party. Neither Party shall have any express or implied power to enter
into any contracts or commitments or to incur any liabilities in the
name of, or on behalf of, the other Party, or to bind the other Party
in any respect whatsoever.
14.12 DEBARMENT. Each Party agrees that it will not use, in any capacity, in
connection with any of its obligations to be performed under this
Agreement any individual who has been debarred under the FD&C Act or
the Generic Drug Enforcement Act.
14.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by facsimile or otherwise, each of which need not contain
the signature of more than one Party but all such counterparts taken
together shall constitute one and the same agreement and shall be
deemed an original.
14.14 CUMULATIVE REMEDIES. Except as set forth in Section 12.3.3, no remedy
referred to in this Agreement is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to in
this Agreement or otherwise available under law.
14.15 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the
drafting Party shall not apply.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, duly authorized representatives of the Parties have
duly executed this Agreement to be effective as of the Effective Date.
AVALON PHARMACEUTICALS, INC. MEDIMMUNE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Ph.D. By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO Title: SVP, Corporate Development
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EXHIBIT A - RESEARCH PROGRAM
A.1. GENERAL. The purpose of the Research Program is to apply Avalon
Technology to the goal of discovering and optimizing Small Molecules
that can block the activity of the * . In addition, the Research
Program will apply Avalon Technology to the goal of defining Target
Biomarkers that can characterize the activity of MedImmune Antibodies
or other pharmaceutical agents, which block * .
The Research Program shall consist of three stages that are
characterized by specific research activities. During Stage I, Avalon
will conduct METS profiling *
During Stage II, Avalon will conduct HITS
screening of the Avalon Chemical Library on * in order to identify
Compound Hits that produce the desired response profile across the gene
Signature Set. Such Compound Hits will be organized into Compound
Families. Avalon and MedImmune shall further characterize Compound Hits
and/or Compound Families in relevant secondary assays, and Avalon and
MedImmune shall select Lead Compounds and/or Compound Families to be
advanced into Stage III. During Stage III, Avalon and MedImmune will
perform Lead Compound Optimization on Lead Compounds with the goal of
defining and selecting Clinical Candidates.
A.2 STAGE I
A.2.1 Collaborative Duties. Within * execution of this Agreement, the
Project Team shall meet and identify the * , * , and * for
initiation of Stage I of the Research Program. The Project Team may
identify further * , and * to be used during Stage I while Stage I
is being conducted. * .
At this time, we anticipate profiling treatments of at least one target
cell line with the following kinds of reagents in Stage I: *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Initially, target cells will be treated individually with each of these
reagents and profiled by METS analysis. This will establish baseline
expression profiles for each of these reagents treated in isolation
* .
A.2.2 MedImmune Duties. Within * after the first meeting of the Project
Team, MedImmune shall provide any *, * and * to Avalon, along with any
MedImmune Know-How necessary for Avalon to perform the Stage I
research. MedImmune shall also provide to Avalon samples of any
Reference Compounds that are in its possession, if a decision is made
by the Project Team to pursue profiling of such agents.
A.2.3 Avalon Duties. Upon receipt of the * , *, MedImmune Know-How
and Reference Compounds (if any), Avalon will treat the Reference and
MedImmune Cells with the * and perform METS profiling of said
treatments. *
Avalon will conduct all relevant
data analyses (including the use of bioinformatics and other analytical
tools) required to establish * gene Signature Sets associated with
blocking the activity of * .
A.3 STAGE II
A.3.1. Collaborative Duties. The MC will review the data and
recommendations from Avalon concerning the pilot screen of
approximately * compounds selected from the Avalon Chemical Library
(see below). At its discretion, based upon the analysis of screening
data from the pilot screen, the MC may recommend further refinement of
a gene Signature Set prior to the screening of the remaining compounds
* in the Avalon Chemical Library. If the data from the pilot screen
appear satisfactory to the MC, then the MC will recommend the screening
of the remaining compounds in the Avalon Chemical Library.
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
A.3.2 Avalon Duties.
