EXHIBIT 10.15
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
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COLLABORATION AND LICENSE AGREEMENT
between
LEXICON GENETICS INCORPORATED
and
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY
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COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (this "Agreement") is dated as
of December 17, 2003 (the "Effective Date") and is made by and between LEXICON
GENETICS INCORPORATED, a Delaware corporation ("Lexicon"), and ▇▇▇▇▇▇▇-▇▇▇▇▇
SQUIBB COMPANY, a Delaware corporation ("BMS"). Lexicon and BMS are sometimes
referred to herein individually as a "party" and collectively as the "parties."
R E C I T A L S
WHEREAS, Lexicon and BMS are each in the business of discovering,
developing and commercializing pharmaceutical products; and
WHEREAS, Lexicon is engaged in the identification and validation of
targets for use in the discovery of compounds potentially useful to prevent or
treat diseases and conditions of the central nervous system;
WHEREAS, Lexicon and BMS are interested in collaborating in the
discovery, development and commercialization of compounds for use in the
prevention or treatment of such diseases and conditions;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
The terms in this Agreement with initial letters capitalized, whether
used in the singular or the plural, shall have the meaning set forth below or,
if not listed below, the meaning designated in places throughout this Agreement.
1.1 "Affiliate" means any corporation, company, partnership, joint
venture and/or firm that controls, is controlled by or is under common control
with a party to this Agreement. For purposes hereof, "control" means (a) in the
case of corporate entities, direct or indirect ownership of more than fifty
percent (50%) of the stock or shares entitled to vote for the election of
directors; and (b) in the case of non-corporate entities, direct or indirect
ownership of more than fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
1.2 "Agreement" means this Collaboration and License Agreement,
including all Exhibits hereto.
1.3 "Alliance Manager" has the meaning set forth in Section 3.12.
1.4 "Annual Research Plan" means the plan to be developed by the
Joint Scientific Committee and approved by the Joint Management Committee for
each Contract Year, to be updated as necessary during each Contract Year,
setting forth, among other things, a master plan for the Research Program during
the Research Program Term and the matters described in Section 2.7 hereof.
1.5 "Background Materials" means BMS Background Materials and
Lexicon Background Materials.
1.6 "Background Technology" means BMS Background Technology and
Lexicon Background Technology.
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1.7 "Back-up Compound" means a Program Compound acting through the
same Selected Target as a Development Candidate and designated by the Joint
Management Committee as a back-up for such Development Candidate, including,
without limitation, any Program Compound for which the Joint Management
Committee authorizes the conduct of preclinical work sufficient to support the
filing of an IND.
1.8 "Blended Rate" means (a) the total amount of royalties (stated
in U.S. dollars) that would be payable in a Contract Year with respect to a
Product under Section 5.5.1 or 5.5.2, as applicable, [**] divided by (b) the
total Net Sales (stated in U.S. dollars) of such Product in that Contract Year,
expressed as a percentage.
1.9 "BMS" means ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company and its Affiliates.
1.10 "BMS Background Materials" means any compounds, assays or
other materials that are (a) necessary or useful for the conduct of the Research
Program, (b) Controlled by BMS, (c) utilized in the Research Program (but only
to the extent so utilized) and (d) either in BMS's or any of its Affiliates'
possession as of the Effective Date or are discovered or acquired by BMS or any
of its Affiliates during the Research Program Term but outside of the conduct of
the Research Program. BMS Background Materials excludes Selected Targets and
Program Compounds.
1.11 "BMS Background Technology" means any inventions, information,
methods, know-how, trade secrets or data that (a) are necessary or useful for
the performance of the Research Program, (b) are Controlled by BMS, (c) are
utilized in the Research Program (but only to the extent so utilized) and (d)
either are in BMS's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by BMS or any of its Affiliates during the
Research Program Term but outside of the conduct of the Research Program.
1.12 "BMS Development Compound" means any and all of the following:
(a) a Development Candidate for a BMS Target that is so
designated under Section 2.5 hereof; and
(b) any Back-up Compound(s) designated for such
Development Candidate; and
(c) any other Small Molecule Compound that acts through
the same BMS Target:
(i) that is made in the course of performing
medicinal chemistry on or optimizing such Development
Candidate and Back-up Compound(s), or performing structure
activity relationship activities using such Development
Candidate, Back-up Compound(s) or other Program Compounds
active against such BMS Target; provided that such Small
Molecule Compound [**]; or
(ii) that is [**]; and
(d) any salts of any of the foregoing.
1.13 "BMS Inactive Selected Target" has the meaning set forth in
Section 2.3.4.4.
1.14 "BMS Product" means a pharmaceutical product containing a BMS
Development Compound as an active ingredient.
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1.15 "BMS Target" means a Selected Target that is so designated
under Section 2.5 hereof.
1.16 "CNS Field" means the prevention, palliation, control or
treatment in humans of (a) depression, schizophrenia, [**], (b) Alzheimer's
disease and other cognitive disorders, (c) [**] neurodegenerative disorders,
[**].
1.17 "Compound Library Screening" means screening of compound
libraries to identify Small Molecule Compounds that are active against a
Selected Target using an assay that meets requirements (for example, with
respect to throughput) established by, or the use of which is otherwise approved
by, the Joint Scientific Committee. For purposes of this Agreement,
"commencement of Compound Library Screening" for a Selected Target means the
initiation of Compound Library Screening for such Selected Target, following
Joint Management Committee authorization, by either BMS or Lexicon.
1.18 "Confidential Information" means any information and data
received by a party (the "Receiving Party") from the other party or its
Affiliates (the "Disclosing Party") in connection with this Agreement
(including, without limitation, all information disclosed by the parties under
Article 2 hereof and any research, testing, clinical, regulatory, marketing or
other scientific or business information, plans, or data pertaining to any
Product of the Disclosing Party). Notwithstanding the foregoing, Confidential
Information shall not include any part of such information or data that:
(a) is or becomes part of the public domain other than by
unauthorized acts of the Receiving Party or its Affiliates;
(b) can be shown by written documents to have been
already in the possession of the Receiving Party or its Affiliates
prior to disclosure under this Agreement, provided such information or
data was not obtained directly or indirectly from the Disclosing Party
under an obligation of confidentiality;
(c) can be shown by written documents to have been
disclosed to the Receiving Party or its Affiliates by a Third Party,
provided such information or data was not obtained directly or
indirectly from the Disclosing Party under an obligation of
confidentiality; or
(d) can be shown by written documents to have been
independently developed by the Receiving Party or its Affiliates
without use, aid or application of Confidential Information of the
Disclosing Party.
Specific Confidential Information of a Disclosing Party shall not be deemed to
come under the foregoing exceptions merely because it is embraced by more
general information that is or becomes part of the public domain, or is known
by, disclosed to or independently developed by the Receiving Party.
1.19 "Contract Year" means (a) with respect to the first Contract
Year, the period beginning on the Effective Date and ending on December 31, 2004
(the "First Contract Year"), and (b) with respect to each subsequent Contract
Year, the twelve (12) month period beginning on the day following the end of the
First Contract Year and each succeeding twelve (12) month period thereafter
during the term of the Agreement (except that the last Contract Year shall end
on the effective date of any termination or expiration of this Agreement). Each
Contract Year (other than the First and last Contract Year) shall be divided
into four (4) "Contract Quarters" comprised of successive three (3) month
periods. In the First Contract Year, the first Contract Quarter shall begin on
the Effective Date and end on March 31, 2004, and in the last Contract Year, the
last Contract Quarter shall end on the effective date of any termination or
expiration of this Agreement.
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1.20 "Control" or "Controlled" means, with respect to any (a)
material, document, item of information, method, data or other know-how or (b)
Patent Right or other intellectual property right, the possession (whether by
ownership or license, other than by a license granted pursuant to this
Agreement) by a party or its Affiliates of the ability to grant to the other
party access, ownership, a license and/or a sublicense as provided herein under
such item or right without violating the terms of any agreement or other
arrangement with any Third Party as of the time such party would first be
required hereunder to grant the other party such access, ownership, license or
sublicense.
1.21 "Cover," "Covered" or "Covering" means, with respect to a
Patent Right, that, but for rights granted to a person or entity under such
Patent Right, the practice by such person or entity of an invention claimed in
such Patent Right would infringe a Valid Claim included in such Patent Right, or
in the case of a Patent Right that is a patent application, would infringe a
Valid Claim in such patent application if it were to issue as a patent.
1.22 "Development Candidate" means a Program Compound that has been
selected by the Joint Management Committee for full preclinical development in
preparation for the commencement of a Phase 1 Trial and that has been designated
by the Joint Management Committee as a "Development Candidate" in accordance
with Section 3.4, including, without limitation, any Program Compound for which
the Joint Management Committee authorizes the commencement of a Phase 1 Trial.
1.23 "Development Compound" means a BMS Development Compound or a
Lexicon Development Compound.
1.24 "Diligent Efforts" means the carrying out of obligations or
tasks by a party in a sustained manner using good faith commercially reasonable
and diligent efforts, which efforts shall be consistent with the exercise of
prudent scientific and business judgment in accordance with the efforts such
party devotes to products or research, development or marketing projects of
similar scientific and commercial potential. Diligent Efforts requires that
[**].
1.25 "Disclosing Party" has the meaning specified in Section 1.18
hereof.
1.26 "Effective Date" means the date specified in the initial
paragraph of this Agreement.
1.27 "Escrow Agent" means an independent Third Party consultant to
the parties with whom BMS shall deposit a list of Excluded Targets and who shall
notify Lexicon which, if any, Targets submitted in accordance with Section 2.2.4
are Excluded Targets.
1.28 "Excluded Target" means a Target that [**]. A list of such
Excluded Targets shall be provided to the Escrow Agent who shall notify Lexicon
which, if any, Targets submitted in accordance with Section 2.2.4 are Excluded
Targets. [**].
1.29 "First Commercial Sale" means the first sale for use or
consumption by the general public of a Product in a country after Regulatory
Approval has been obtained in such country. For clarity, First Commercial Sale
shall not include the sale of any Product for use in clinical trials or for
compassionate use prior to the approval of an NDA.