(a) Avalon will transfer and validate the relevant gene Signature Sets
obtained from Stage I onto the HITS quantitative polymerase chain
reaction platform. Avalon will then perform a pilot screen against a
target cell used in Stage I. In the pilot screen, Avalon will test
approximately * compounds selected from the Avalon Chemical Library.
Data from the pilot screen will be analyzed by Avalon to evaluate the
performance of the screen and the suitability of the selected gene
Signature Sets. Following the pilot screen and upon approval by the MC,
the remaining compounds in the Avalon Chemical Library (approximately *
compounds) will be screened and Compound Hits will be identified by
Avalon. Although Avalon estimates that approximately * Compounds from
the Avalon Chemical Library may induce a gene signature similar enough
to the Signature Sets obtained from Stage I to warrant further
analysis, Avalon makes no warranty or representation as to how many, if
any, Compounds will be identified pursuant to this SECTION A.3.2(a).
(b) Avalon will re-screen any Compound Hits identified in SECTION
A.3.2(a) at least once using the same HITS assay employed in SECTION
A.3.2(a), in order to confirm the activity originally identified in the
primary HITS screen. Avalon estimates, but does not warrant or
represent, that approximately *.
(c) Avalon will group any Compound Hits identified by the HITS assays
of SECTIONS A.3.2(a) and A.3.2(b) into Compound Families based on
similarities in function and chemical scaffold.
(d) Avalon will *
(e) Avalon shall choose representative, confirmed Compound Hits from
each Compound Family and subject such Compound Hits to METS profiling,
to generate global gene expression profiles for each confirmed Compound
Hit Family. The criteria used to select these Compounds from the
Compound Families shall be determined by
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
Avalon and shall include considerations of expected toxicity, expected
pharmacokinetics, solubility and ability to easily modify the chemical
structure.
A.3.3 MedImmune Duties: MedImmune will recommend relevant secondary
assays (non-METS assay) for the characterization of hits identified
from screening during Stage II. MedImmune will conduct testing of
compound hits in relevant (non-METS) secondary assays. When MedImmune
conducts such testing, Avalon will transfer compound to MedImmune
without any information on chemical structure and MedImmune will not
determine or have any Third Party determine the structures of the
compounds provided. Alternately, MedImmune will transfer MedImmune
Know-How for the performance of such assays to Avalon, provided that
resources and FTE's to conduct such assays are available at Avalon. In
such cases, MedImmune will pay for the performance of such assays at
Avalon. MedImmune shall participate in the selection of Lead Compounds
for Lead Optimization and recommend such Lead Compounds to the
MedImmune Executive Committee for approval. The MedImmune Executive
Committee shall review such recommendations and approve the initiation
of Stage III, in its sole discretion.
A.4 STAGE III
A.4.1 Collaborative Duties. For each Compound Family selected by
MedImmune under SECTION A.3.3, some or all of the Compound Hits within
that Compound Family shall be designated Lead Compounds and subjected
to Lead Compound Optimization. The MC shall review progress of Lead
Compound Optimization and shall ultimately make the decision on
selection of Clinical Candidates.
A.4.2 Avalon Duties.
Avalon shall use standard medicinal and combinatorial chemistry to
synthesize compound Analogs during Lead Compound Optimization.
Throughout the optimization process, Avalon shall employ T-SAR and METS
profiling of Lead Compounds and Lead Compound Analogs to monitor and
maintain activity that mimics the Signature Set generated in Stage I.
The METS profiling will also be used to monitor global gene activity
and identify subgroups of Analogs based upon changes in gene
expression. Throughout the optimization process, Avalon shall also use
RACETraCK to rapidly address in vivo activity of Lead Compounds or
Compound Analogs, and identify those Lead Compounds or Lead Compound
Analogs with the best activity profile. It is anticipated that
MedImmune will conduct animal studies and will provide the necessary
cells and/or tissues from such studies to Avalon for the isolation of
RNA for use in a RACETraCK assessment; however, only Avalon shall
perform the actual RACETraCK assessment of that RNA.
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Any Compound within a Compound Family undergoing optimization under
this SECTION A.4, which is discovered to not inhibit the Target or have
a modulating activity in the Target pathway shall no longer be
considered part of the Avalon Technology, and shall no longer be
exclusively licensed to MedImmune pursuant to SECTION 2.1(a).