1.30 "FDA" means the United States Food and Drug Administration, or
the successor thereto.
1.31 "Full Phase Program" means a full medicinal chemistry and
supporting biology program involving the commitment of resources of the scope
and nature described in Exhibit A. For purposes of this Agreement, "commencement
of a Full Phase Program" means the authorization by the Joint
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Management Committee of the commencement of activities for the first Full Phase
Program for a given Selected Target.
1.32 "FTE" means the equivalent of one employee working on a
dedicated full time basis for one year (consisting of [**] hours per year of
dedicated effort) performing scientific, technical or managerial work on or
directly related to the Target Discovery Program or the Research Program, as
applicable. [**].
1.33 "Inactive Selected Target" has the meaning specified in
Section 2.3.4 hereof. Any BMS Inactive Selected Target or Lexicon Inactive
Selected Target shall remain an Inactive Selected Target unless and until it
becomes a BMS Target or Lexicon Target.
1.34 "Indemnitee" has the meaning specified in Section 10.4 hereof.
1.35 "Indemnitor" has the meaning specified in Section 10.4 hereof.
1.36 "IND" means an Investigational New Drug application filed with
the U.S. Food and Drug Administration or a similar application for the clinical
testing of a Product in human subjects filed with a foreign regulatory
authority.
1.37 "Joint Management Committee" has the meaning specified in
Section 3.1.1 hereof.
1.38 "Joint Program Inventions" has the meaning specified in
Section 7.1.3.3 hereof.
1.39 "Joint Research Project Team" has the meaning specified in
Section 3.1.2 hereof.
1.40 "Joint Scientific Committee" has the meaning specified in
Section 3.1.2 hereof.
1.41 "Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, domestic or foreign.
1.42 "Level 1 Phenotypic Analysis" means the analyses of the
phenotypes of Mutant Mice described in Exhibit B.
1.43 "Level 2 Phenotypic Analysis" means any one or more of the
analyses of the phenotypes of Mutant Mice described in Exhibit C. The Level 2
Phenotypic Analysis for a given Target shall be as determined by the Joint
Scientific Committee as set forth in Section 3.5.
1.44 "Lexicon" means Lexicon Genetics Incorporated and its
Affiliates.
1.45 "Lexicon Background Materials" means any compounds, assays or
other materials that are (a) necessary or useful for the conduct of the Research
Program, (b) Controlled by Lexicon, (c) utilized in the Research Program (but
only to the extent so utilized) and (d) either in Lexicon's or any of its
Affiliates' possession as of the Effective Date or are discovered or acquired by
Lexicon or any of its Affiliates during the Research Program Term but outside of
the conduct of the Research Program. Lexicon Background Materials excludes
Selected Targets and Program Compounds.
1.46 "Lexicon Background Technology" means any inventions,
information, methods, know-how, trade secrets or data that (a) are necessary or
useful for the performance of the Research Program, (b) are Controlled by
Lexicon, (c) are utilized in the Research Program (but only to the extent so
utilized)
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and (d) either are in Lexicon's or any of its Affiliates' possession as of the
Effective Date or are discovered or acquired by Lexicon or any of its Affiliates
during the Research Program Term but outside of the conduct of the Research
Program.
1.47 "Lexicon Development Compound" means any and all of the
following:
(a) a Development Candidate for a Lexicon Target that is
so designated under Section 2.5 hereof; and
(b) any Back-up Compound(s) designated for such
Development Candidate; and
(c) any other Small Molecule Compound that acts through
the same Lexicon Target:
(i) that is made in the course of performing
medicinal chemistry on or optimizing such Development
Candidate and Back-up Compound(s), or performing structure
activity relationship activities using such Development
Candidate, Back-up Compound(s) or other Program Compounds
active against such Lexicon Target; provided that such Small
Molecule Compound [**]; or
(ii) that is [**]; and
(d) any salts of any of the foregoing.
1.48 "Lexicon Inactive Selected Target" has the meaning set forth
in Section 2.3.4.4.
1.49 "Lexicon Product" means a pharmaceutical product containing a
Lexicon Development Compound as an active ingredient.
1.50 "Lexicon Target" means a Selected Target that is so designated
under Section 2.5 hereof.
1.51 "LexVision Agreement" means the LexVision Database and
Collaboration Agreement dated September 26, 2000 between Lexicon and BMS, as
amended.
1.52 "LG617 Compound" means a Small Molecule Compound acting
through the LG617 Target.
1.53 "LG617 License" has the meaning specified in Section 4.4
hereof.
1.54 "LG617 Negotiation Period" has the meaning specified in
Section 4.4 hereof.
1.55 "LG617 Option Period" has the meaning specified in Section 4.4
hereof.
1.56 "LG617 Target" means the Target designated by Lexicon as
LG617.
1.57 "Listed Target" means [**].
1.58 "MAA Approval" means the final marketing authorization
approval, including full marketing, pricing and reimbursement approval, for the
applicable Product, in [**].
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1.59 "MAA Filing" means the filing of a marketing authorization
application or other application for marketing approval for the applicable
Product filed (a) in [**] or (b) in the European Medicines Evaluation Agency
under the centralized European procedure.
1.60 "Mid-Phase Program" means a mid-phase medicinal chemistry and
supporting biology program involving the commitment of resources of the scope
and nature described in Exhibit D.
1.61 "Mutant Mouse" means mouse cell or mouse containing a selected
mutation in the murine ortholog of a Target that is made or produced by Lexicon.
A "line of Mutant Mice" means Mutant Mice having the same selected mutation.
1.62 "NDA" means a New Drug Application filed with the FDA required
for marketing approval for the applicable Product in the U.S.
1.63 "NDA Approval" means the final approval of an NDA by the FDA
for the applicable Product in the U.S.
1.64 "NDA Filing" means the acceptance by the FDA of the filing of
an NDA for the applicable Product.
1.65 "Net Sales" means, with respect to a Product, the gross amount
invoiced by BMS, Lexicon, Sublicensees of BMS or Lexicon, and their respective
Affiliates for sales of such Product to customers which are not Affiliates (or
which are Affiliates but are end users of such Product), less:
(a) trade, quantity and cash discounts actually allowed;
(b) discounts, refunds, rebates, chargebacks, retroactive price
adjustments, billing errors and any other allowances (including,
without limitation, government-mandated and managed health
care-negotiated rebates) actually granted which effectively reduce the
net selling price;
(c) product returns credits and allowances actually granted;
(d) any tax imposed on the production, sale, delivery or use of
the product (excluding federal, state or local taxes based on income);
(e) freight, postage, shipping, customs duties, excises, tariffs,
surcharges, other governmental charges (excluding federal, state or
local taxes based on income) and insurance charges actually allowed or
paid for delivery of Products;
(f) payments or rebates paid with respect to such Product in
connection with state or federal Medicare, Medicaid or similar programs
in the United States or in connection with similar programs in other
countries in which there are sales; and
(g) amounts repaid, credited or written off by reason of
uncollectible debt, and amounts written off on account of factoring of
receivables to the extent consistent with the selling party's normal
business practices.
Such amounts shall be determined from the books and records of BMS, Lexicon,
Sublicensees of BMS or Lexicon, and their respective Affiliates, as the case may
be, maintained in accordance with U.S. generally accepted accounting principles,
consistently applied.
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In the event the Product is sold as part of a Combination Product (as
defined below), the Net Sales from the Combination Product, for the purposes of
determining royalty payments, will be determined by multiplying the actual Net
Sales of the Combination Product by the fraction A/(A+B) where A is the average
sale price of the Product when sold separately in finished form and B is the
total average sale price of the other active ingredient or ingredients in the
Combination Product sold separately in finished form.
In the event that the average sales price of both the Product and the
other active compounds or ingredients in the Combination Product cannot be
determined, the adjusted Net Sales of the Combination Product for the purpose of
determining royalties shall be negotiated by the parties in good faith and in an
equitable manner consistent with the intent of this Agreement.
The Net Sales price for a Combination Product in a given country will
be calculated once each Contract Year and such price will be used during all
applicable royalty reporting periods for the entire Contract Year for such
country, absent extraordinary conditions or events. When determining the average
sale price of a Product or the other active compounds or ingredients in the
Combination Product, the average sale price will be calculated using data
arising from the twelve (12) months preceding the calculation of the Net Sales
price for the Combination Product. As used above, the term "Combination Product"
means any Product sold in conjunction with any other active component(s)
(whether packaged together or in the same therapeutic formulation).
If BMS, Lexicon, Sublicensees of BMS or Lexicon, or any of their
respective Affiliates sells any Product to a customer which also purchases other
products or services from such seller or any of its Affiliates in a bundled,
combination or capitated transaction (a "Bundled Transaction"), and such seller
discounts the sales price of the Product to a greater degree than such seller or
its Affiliates generally discount the price of its other products to such
customer, then the aggregate amount received with respect to such Bundled
Transaction shall be allocated to Net Sales pursuant to the formula set forth in
Exhibit E hereto. For purposes of the foregoing, "discounting" includes
establishing the list price at lower than the seller's normal pricing level.
Free samples of Product and/or the disposition of Product for, or the
use of Product in, pre-clinical or clinical (Phase 1 - 3) trials or other
market-focused (Phase 4) trials in which Product is provided to patients without
any payment shall not result in any Net Sales.
1.66 "Patent Prosecution" has the meaning specified in Section
7.2.1 hereof.
1.67 "Patent Rights" means all existing patents and patent
applications and all patent applications hereafter filed and patents hereafter
issued, including, without limitation, any continuations, continuations-in-part,
divisions, provisionals or any substitute applications, any patent issued with
respect to any such patent applications, any reissue, reexamination, renewal or
extension (including any supplemental protection certificate) of any such
patent, and any confirmation patent or registration patent or patent of addition
based on any such patent, and all foreign counterparts of any of the foregoing.
1.68 "Phase 1 Trial" shall mean a human clinical trial [**] that is
intended to initially evaluate the safety, pharmacokinetic and/or
pharmacological effect of a Product in subjects in accordance with or otherwise
in satisfaction of the requirements of 21 CFR 312.21(a). For purposes of this
Agreement, "commencement of a Phase 1 Trial" for a Product shall mean the first
dosing of such Product into a human patient in a Phase 1 Trial.
1.69 "Phase 2 Trial" means a human clinical trial [**] that is
intended to initially evaluate the dosing and effectiveness of a Product for a
particular indication or indications in patients with the disease
8
or indication under study in accordance with or otherwise in satisfaction of the
requirements of 21 CFR 312.21(b). For purposes of this Agreement, "commencement
of a Phase 2 Trial" for a Product shall mean the first dosing of such Product
into a human patient in a Phase 2 Trial.
1.70 "Phase 3 Trial" means a pivotal human clinical trial [**] the
results of which could be used to establish safety and efficacy of a Product as
a basis for an NDA in accordance with or otherwise in satisfaction of the
requirements of 21 CFR 312.21(c). For purposes of this Agreement, "commencement
of a Phase 3 Trial" for a Product shall mean the first dosing of such Product
into a human patient in a Phase 3 Trial.
1.71 "Post Opt-out Product" has the meaning set forth in Section
2.5.3.3.
1.72 "Pre-existing Obligations" means:
(a) [**]; and
(b) [**].
1.73 "Product" means a BMS Product or a Lexicon Product.
1.74 "Product Licensee" means (a) with respect to a BMS Product,
BMS, and (b) with respect to a Lexicon Product, Lexicon.
1.75 "Product Licensor" means (a) with respect to a BMS Product,
Lexicon, and (b) with respect to a Lexicon Product, BMS.
1.76 "Program Committee" means the Joint Management Committee or
the Joint Scientific Committee.
1.77 "Program Compound" means a Small Molecule Compound that:
(a) (i) is selected by the Joint Scientific Committee for
optimization, characterization and/or preclinical evaluation
in the conduct of the Research Program,
(ii) is Controlled by a party,
(iii) either is in a party's or any of its
Affiliates' possession as of the Effective Date or is
discovered or acquired by either or both parties or any of
their respective Affiliates during the Research Program Term
but outside the conduct of the Research Program, and
(iv) inhibits, agonizes or otherwise modulates
(i.e., acts through) a Selected Target; or
(b) is first [**] in the conduct of the Research Program;
or
(c) is [**]; or
(d) is otherwise designated a Program Compound by the
Joint Management Committee;
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provided, however, that in no event shall [**] become a Program Compound unless
such designation is affirmatively agreed to by the Joint Management Committee.
1.78 "Program Director" has the meaning specified in Section 3.2
hereof.
1.79 "Program Intellectual Property" means Program Patent Rights
and any other proprietary rights in Program Material and Program Technology.
1.80 "Program Invention" has the meaning specified in Section
7.1.3.3 hereof.
1.81 "Program Material" means (a) any Program Compounds and (b) any
material first identified or discovered in the conduct of the Research Program.
1.82 "Program Patent Rights" means any Patent Rights that are
Controlled by one or both parties and that Cover any Program Technology or
Program Materials. For clarification, such Program Patent Rights include the
entire scope of all of the claims contained in such Patent Rights.
1.83 "Program Technology" means any invention, information,
methods, know-how, trade secrets or data that (a) is Controlled by a party or
jointly by the parties and (b) either (i) relates to the use in the CNS Field of
Small Molecule Compounds acting through a Selected Target, or the use in the CNS
Field of a Selected Target to identify Small Molecule Compounds acting through
such Selected Target, or (ii) is first identified or discovered in the conduct
of the Research Program. [**]. Program Technology excludes any invention,
information, methods, know-how, trade secrets or data with respect to [**], or
the [**] acting through such Selected Target, in each case that is first
identified or discovered by a party outside of the conduct of the Research
Program; provided, however, that, [**]. In addition, Program Technology excludes
Program Materials.
1.84 "Proposed Target" means a Target proposed for designation as a
Selected Target in accordance with Section 2.3.1 hereof
1.85 "Receiving Party" has the meaning specified in Section 1.18
hereof.
1.86 "Regulatory Approval" means any and all approvals (including
any applicable governmental price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, national, multinational, state,
provincial or local regulatory agency, department bureau or other governmental
entity that are necessary for the manufacture, use, storage, import, transport,
promotion, marketing and sale of a Product in a country or group of countries.
1.87 "Released Target" means [**] or a Target designated as a
Released Target in accordance with Section 2.3.2 hereof.
1.88 "Research Program" has the meaning specified in Section 2.1.1
hereof.
1.89 "Research Program Activities" has the meaning specified in
Section 2.1.1 hereof.
1.90 "Research Program Term" has the meaning specified in Section
2.1.2 hereof.
1.91 "Research Program Costs" means the FTE costs and out-of-pocket
expenditures that are incurred after the Effective Date by a party in performing
activities approved by the Joint Management Committee in support of the Research
Program, for purposes of which the cost of an FTE shall be [**] per
10
FTE per year. Research Program Costs shall not include [**]. In addition,
Research Program Costs shall not include [**].
1.92 [**]
1.93 "Reviewing Party" has the meaning specified in Section 8.4
hereof.
1.94 "Selected Target" means any Target that is selected for
research by the Joint Management Committee in accordance with Section 2.3.2
hereof.
1.95 "Selected Target Inventions" has the meaning specified in
Section 7.1.3.2 hereof.
1.96 "Small Molecule Compound" means a chemical compound [**]. For
clarity, Small Molecule Compound specifically excludes any compound that
consists of or incorporates as an active ingredient [**] (a) a protein, (b) an
antibody or any fragment thereof, (c) an antisense product or (d) an
oligonucleotide.
1.97 "Sole Program Inventions" has the meaning specified in Section
7.1.3.3 hereof.
1.98 "Sublicensee" means (a) in the case of a BMS Product, any
Third Party which is licensed by BMS to market and sell such BMS Product, and
(b) in the case of a Lexicon Product, any Third Party which is licensed by
Lexicon to market and sell such Lexicon Product.
1.99 "Submitting Party" has the meaning specified in Section 8.4
hereof.
1.100 "Target" means [**]. Each Target shall be identified by [**].
1.101 "Target Discovery Program" has the meaning specified in
Section 2.1.1 hereof.
1.102 "Target Discovery Program Term" has the meaning specified in
Section 2.2.2 hereof.
1.103 "Territory" means all countries and jurisdictions throughout
the world.
1.104 "Third Party" means any person or entity other than Lexicon,
BMS and their respective Affiliates.
1.105 "Third Party Opportunity" has the meaning specified in Section
2.11 hereof.
1.106 "Valid Claim" means either (a) a claim of an issued and
unexpired patent which has not been held permanently revoked, unenforceable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal and
that is not admitted to be invalid or unenforceable through reissue, disclaimer
or otherwise, or (b) a claim of a [**], provided, however, that (x) [**] and (y)
[**].
ARTICLE 2. RESEARCH PROGRAM
2.1 General.
2.1.1 Objectives. The parties intend to carry out a research program
(the "Research Program") in which Lexicon and BMS will collaborate to identify,
characterize and carry out the preclinical development of Small Molecule
Compounds that act through Selected Targets for use in the CNS Field, consistent
with the objectives set forth in and the resources allocated to such
11
activities in the then-current Annual Research Plan ("Research Program
Activities"). It is intended that the Research Program will be conducted as a
unified collaborative effort with activities by the parties carried out
primarily at each party's respective facilities, and this intent shall be
reflected in the Annual Research Plans. It is further intended that each party
shall contribute to fifty (50%) of the Research Program Costs, and the Annual
Research Plans will be consistent with and provide for such equal contribution.
In support of the Research Program, Lexicon will continue its efforts, using its
technology for the generation and analysis of the phenotypes of Mutant Mice, to
identify and validate Targets with potential utility in the CNS Field (the
"Target Discovery Program").
2.1.2 Research Program Term. The Research Program shall commence on
the Effective Date and continue during the Target Discovery Program Term and
thereafter until all Selected Targets have become BMS Targets, Lexicon Targets
or Inactive Selected Targets and thereafter for so long as the parties continue
to conduct Research Program Activities with respect to any BMS Targets or
Lexicon Targets (the "Research Program Term").
2.2 Target Discovery Program.
2.2.1 Generation and Analysis of Mutant Mice. In the Target
Discovery Program, Lexicon shall complete (a) the development and ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of [**] lines of Mutant Mice and (b) Level 2 Phenotypic
Analysis of such lines of Mutant Mice, from the first [**] lines of Mutant Mice
for which Level 1 Phenotypic Analysis was completed, that displayed a phenotype
suggestive, as determined by [**], of the potential utility of the corresponding
Target in the CNS Field. [**]. Lexicon shall use Diligent Efforts to complete
such work by the end of the third Contract Year of the Research Term and, if
necessary, shall continue to use Diligent Efforts thereafter until such work is
complete, [**]. The Target Discovery Program Term shall continue until such work
is complete.
2.2.2 Target Discovery Program Term. The Target Discovery Program
shall continue until the end of the third Contract Year of the Research Program
Term (and thereafter until the work set forth in Section 2.2.1 is completed)
(the "Target Discovery Program Term"); provided that BMS shall have the option
to extend the Target Discovery Program Term for an additional two Contract Years
(which two-year period may be further extended as set forth below) on the terms
set forth below:
(a) BMS may extend the Target Discovery Program to
include the completion by Lexicon in the Target Discovery Program of
(i) the development and ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of [**] lines of
Mutant Mice (to the extent not already completed by the end of the
third Contract Year of the Research Program Term) and (ii) Level 2
Phenotypic Analysis of such lines of Mutant Mice, from such [**] lines
of Mutant Mice, that displayed a phenotype suggestive, as determined by
[**], of the potential utility of the corresponding Target in the CNS
Field. Lexicon shall use Diligent Efforts to complete such work by the
end of the fifth Contract Year of the Research Term and, if necessary,
shall continue to use Diligent Efforts thereafter until such work is
complete, [**]. The Target Discovery Program Term shall continue until
such work is complete.