A.4.3 MedImmune Duties. MedImmune shall be responsible for * of
Compounds and Analogs generated from screening or during Lead Compound
Optimization. RACETraCK profiling and analysis of any cells or tissues
isolated from such animal models will be performed by Avalon. MedImmune
shall designate at least * , or present good reasons to the MC why no
Clinical Candidate has been selected. If MedImmune selects a Clinical
Candidate, then it must use Commercially Reasonable Efforts to initiate
a Development and Commercialization Program and commercialize a
Product.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
EXHIBIT B
PROGRAM BUDGET
* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* * * * * *
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
EXHIBIT C
CERTAIN AVALON PATENT RIGHTS
1. CERTAIN AVALON PATENT RIGHTS
TITLE DESCRIPTION INVENTOR APPLN. NO. ATTORNEY
DOCKET NO.
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* * * * *
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* * * * *
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INTERNAL USE NOTES:
*
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* Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * . A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
EXHIBIT D
FORM OF PRESS RELEASE
MEDIMMUNE AND AVALON PHARMACEUTICALS ANNOUNCE
COLLABORATION TO DISCOVER SMALL MOLECULE THERAPEUTIC DRUGS
FOR INFLAMMATORY DISEASES
GAITHERSBURG, MD AND GERMANTOWN, MD, JUNE XX, 2005 - MedImmune, Inc. (Nasdaq:
MEDI) and Avalon Pharmaceuticals, Inc. today announced a collaboration to
discover and develop small molecule therapeutic compounds in the area of
inflammatory disease. Avalon will use its AvalonRxTM drug discovery engine to
identify lead compounds. MedImmune will be responsible for preclinical and
clinical testing of any resulting product candidates, as well as all future
development and sales and marketing activities.
Under the terms of the agreement, Avalon will receive an upfront payment,
research and development support, milestone payments and royalties on any future
marketed products. MedImmune also has the option to initiate two additional
small molecule drug discovery collaborations with Avalon under similar terms.
"This collaboration with Avalon expands the breadth of our research to include
small molecules as potential therapies for various inflammatory diseases,"
stated ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, MedImmune's senior vice president of corporate
development. "We look forward to investigating Avalon's proprietary drug
discovery technology with the hope that our combined efforts will lead to
developing new treatment options for patients suffering from debilitating
disease."
"We are excited to be MedImmune's first partner in the discovery and
optimization of small molecule therapeutic compounds," stated ▇▇▇ ▇▇▇▇▇▇,
Avalon's chief executive officer. "It is also significant that this is our first
major program with our AvalonRx drug discovery platform in a therapeutic area
beyond our internal cancer focus."
ABOUT MEDIMMUNE
MedImmune strives to provide better medicines to patients, new medical options
for physicians, rewarding careers to employees, and increased value to
shareholders. Dedicated to advancing science and medicine to help people live
better lives, the company is focused on the areas of infectious diseases, cancer
and inflammatory diseases. With approximately 2,000 employees worldwide,
MedImmune is headquartered in Maryland. For more information, visit the
company's website at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇.
ABOUT AVALON
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Avalon Pharmaceuticals is a biopharmaceutical company focused on the discovery
and development of small molecule therapeutics for the treatment of cancer.
Avalon seeks to discover and develop novel therapeutics through the use of a
comprehensive, innovative and proprietary suite of technologies based upon
large-scale gene expression analysis which it calls AvalonRx(TM). Avalon
Pharmaceuticals was established in 1999 and is headquartered in Germantown,
Maryland.
This announcement contains, in addition to historical information, certain
forward-looking statements that involve risks and uncertainties, in particular,
related to the research and development of future small molecule products. Such
statements reflect the current views of MedImmune and/or Avalon management and
are based on certain assumptions. Actual results could differ materially from
those currently anticipated as a result of a number of factors, including risks
and uncertainties discussed in MedImmune's filings with the U.S. Securities and
Exchange Commission. There can be no assurance that such development efforts
will succeed, that the products will receive required regulatory clearance or,
even if such regulatory clearance is received, that the subsequent products will
ultimately achieve commercial success.
###
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