(b) BMS may extend the Target Discovery Program to
include the completion by Lexicon in the Target Discovery Program of
(i) the development and ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of [**] lines of
Mutant Mice and (ii) Level 2 Phenotypic Analysis of such lines of
Mutant Mice, from such [**] lines of Mutant Mice, that
12
displayed a phenotype suggestive, as determined by [**], of the
potential utility of the corresponding Target in the CNS Field. Lexicon
shall use Diligent Efforts to complete such work by the end of the
fifth Contract Year of the Research Term and, if necessary, shall
continue to use Diligent Efforts thereafter until such work is
complete, [**]. The Target Discovery Program Term shall continue until
such work is complete.
BMS may exercise the foregoing option by delivery to Lexicon of written notice
of such exercise (specifying the subsection above under which such option is
being exercised) no fewer than [**] days before the end of the third Contract
Year of the Research Program Term.
2.2.3 Reporting and Oversight of Target Discovery Program Progress.
Lexicon shall keep the Joint Scientific Committee fully informed of the progress
of its activities under this Section 2.2. At a minimum, within [**] days
following [**] during the Target Discovery Program Term, Lexicon shall prepare,
and provide to the Joint Scientific Committee, a reasonably detailed written
summary report which shall describe (a) the work performed by Lexicon during the
preceding [**], including, without limitation, the status of Lexicon's
development of Mutant Mice and the conduct of Level 1 Phenotypic Analysis and
Level 2 Phenotypic Analysis (or only Level 1 Phenotypic Analysis if Level 2
Phenotypic Analysis has not been performed) of such Mutant Mice, and (b)
identify phenotypes identified through such ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ Analysis that are suggestive, in Lexicon's good faith
scientific judgment, of the potential utility of the corresponding Targets in
the CNS Field. [**].
2.2.4 Disclosure of Target Identity. Prior to first disclosing to
BMS the identity of any Target (by sequence or otherwise in a manner that would
reveal the identity of the Target), Lexicon shall submit the identity of the
Target to the Escrow Agent, who will notify Lexicon whether such Target matches
any Excluded Target. [**]. In the event a Target matches an Excluded Target, as
determined by the Escrow Agent, Lexicon shall promptly notify BMS of such fact
and, if requested by BMS within [**] days thereafter, shall provide BMS with the
phenotypic data relating to the corresponding line of Mutant Mice and such
additional information with respect to any Target (without disclosing the
identity of such Target) that is [**]. In such event, BMS shall have the right,
within [**] days after receiving such information, to submit to the Escrow Agent
a second list of Excluded Targets, in which case the Escrow Agent shall
determine whether the Target in question matches any Target on the second list
of Excluded Targets. If the Target in question does not match any Target on the
second list of Excluded Targets, the Escrow Agent shall so notify Lexicon and
BMS, and such Target shall not be considered an Excluded Target and may be
considered for proposal as a Proposed Target. BMS shall not be entitled to
designate a Target as an Excluded Target following Lexicon's disclosure to BMS
of the identity of such Target in accordance with this Section 2.2.4. The
parties may mutually agree in writing to redesignate any Excluded Target as a
non-Excluded Target that may be considered for proposal as a Proposed Target.
2.2.5 [**].
2.3 Target Selection.
2.3.1 Proposal of Targets. Following Lexicon's completion of ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of a line of Mutant Mice corresponding to a Target [**], BMS
and Lexicon shall each have the right to propose such Target for inclusion in
the Research Program as a Selected Target. Within [**] following the proposal by
either party that such Proposed Target be considered for designation as a
Selected Target [**], BMS and Lexicon shall provide the Joint Scientific
Committee with the following information:
13
(a) all relevant scientific data in BMS's possession (and
which BMS has the right to disclose to Lexicon) and all relevant
scientific data in Lexicon's possession (and which Lexicon has the
right to disclose to BMS) relating specifically to such Proposed
Target, including, without limitation, any bioinformatics and
expression analyses conducted by BMS or Lexicon with respect to such
Proposed Target, and any phenotypic data with respect to mice
(including, without limitation, Mutant Mice) with a mutation in the
murine ortholog of such Proposed Target;
(b) the results of genomic analysis and druggability
assessment with respect to such Proposed Target by BMS and/or Lexicon;
(c) [**]; and
(d) [**].
2.3.2 Designation of Proposed Targets as Selected Targets or
Released Targets. Within [**] following receipt by the Joint Scientific
Committee of a complete package of all of the information set forth in Section
2.3.1 for a Proposed Target, the Joint Scientific Committee shall make a
recommendation to the Joint Management Committee as to whether to designate such
Proposed Target as a Selected Target or a Released Target. [**] In the event the
members of the Joint Management Committee are unable to reach agreement by
consensus regarding such designation within [**] following its receipt of the
Joint Scientific Committee recommendation, [**].
2.3.3 [**].
2.3.4 Inactive Selected Targets.
2.3.4.1 A Selected Target shall become an "Inactive Selected
Target" upon the occurrence of any of the following: (a) at such time
that there has been no material activity by either party with respect
to studies to further evaluate the utility of such Selected Target or
the development of assays or the discovery or development of Program
Compounds acting through such Selected Target for a period of [**], and
[**]; (b) upon the election of a party that does not wish to proceed
with the discovery or development of Program Compounds acting through a
Selected Target, when the other party does wish to proceed, such that
such other party could proceed with the discovery or development of
Program Compounds acting through such Inactive Selected Target, without
the participation of the party making such election [**]; or (c) upon
the election of the Joint Management Committee, in order to equalize
each party's participation in the Research Program (measured by
Research Program Costs), such that one party could proceed with the
discovery or development of Program Compounds acting through such
Inactive Selected Target, without the participation of the other party.
2.3.4.2 The Joint Management Committee shall determine how
the parties shall proceed with respect to the Inactive Selected Target;
provided that, in the event that one party desires to proceed with the
discovery or development of Program Compounds acting through such
Inactive Selected Target, and the other party does not wish to proceed
with such discovery and development efforts in the Research Program (or
if one party has been given the opportunity to pursue the discovery or
development of Program Compounds acting through such Inactive Selected
Target under Section 2.3.4.1(b) or (c) above), such party may elect to
proceed with such discovery or development for its own
14
account (using Diligent Efforts), without participation of the other
party. In such case, (a) the other party shall reasonably cooperate
with the party electing to proceed with the discovery and development
of Program Compounds acting through such Inactive Selected Target, at
the developing party's expense, in transitioning such activities to
such developing party (including, without limitation, the transfer of
relevant Program Material) and (b) upon the commencement of a Phase 1
Trial for a Program Compound acting through such Inactive Selected
Target (and notwithstanding anything to the contrary in Section 2.5),
such Inactive Selected Target shall then be designated as and treated
as a BMS Target or Lexicon Target (depending on the party that proceeds
with such discovery and development) for all purposes, except that the
milestone payments and royalties payable with respect to BMS Products
(under Sections 5.4.1 and 5.5.1) or Lexicon Products (under Sections
5.4.2 and 5.5.2), as the case may be, shall be [**] of those otherwise
payable. Prior to the commencement of a Phase 1 Trial for a Product
acting through an Inactive Selected Target, such Inactive Selected
Target shall remain designated as an Inactive Selected Target.
2.3.4.3 If neither party elects to proceed with such
discovery and development of Program Compounds acting through such
Inactive Selected Target for its own account, [**].
2.3.4.4 An Inactive Selected Target for which BMS proceeds
with the discovery and development of Program Compounds acting through
such Inactive Selected Target, without the participation of Lexicon, as
set forth above, shall be designated as a "BMS Inactive Selected
Target." An Inactive Selected Target for which Lexicon proceeds with
the discovery and development of Program Compounds acting through such
Inactive Selected Target, without the participation of BMS, as set
forth above, shall be designated as a "Lexicon Inactive Selected
Target."
2.4 Conduct of Research Program.
2.4.1 Scope. Following the designation of a Selected Target, the
parties will use Diligent Efforts, under the direction of the Joint Management
Committee and Joint Scientific Committee, to carry out the following principal
activities with respect to the Selected Target: (a) to carry out studies to
further evaluate the biology and the utility of the Selected Target ([**]), (b)
to develop assays for such Selected Target amenable to Compound Library
Screening, (c) to conduct Compound Library Screening against such Selected
Target, (d) to carry out a Mid-Phase Program to develop lead compounds suitable
to chemically recapitulate the phenotype seen in the Mutant Mice for the
Selected Target, (e) to carry out a follow-up Full Phase Program with the
objective of identifying Program Compounds meeting the criteria required for
designation as Development Candidates that are suitable for further development,
and (f) to carry out preclinical work on selected Development Candidates and
Back-up Compounds in preparation for Phase 1 Trials. The parties will carry out
other specific activities in support of these principal activities.
2.4.2 Efforts. The Joint Management Committee shall adopt project
progression guidelines, including criteria for the selection of Program
Compounds, Development Candidates and Back-up Compounds for the Research
Program. [**]. The parties shall conduct the Research Program in good scientific
manner in accordance with such project progression guidelines and in compliance
with applicable Laws. Each party shall use Diligent Efforts to conduct the
activities of the Research Program that are assigned to it in the
then-applicable Annual Research Plan, and each shall devote sufficient resources
to timely perform such respective activities. While the parties acknowledge and
agree that neither party guarantees the success of the Research Program
15
or any individual task undertaken thereunder, each party agrees that it will
perform the activities assigned to it under the Research Program in a
professional manner in accordance with the highest industry standards.
2.4.3 Resources. Over the course of the Research Program, tasks
under the Research Program will be allocated between the parties with the goal
that each party's participation in the Research Program (based on FTE
utilization and out-of-pocket expenditures) and Research Program Costs will be
substantially equal. Particular tasks and responsibilities shall be assigned in
a manner consistent with each party's respective capabilities, capacity and
expertise. For purposes of this Agreement, "out-of-pocket expenditures"
includes, but is not limited to, the cost of subcontractors related to the
Research Program, but specifically excludes the cost of laboratory supplies,
laboratory space and capital equipment. Either party may at its sole discretion
reduce its required contribution to the Research Program Costs by designating
one or more Selected Targets as Inactive Selected Targets that may be pursued by
the other party as contemplated in Section 2.3.4.
2.4.4 FTE Levels. The parties anticipate that the combined total
personnel the parties will commit to the Research Program will start at an
average of [**] FTEs for the First Contract Year and will escalate to an average
of [**] FTEs for the Second Contract Year, [**] FTEs in the Third Contract Year
and [**] FTEs for the Fourth Contract Year (i.e., these are the expected number
of FTEs to be included in the Research Program Costs). For clarification, the
number of FTEs referenced in the previous sentence shall not include Lexicon
FTEs working on the Target Discovery Program, except as set forth in Section
2.2.5. Each party agrees in good faith to expedite the hiring and utility of
such FTEs as early in the applicable Contract Year as possible. In the event
that the Research Program generates more projects that qualify for lead
optimization than are contemplated by the foregoing resource commitment, the
parties agree to discuss in good faith a possible increase in the number of FTEs
devoted to the Research Program, and may discuss changes in the allocation of
Research Program Costs; provided that any such increase in the number of FTEs or
change in the allocation of Research Program Costs shall be subject to the
mutual agreement of the parties. The Annual Research Plans shall set forth
specific FTE levels for each Contract Year to be assigned to specific
activities.
2.4.5 Subcontractors. In accordance with Section 2.4.3, the parties
will endeavor to optimize the allocation of their resources for the conduct of
the Research Program. As necessary and in furtherance of the Research Program,
however, either party may enter into research-related agreements or subcontracts
in accordance with this Section 2.4.5; provided that (a) none of the rights of
the other party hereunder are diminished or otherwise adversely affected as a
result of such subcontracting, (b) such party obtains the written approval of
the other party prior to engaging any subcontractor, which approval shall not be
unreasonably withheld or delayed, (c) the subcontractor undertakes in writing
obligations of confidentiality and non-use regarding the other party's
Confidential Information that are substantially the same as those undertaken by
BMS and Lexicon pursuant to Article 8 hereof, and (d) where possible, the
subcontractor agrees in writing to assign to the party inventions made by such
subcontractor in performing services for the party. In the event a party
performs one or more of its obligations under the Research Program through a
subcontractor, then such Party shall at all times be responsible for the
performance of such subcontractor. The Joint Management Committee shall decide
whether the cost of such agreement shall be shared equally between the parties
or if the cost is to be borne by one party and whether it can be allocated to
offset obligations with respect to FTE levels as set forth in Section 2.4.4 of
this Agreement.
16
2.4.6 Reports. Each party shall submit [**] reports to the Joint
Management Committee, and additional reports as may be required by the
then-current Annual Research Plans, detailing its activities under the Research
Program. The Joint Management Committee shall use such [**] reports to monitor
the parties' respective contributions to the Research Program. The Joint
Management Committee may amend the Annual Research Plan as necessary to maintain
substantial equality in resources devoted and participation by the parties over
the course of the Research Program, as measured by Research Program Costs.
2.4.7 Adjustments. If either party believes that the parties are not
devoting substantially equal resources and participation to the Research
Program, measured by the aggregated Research Program Costs incurred by each
party, such party may submit the matter to the Joint Management Committee in
writing, providing a reasonably detailed description of its reasons for such
belief. Taking into account historical and prospective participation and
resource devotion of the parties during the current Contract Quarter and the
immediately following Contract Quarter, the Joint Management Committee shall
take such steps as may be reasonably necessary to ensure substantial equality in
resources devoted to and participation by the parties in the Research Program
including, with respect to any out-of-pocket expenditures, a reimbursement by
one party to the other party. In addition or as an alternative to taking steps
to reallocate resources and participation in the Research Program, the Joint
Management Committee may, by agreement, take one or more of the following
actions in order to equalize each party's participation in the Research Program
(measured by the aggregated Research Program Costs): (a) designate a Selected
Target as an Inactive Selected Target, such that one party could proceed with
the discovery or development of Program Compounds acting through such Inactive
Selected Target, without the participation of the other party (and such that the
developing party's activities with respect to such Inactive Selected Target
would no longer be included in the Research Program Costs) or (b) provide for
the payment by one party to the other party of one-half of the Research Program
Costs attributable to unmatched FTEs provided by such other party in support of
Research Program Activities. In addition, a party may elect to designate a
Selected Target as an Inactive Selected Target to be pursued by the other party
as set forth in Section 2.3.4.1(b), and upon such election, the party making
such election shall notify the Joint Management Committee if it wishes to
maintain the level of its FTE contribution to the Research Program Costs by
allocating FTEs to another Selected Target or to reduce the total number of FTEs
the party contributes to the Research Program Costs. At the request of a party,
the other party shall permit an independent, certified accountant appointed by
the requesting party and reasonably acceptable to the other party, at reasonable
times and upon reasonable notice but no more than [**], to examine, at the sole
cost of the requesting party, the records of the other party to verify the
accuracy of any reports submitted by the other party to the Joint Management
Committee regarding the Research Program Costs devoted to the Research Program
by such party.
2.5 Development and Commercialization of Products.
2.5.1 Designation of BMS Targets and Lexicon Targets. Upon the
commencement of a Phase 1 Trial for the first pharmaceutical product acting
through a given Selected Target that contains a Development Candidate as an
active ingredient, BMS will have the first option, exercisable by written notice
to Lexicon, to obtain exclusive rights under Section 4.1.1.3 and Section 4.2.1
with respect to such Selected Target, upon the exercise of which option (a) such
Selected Target shall be designated as a "BMS Target," (b) BMS shall then be the
Product Licensee with respect to such BMS Target and (c) the exclusive licenses
granted to BMS under Section 4.1.1.3 and Section 4.2.1 shall apply to such BMS
Target. BMS shall deliver written notice to Lexicon within [**] days of the
commencement of such Phase 1 Trial of its election whether or not to be the
Product Licensee for such Selected Target. If BMS fails, within such
17
[**] period, to deliver written notice to Lexicon of its election whether or not
to be the Product Licensee for such Selected Target, Lexicon shall provide
notice to BMS advising BMS that such notice by BMS is required. If BMS does not
remedy such failure within [**] days following Lexicon's notice, then Lexicon
shall have the option to obtain exclusive rights under Section 4.1.2.3 and
Section 4.2.2 with respect to such Selected Target, upon the exercise of which
option (a) such Selected Target shall be designated as a "Lexicon Target," (b)
Lexicon shall then be the Product Licensee with respect to such Lexicon Target
and (c) the exclusive licenses granted to Lexicon under Section 4.1.2.3 and
Section 4.2.2 shall apply to such Lexicon Target.
2.5.2 Responsibility for Development and Commercialization
Activities. From and after the time that a party is designated as the Product
Licensee with respect to a Selected Target, such party shall then have full
responsibility (including responsibility for funding, resourcing and
decision-making) for all research, development and commercialization activities
relating to Development Compounds and Products that act through such Selected
Target, subject to the provisions of Section 2.5.3 and Article 6 hereof.
2.5.3 Continuation of Research Program Activities.
2.5.3.1 The party that is designated as the Product Licensee
with respect to a Selected Target may, at its option, request that
Research Program Activities (including but not limited to work on
Back-up Compounds) continue following the designation of such Selected
Target as a BMS Target or Lexicon Target, as applicable. In such event,
the parties shall continue to carry out such Research Program
Activities with respect to such Selected Target as may be reasonably
requested by the Product Licensee (with the allocation of
responsibilities determined by the Joint Management Committee and
reflected in the Annual Research Plans) until the earlier of (a) the
first NDA Approval or MAA Approval of a Product acting through such
Selected Target or (b) the Product Licensor notifies the Product
Licensee of its election to discontinue further Research Program
Activities with respect to such Selected Target.
2.5.3.2 In the event the Product Licensor notifies the
Product Licensee of its election to discontinue further Research
Program Activities with respect to such Selected Target, (a) the
Product Licensor shall have no further obligation with respect to
further Research Program Activities related to such Selected Target
other than to reasonably cooperate with the Product Licensee, at the
Product Licensee's expense, in transitioning such activities to the
Product Licensee (including, without limitation, the transfer of
relevant Program Material), (b) no further activities of the Product
Licensee related to such Selected Target shall be considered Research
Program Activities for purposes of the parties' participation in the
Research Program or Research Program Costs and (c) the milestone
payments and royalties with respect to BMS Products (under Sections
5.4.1 and 5.5.1) or Lexicon Products (under Sections 5.4.2 and 5.5.2),
as the case may be, that are Post Opt-out Products (as defined below)
shall be [**].
2.5.3.3 As used in this Agreement, a "Post Opt-out Product"
shall mean a Product acting through a Selected Target for which the
Product Licensor has elected to discontinue further Research Program
Activities under this Section 2.5.3, which Product does not contain as
an active ingredient a Development Candidate or Back-up Compound for
which [**].
2.5.3.4 The milestone payments and royalties with respect to
BMS Products (under Sections 5.4.1 and 5.5.1) or Lexicon Products
(under Sections 5.4.2 and 5.5.2) (a)
18
that are Post Opt-out Products and that contain [**] as an active
ingredient shall be [**] and (b) that are Post Opt-out Products and
that do not contain [**] as an active ingredient shall be [**].
2.6 Exclusivity.
2.6.1 During the Research Program Term, each party shall work
exclusively with the other party under the terms of the Agreement with respect
to discovery and development activities directed to identifying and developing
Small Molecule Compounds that act through Selected Targets, on a Selected
Target-by-Selected Target basis, until the later to occur of:
(a) such time as the applicable Selected Target either:
(i) becomes an Inactive Selected Target, or
(ii) is designated as a BMS Target or a Lexicon
Target and either (A) the Product Licensee has obtained an NDA
Approval or MAA Approval of a Product acting through such
Selected Target or (B) the Product Licensor has notified the
Product Licensee of its election to discontinue further
Research Program Activities with respect to such Selected
Target; or
(b) such time as the specific and substantial medical
utility of such Selected Target in the CNS Field is or becomes
[**].
The expiration or termination of the parties' exclusivity obligations with
respect to a Selected Target under this Section 2.6.1 shall not be construed as
granting any right or license under any Background Materials, Background
Technology or Program Intellectual Property related thereto.
2.6.2 During the Target Discovery Program Term, Lexicon shall work
exclusively with BMS and shall not enter into discussions with any Third Party
with respect to activities directed to the identification of novel Targets for
the identification and development of Small Molecule Compounds for use in the
CNS Field, provided that Lexicon may pursue discussions with third parties with
respect to Released Targets and Inactive Selected Targets that the parties have
agreed to out-license. During the Target Discovery Program Term, Lexicon shall
work exclusively with BMS under the terms of the Agreement with respect to all
Targets identified by Lexicon as of the Effective Date and thereafter as having
potential utility in the CNS Field, with the exception of Lexicon's LG617 Target
(which is subject to Section 4.4) and Released Targets.
2.6.3 Except as otherwise provided for in this Agreement, and
without granting any right or license under any Lexicon Background Materials or
Lexicon Background Technology with respect thereto, for a period of [**] years
following the proposal that a Proposed Target be considered for designation as a
Selected Target under Section 2.3.2, BMS shall not, unless such Proposed Target
was so designated, research, develop or commercialize any pharmaceutical product
for any indication within the CNS Field that specifically targets such Proposed
Target. For the avoidance of doubt, the parties agree that this covenant not to
compete is not meant to restrict BMS from researching, developing and/or
commercializing pharmaceutical products that do not specifically target a
Proposed Target but that nevertheless bind to such Proposed Target; provided
that such pharmaceutical products specifically target, and achieve their
intended physiological effects by binding to, a Target other than the Proposed
Target. Without granting any right or license, BMS's obligations under this
Section 2.6.3 with respect to a Proposed Target shall terminate on the earlier
of:
19
(a) the medical utility in the disclosed indication of
the Proposed Target is or becomes [**]; or
(b) [**].
2.7 Annual Research Plan.
2.7.1 The Joint Scientific Committee shall prepare and the Joint
Management Committee shall approve the Annual Research Plan for every Contract
Year (other than the First Contract Year) at least [**] prior to the
commencement of such Contract Year. The Annual Research Plan for the First
Contract Year shall be prepared by the Joint Scientific Committee and approved
by the Joint Management Committee within [**] after the Effective Date.
2.7.2 The Joint Management Committee shall update and amend, as
appropriate, the then-current Annual Research Plan from time to time.
2.7.3 Each Annual Research Plan shall contain the specific research
objectives to be achieved during the relevant Contract Year, the specific
activities to be performed under the Research Program during such year and the
timeline for performing such activities, and shall designate which party shall
be responsible for performing each of such activities.
2.7.4 Each Annual Research Plan shall be consistent with the other
terms and conditions of this Agreement, including without limitation the
objectives set forth in Section 2.1.1 and the terms and conditions set forth in
Section 2.4, and each Annual Research Plan for Contract Years after the First
Contract Year shall be substantially the same in form, including the items
itemized in, the Annual Research Plan for the First Contract Year.
2.8 Research Program Records.
2.8.1 All work conducted by each party in the course of the Research
Program shall be completely and accurately recorded, in reasonable detail and in
good scientific manner, in separate laboratory notebooks. On reasonable notice,
and at reasonable intervals, each party shall have the right to inspect and copy
all such records of the other party reflecting Program Technology or work done
under the Research Program, to the extent reasonably required to carry out its
respective obligations and to exercise its respective rights hereunder. The
parties acknowledge and agree that neither party guarantees the success of the
Research Program tasks undertaken hereunder.
2.8.2 In order to protect the parties' Patent Rights under U.S. law
in any inventions conceived or reduced to practice during or as a result of the
Research Program, each party agrees to maintain a policy that requires its
employees to record and maintain all data and information developed during the
Research Program in such a manner as to enable the parties to use such records
to establish the earliest date of invention and/or diligence to reduction to
practice. At a minimum, the policy shall require such individuals to record all
inventions generated by them in standard laboratory notebooks or other suitable
means that are dated and corroborated by non-inventors on a regular,
contemporaneous basis.
2.9 Disclosure of Research Program Results. Subject to restrictions imposed
by a party's confidentiality obligations to any Third Party with respect to
Background Materials or Background Technology, each party will disclose to the
Joint Scientific Committee all Program Technology that is discovered, invented
or made by such party during the course of the Research Program and that is
useful
20
in or relates to the Research Program, including, without limitation,
information regarding Selected Targets, Small Molecule Compounds identified in
the Research Program through the use of Selected Targets, activities of such
Small Molecule Compounds, derivatives and results of in vitro and in vivo
studies, assay techniques and new assays. Such Program Technology will be
promptly disclosed to the Joint Scientific Committee, with meaningful
discoveries or advances being communicated as promptly as practicable after such
information is obtained or its significance is appreciated. Upon written request
by any member of the Joint Scientific Committee, each party will provide the
other with copies of the raw data generated in the course of the Research
Program, if reasonably necessary to the other party's work under the Research
Program. Any information disclosed pursuant to this Section 2.9 may be used by
the other party solely for the purposes of the Research Program or as otherwise
expressly permitted in this Agreement.
2.10 Material Transfer. In order to facilitate the Research
Program, either party may provide to the other party certain Program Materials
and Background Materials Controlled by the supplying Party for use by the other
party in furtherance of the Research Program. All such Program Materials shall
be considered the Confidential Information of both parties and shall be subject
to the restrictions in Article 8. All Background Materials shall be considered
the Confidential Information of the supplying Party and shall be subject to the
restrictions in Article 8. Except as otherwise provided under this Agreement,
all such Program Materials and Background Materials delivered to the other party
shall remain the sole property of the supplying party, shall be used only in
furtherance of the Research Program and solely under the control of the other
party and its Affiliates, shall not be used or delivered to or for the benefit
of any Third Party without the prior written consent of the supplying party and
shall not be used in research or testing involving human subjects. The Program
Materials and Background Materials supplied under this Section 2.10 must be used
with prudence and appropriate caution in any experimental work, since not all of
their characteristics may be known. THE PROGRAM MATERIALS AND BACKGROUND
MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.
2.11 Third Party Opportunities. In the event that a party is
presented with an opportunity to obtain a license from a Third Party for the
development and commercialization of a Small Molecule Compound acting through a
Selected Target (a "Third Party Opportunity"), then the party may pursue such
Third Party Opportunity, but only in the manner provided in this Section 2.11.
For purposes of Third Party Opportunities, Section 2.6.1.(a) shall not apply
[**]
2.11.1 Third Party Opportunities for Selected Targets. In
the event that a party is presented with a Third Party Opportunity for
the development and commercialization of a Small Molecule Compound
acting through a Selected Target that has not been previously
designated as an Inactive Selected Target, a BMS Target or a Lexicon
Target, then the party may pursue such Third Party Opportunity, but
only in the manner provided in this Section 2.11.1. The party shall
present the Third Party Opportunity, including all relevant terms and
conditions relating thereto (subject to any confidentiality obligations
to the Third Party), to the Joint Management Committee. In the event
that the Joint Management Committee elects to pursue such Third Party
Opportunity, then the parties shall negotiate (with one another and
with the Third Party, as appropriate) in a good faith effort to reach
an agreement whereby the Third Party Opportunity can be included as a
Product under the Agreement. In the event that the parties and the
Third Party reach an agreement to include such Third Party Opportunity
as a Product under the Agreement, then (a) [**], and (b) [**]. In the
event that the Joint Management Committee does not elect to pursue such
Third Party Opportunity, then, subject to the parties' obligations
under Section
21
2.6.1(b) and Article 8, either party shall have the right to pursue
such Third Party Opportunity and, upon completion of an agreement with
such Third Party for such Third Party Opportunity, shall, by notice to
the other party, either (i) include such Third Party Opportunity as a
Product under this Agreement, [**], or (ii) designate such Selected
Target as an Inactive Selected Target to be pursued by the other party.
2.11.2 Third Party Opportunities for Inactive Selected
Targets, BMS Targets or Lexicon Targets. In the event that a party is
presented with a Third Party Opportunity for the development and
commercialization of a Small Molecule Compound acting through a
Selected Target that has been previously designated as an Inactive
Selected Target, a BMS Target or a Lexicon Target, then the party may
pursue such Third Party Opportunity, but only in the manner provided in
this Section 2.11.2 and subject to the parties' obligations under
Section 2.6.1(b) and Article 8.
2.11.2.1 If the party pursuing such Third Party
Opportunity [**], the party shall present the Third Party
Opportunity, including all relevant terms and conditions
relating thereto (subject to any confidentiality obligations
to the Third Party), to the Joint Management Committee. In the
event that the Joint Management Committee elects to pursue
such Third Party Opportunity, then the parties shall negotiate
(with one another and with the Third Party, as appropriate) in
a good faith effort to reach an agreement whereby the Third
Party Opportunity can be included as a Product under the
Agreement. In the event that the parties and the Third Party
reach an agreement to include such Third Party Opportunity as
a Product under the Agreement, then (a) [**], and (b) [**]. In
the event that the Joint Management Committee does not elect
to pursue such Third Party Opportunity, then, subject to the
parties' obligations under Section 2.6.1(b) and Article 8,
[**] shall have the right to pursue such Third Party
Opportunity. [**].
2.11.2.2 [**].
2.11.2.3 [**].
ARTICLE 3. COLLABORATION MANAGEMENT
3.1 Program Committees.
3.1.1 Joint Management Committee. As soon as practicable
after the Effective Date, BMS and Lexicon shall establish a Joint
Management Committee (the "Joint Management Committee") comprised of
[**] representatives designated by BMS and [**] representatives
designated by Lexicon, each of whom shall have experience and seniority
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that BMS and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time.
3.1.2 Joint Scientific Committee. As soon as practicable
after the Effective Date, BMS and Lexicon shall establish a Joint
Scientific Committee (the "Joint Scientific Committee") comprised of
[**] representatives designated by BMS and [**] representatives
designated by Lexicon, each of whom shall have experience and seniority
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that BMS and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time. From time to time during the
Research Program Term, the Joint Scientific Committee may establish one
or more Joint Research Project Teams (each, a "Joint Research Project
Team") to implement various aspects of the Annual Research Plan. Such
teams shall be governed in the
22
same manner and subject to the relevant requirements as set forth herein for the
Joint Scientific Committee.
3.2 Program Directors. Each party shall appoint one of its
designees on the Joint Management Committee or the Joint Scientific Committee to
serve as a program director (each, a "Program Director") with responsibility for
overseeing the day-to-day activities of the parties with respect to the Research
Program and for being the primary point of contact between the parties with
respect to the Research Program.
3.3 Replacement of Program Committee Representatives and Program
Directors. Each party shall be free to replace its representative members of any
Program Committee and its Program Director with new appointees who have
authority to act on behalf of such party, on notice to the other party.
3.4 Responsibilities of Joint Management Committee. The Joint
Management Committee shall be responsible for overseeing and directing the
parties' interaction and performance of their respective obligations under this
Agreement. Without limiting the generality of the foregoing, its duties shall
include, and it shall be responsible for decisions with respect to, the
following:
(a) designation of Selected Targets and Released Targets
in accordance with Section 2.3.2 hereof;
(b) review and approval of Annual Research Plans;
(c) oversight of the implementation of Annual Research
Plans and allocation of resources and other activities in support of
the Research Program, including the matters contemplated by Section 2.4
hereof;
(d) [**];
(e) classification of Selected Targets as Inactive
Selected Targets in accordance with Section 2.3.4 hereof;
(f) authorization of the commencement of Compound Library
Screening for a Selected Target;
(g) determination as to which Selected Targets should be
pursued with a Mid-Phase Program and which party should perform such
Mid-Phase Program;
(h) determination as to which Selected Targets should be
pursued with a Full Phase Program and which party should perform such
Full Phase Program;
(i) establishment of criteria for designation of
Development Candidates [**] and Back-up Compounds;
(j) designation of Development Candidates [**] and
Back-up Compounds;
(k) decisions with respect to the preclinical development
of Development Candidates and Back-up Compounds leading to the
commencement of a Phase 1 Trial;
(l) prioritization of programs and activities where
resources are constrained;
23
(m) resolving matters within the responsibilities of the
Joint Scientific Committee as to which the members of the Joint
Scientific Committee are unable to reach a consensus; and
(n) addressing scientific issues and resolving
differences that may arise between the parties related to the
performance of the Target Discovery Program or the Research Program.
The Joint Management Committee shall not have the power to amend or waive
compliance with this Agreement.
3.5 Responsibilities of Joint Scientific Committee. The Joint
Scientific Committee shall be responsible for preparing for approval by the
Joint Management Committee and implementing the Annual Research Plans,
allocation of resources and other activities in support of the Research Program,
with the objective of expeditiously identifying Selected Targets and identifying
compounds meeting the criteria for designation as Development Candidates.
Without limiting the generality of the foregoing, its duties shall include (a)
establishing requirements (including, for example, with respect to throughput)
for, or otherwise approving the use of, assays for Compound Library Screening,
(b) selecting Small Molecule Compounds for optimization, characterization and/or
preclinical evaluation in the conduct of the Research Program, (c) monitoring,
reviewing and reporting on the progress of the Research Program, and (d) setting
the agenda for the Joint Management Committee for scientific and technical
matters relating to the Research Program and recommending actions by the Joint
Management Committee. The Joint Scientific Committee shall further have
responsibility during the Target Discovery Program Term for [**] monitoring and
reviewing the progress of the Target Discovery Program. The Joint Scientific
Committee shall not have the power to amend or waive compliance with this
Agreement. As appropriate, the Joint Scientific Committee shall establish
subcommittees and working groups, having an equal number of representatives of
Lexicon and BMS, which will work closely and meet frequently to further the
objectives of this Agreement.
3.6 Meetings of Program Committees. Each Program Committee shall
meet at least [**], and more frequently as the parties deem appropriate, on such
dates and at such times as the parties shall agree, on [**] days' written notice
to the other party unless such notice is waived by the parties. The first
meeting of the Joint Management Committee shall take place within [**] days
after the Effective Date, at Lexicon's facility in The Woodlands, Texas. Each
Program Committee may convene or be polled or consulted from time to time by
means of telecommunications, videoconferences or correspondence, as deemed
necessary or appropriate by the parties. To the extent that meetings are held in
person, they shall alternate between the offices of the parties unless the
parties otherwise agree.
3.7 Decisions.
3.7.1 Quorum; Voting. A quorum for a meeting of a Program
Committee shall require the presence of at least one Lexicon member (or
designee) and at least one BMS member (or designee) in person or by
telephone. All decisions made or actions taken by a Program Committee
shall be made unanimously by its members, with the Lexicon members
cumulatively having one vote and the BMS members cumulatively having
one vote; provided that, in the event the members of the Joint
Management Committee are unable to reach unanimity as to a decision
under Section [**], [**]; and provided further, that at such time that
a party is designated as a Product Licensee with respect to a Selected
Target under Section 2.5, such Product Licensee shall then have final
decision-making authority with respect to decisions concerning all
further research and development activities with respect to such
Selected Target.
24
3.7.2 Dispute Resolution.
3.7.2.1 In the event that unanimity cannot be reached by the
Joint Scientific Committee with respect to a matter that is a subject
of its decision-making authority, then the matter shall be referred for
further review and resolution to the Alliance Managers and the Joint
Management Committee. Except as provided in Section 3.7.1, in the event
that unanimity cannot be reached by the Joint Management Committee with
respect to a matter that is a subject of its decision-making authority,
then the matter shall be referred for further review and resolution to
[**]. The designated officers of each party shall use reasonable
efforts to resolve the matter within [**] days after the matter is
referred to them.
3.7.2.2 If the designated officers cannot resolve any matter
described in Section 3.4 within such [**] period, the matter shall be
referred to a Third Party arbitrator or arbitrators, in accordance with
the following procedures, whose decision shall be [**]. In such event,
the parties shall attempt to mutually agree upon a single independent
Third Party arbitrator, who shall be a scientific professional with
appropriate experience in the subject matter at issue in such
disagreement, within [**] days after the initial referral of such
matter to the designated officers. If the parties are unable to
mutually agree upon one such person, then each party shall appoint one
independent Third Party scientific professional with appropriate
experience in the subject matter at issue in such disagreement prior to
the expiration of such [**] period, and within [**] days after the
initial referral of such matter to the designated officers, such
person(s) shall select a single independent Third Party arbitrator, who
shall be a scientific professional with appropriate experience in the
subject matter at issue in such disagreement. Each party shall present
all information presented to the Joint Management Committee and all
other information as such party reasonably desires regarding such
disagreement. Within [**] days after the initial referral of such
matter to the designated officers, the arbitrator shall provide written
notice to the parties regarding his or her determination regarding such
disagreement.
3.8 Administration. The chairperson of each Program Committee
shall be designated annually on an alternating basis between the parties. The
initial chairperson shall be selected by BMS. The party not designating the
chairperson shall designate one of its representative members as secretary to
such Program Committee for such year. The chairperson shall be responsible for
calling meetings of such Program Committee, sending notices of meetings to all
members and for leading such meetings.
3.9 Minutes. Within [**] days after each Program Committee
meeting, the secretary of such Program Committee shall prepare and distribute
minutes of the meeting, which shall provide a description in reasonable detail
of the discussions had at the meeting and a list of any actions, decisions or
determinations approved by such Program Committee. The secretary shall be
responsible for circulation of all draft and final minutes. Draft minutes shall
be first circulated to the chairperson, edited by the chairperson and then
circulated in final draft form to all members of such Program Committee
sufficiently in advance of the next meeting to allow adequate review and comment
prior to the meeting. Minutes shall be approved or disapproved, and revised as
necessary, at the next meeting. Final minutes shall be distributed to the
members of such Program Committee.
3.10 Term. The Joint Scientific Committee and the Joint Management
Committee shall exist until the termination or expiration of the Research
Program Term and for such longer period as necessary to perform the
responsibilities assigned to it under this Agreement.
25
3.11 Expenses. Each party shall be responsible for all travel and
related costs for its representatives to attend meetings of, and otherwise
participate on, the Joint Scientific Committee and the Joint Management
Committee.
3.12 Alliance Managers. Each party shall appoint one senior
representative who possesses a general understanding of the scientific and
business issues relevant to this Agreement to act as its respective alliance
manager (each, an "Alliance Manager") for the relationship of the parties under
this Agreement. Each party may change its designated Alliance Manager from time
to time upon notice to the other party. Any Alliance Manager may designate a
substitute to temporarily perform the functions of that Alliance Manager. Each
Alliance Manager shall be charged with creating and maintaining a collaborative
work environment within and among the Joint Management Committee and Joint
Scientific Committee and any other committees or working groups that may be
formed pursuant to this Agreement. Each Alliance Manager will also:
(a) be the point of first referral in all matters of
conflict resolution;
(b) provide a single point of communication for seeking
consensus both internally within the respective parties organizations
and together regarding key strategy and plan issues;
(c) plan and coordinate cooperative efforts and internal
and external communications; and
(d) take responsibility for ensuring that governance
activities occur as set forth in this Agreement, in particular ensuring
that Joint Scientific Committee and Joint Management Committee meetings
occur, and that minutes are developed from such meetings, in accordance
with this Agreement, and that action items determined at such meetings
are appropriately carried out or otherwise addressed.
The Alliance Managers shall be entitled to attend meetings of any of
the Joint Scientific Committee and Joint Management Committee and other
committees that may be formed, but shall not have, or be deemed to have, any
rights or responsibilities of a member of any committee. Each Alliance Manager
may bring any matter to the attention of any committee where such Alliance
Manager reasonably believes that such matter requires such attention.
Any dispute between the parties arising under this Agreement shall be
brought to the attention of the Alliance Managers for resolution. The Alliance
Managers will endeavor to propose and define mutually acceptable solutions and
facilitate communications in an attempt to bring the dispute to a mutually
agreeable resolution. If the Alliance Managers cannot find an acceptable
solution to a dispute and if the Joint Management Committee cannot resolve any
matter properly referred to it, such dispute shall be resolved as set forth in
Section 3.7.2 or Section 12.6, as applicable.
ARTICLE 4. GRANTS OF RIGHTS
4.1 Grants of Research Licenses.
4.1.1 By Lexicon.
4.1.1.1 Selected Targets. Subject to the terms of
this Agreement and any applicable [**], during the Research
Program Term, Lexicon hereby grants to BMS and its Affiliates,
within the Territory, (a) a non-exclusive right and license
(without any right to sublicense, except as set forth below)
under Lexicon's rights in the Lexicon
26
Background Materials and the Lexicon Background Technology and
(b) a co-exclusive right and license (without any right to
sublicense, except as set forth below) under Lexicon's rights
in the Program Intellectual Property to (i) identify and
validate Selected Targets (other than Selected Targets that
have become BMS Inactive Selected Targets, Lexicon Inactive
Selected Targets, BMS Targets or Lexicon Targets) for the
identification, evaluation and optimization of Small Molecule
Compounds that are active against such Selected Targets for
use in the CNS Field, (ii) identify Small Molecule Compounds
that are active against such Selected Targets through the use
of such Selected Targets and (iii) undertake preclinical
research and evaluation of Program Compounds, in each case in
the conduct of the Research Program. Such right and license
shall include the right to grant sublicenses to Third Parties
that are approved by the Joint Management Committee.
4.1.1.2 BMS Inactive Selected Targets. Subject to
the terms of this Agreement and any applicable [**], Lexicon
hereby grants to BMS and its Affiliates, within the Territory,
(a) a non-exclusive right and license (without any right to
sublicense, except as set forth below) under Lexicon's rights
in the Lexicon Background Materials and the Lexicon Background
Technology and (b) an exclusive right and license (without any
right to sublicense, except as set forth below) under
Lexicon's rights in the Program Intellectual Property to (i)
validate BMS Inactive Selected Targets for the identification,
evaluation and optimization of Small Molecule Compounds that
are active against such Selected Targets for use in the CNS
Field, (ii) identify Small Molecule Compounds that are active
against such BMS Inactive Selected Targets through the use of
such BMS Inactive Selected Targets and (iii) undertake
preclinical research and evaluation of Small Molecule
Compounds that are active against such BMS Inactive Selected
Targets. Such right and license shall include the right to
grant sublicenses to Third Parties in connection with, and
incident to, a sublicense granted to such Third Party under
the rights and licenses granted under Section 4.2.1. The
rights and licenses granted under this Section 4.1.1.2 shall
be in effect during the Research Program Term and thereafter
so long as BMS is using Diligent Efforts in exercising its
rights under this license.
4.1.1.3 BMS Targets. Subject to the terms of this
Agreement and any applicable [**], Lexicon hereby grants to
BMS and its Affiliates, within the Territory, (a) a
non-exclusive right and license (without any right to
sublicense, except as set forth below) under Lexicon's rights
in the Lexicon Background Materials and the Lexicon Background
Technology and (b) an exclusive right and license (without any
right to sublicense, except as set forth below) under
Lexicon's rights in the Program Intellectual Property to (i)
identify Small Molecule Compounds that are active against BMS
Targets through the use of such BMS Targets and (ii) undertake
preclinical research and evaluation of Small Molecule
Compounds that are active against such BMS Targets. Such right
and license shall include the right to grant sublicenses to
Third Parties in connection with, and incident to, a
sublicense granted to such Third Party under the rights and
licenses granted under Section 4.2.1.
4.1.2 By BMS.
4.1.2.1 Selected Targets. Subject to the terms of
this Agreement and any applicable [**], during the Research
Program Term, BMS hereby grants to Lexicon and its Affiliates,
within the Territory, (a) a non-exclusive right and license
(without any right to sublicense, except as set forth below)
under BMS's rights in the BMS Background Materials and the BMS
Background Technology and (b) a co-exclusive right and license
27
(without any right to sublicense, except as set forth below)
under BMS's rights in the Program Intellectual Property to (i)
identify and validate Selected Targets (other than Selected
Targets that have become BMS Inactive Selected Targets,
Lexicon Inactive Selected Targets, BMS Targets or Lexicon
Targets) for the identification, evaluation and optimization
of Small Molecule Compounds that are active against such
Selected Targets for use in the CNS Field, (ii) identify Small
Molecule Compounds that are active against such Selected
Targets through the use of such Selected Targets and (iii)
undertake preclinical research and evaluation of Program
Compounds, in each case in the conduct of the Research
Program. Such right and license shall include the right to
grant sublicenses to Third Parties that are approved by the
Joint Management Committee.
4.1.2.2 Lexicon Inactive Selected Targets. Subject
to the terms of this Agreement and any applicable [**], BMS
hereby grants to Lexicon and its Affiliates, within the
Territory, (a) a non-exclusive right and license (without any
right to sublicense, except as set forth below) under BMS's
rights in the BMS Background Materials and the BMS Background
Technology and (b) an exclusive right and license (without any
right to sublicense, except as set forth below) under BMS's
rights in the Program Intellectual Property to (i) validate
Lexicon Inactive Selected Targets for the identification,
evaluation and optimization of Small Molecule Compounds that
are active against such Selected Targets for use in the CNS
Field, (ii) identify Small Molecule Compounds that are active
against such Lexicon Inactive Selected Targets through the use
of such Lexicon Inactive Selected Targets and (iii) undertake
preclinical research and evaluation of Small Molecule
Compounds that are active against such Lexicon Inactive
Selected Targets. Such right and license shall include the
right to grant sublicenses to Third Parties in connection
with, and incident to, a sublicense granted to such Third
Party under the rights and licenses granted under Section
4.2.2. The rights and licenses granted under this Section
4.1.2.2 shall be in effect during the Research Program Term
and thereafter so long as Lexicon is using Diligent Efforts in
exercising its rights under this license.
4.1.2.3 Lexicon Targets. Subject to the terms of
this Agreement and any applicable [**], BMS hereby grants to
Lexicon and its Affiliates, within the Territory, (a) a
non-exclusive right and license (without any right to
sublicense, except as set forth below) under BMS's rights in
the BMS Background Materials and the BMS Background Technology
and (b) an exclusive right and license (without any right to
sublicense, except as set forth below) under BMS's rights in
the Program Intellectual Property to (i) identify Small
Molecule Compounds that are active against Lexicon Targets
through the use of such Lexicon Targets and (ii) undertake
preclinical research and evaluation of Small Molecule
Compounds that are active against such Lexicon Targets. Such
right and license shall include the right to grant sublicenses
to Third Parties in connection with, and incident to, a
sublicense granted to such Third Party under the rights and
licenses granted under Section 4.2.2.
4.1.3 Restrictions on Clinical Development of Products.
Neither party nor their respective Affiliates shall administer to
humans any Product that incorporates or is derived from any Program
Compound, unless and until (and then only to the extent that) such
party has received Joint Management Committee approval or has received
a license under Section 4.2 for the clinical development and
commercialization of such Product.
4.2 Grants of Development and Commercialization Licenses.
28
4.2.1 By Lexicon. Subject to the terms of this Agreement
and any applicable [**], Lexicon hereby grants to BMS and its
Affiliates, within the Territory, an exclusive right and license, with
the right to sublicense, under Lexicon's rights in the Program
Intellectual Property to develop, make, have made, import, use, have
used, offer for sale, sell and have sold BMS Development Compounds and
BMS Products. Any sublicense under this Section 4.2.1 shall be set
forth in a written agreement containing confidentiality, non-use,
ownership of intellectual property and audit provisions consistent with
and no less restrictive than those contained herein, shall be subject
and subordinate to the terms and conditions of this Agreement, and
shall obligate the Sublicensee to make the milestone and royalty
payments required hereunder; provided that BMS shall remain responsible
for all payments due to Lexicon hereunder. BMS shall provide Lexicon
with an [**] copy of each sublicense agreement promptly after executing
the same; provided, however, that subject to the exceptions set forth
in Section 1.18, each such sublicense agreement shall be Confidential
Information of BMS.
4.2.2 By BMS. Subject to the terms of this Agreement and
any applicable [**], BMS hereby grants to Lexicon and its Affiliates,
within the Territory, an exclusive right and license, with the right to
sublicense, under BMS's rights in the Program Intellectual Property to
develop, make, have made, import, use, have used, offer for sale, sell
and have sold Lexicon Development Compounds and Lexicon Products. Any
sublicense under this Section 4.2.2 shall be set forth in a written
agreement containing confidentiality, non-use, ownership of
intellectual property and audit provisions consistent with and no less
restrictive than those contained herein, shall be subject and
subordinate to the terms and conditions of this Agreement, and shall
obligate the Sublicensee to make the milestone and royalty payments
required hereunder; provided that Lexicon shall remain responsible for
all payments due to BMS hereunder. Lexicon shall provide BMS with an
[**] copy of each sublicense agreement promptly after executing the
same; provided, however, that subject to the exceptions set forth in
Section 1.18, each such sublicense agreement shall be Confidential
Information of Lexicon.
4.3 No Grant of Other Technology or Patent Rights. Except as
otherwise expressly provided in this Agreement, under no circumstances shall a
party hereto, as a result of this Agreement, obtain any ownership interest in or
other right to any technology, know-how, patents, patent applications, gene or
genomic ▇▇▇▇▇▇▇▇ ▇▇▇▇ or information, products, or biological materials of the
other party, including items owned, controlled or developed by, or licensed to,
the other party, or transferred by the other party to said party, at any time
pursuant to this Agreement.
4.4 Right of First Offer for LG617 Target Collaboration. Lexicon
agrees that, during the period beginning on the Effective Date and ending on the
later of (a) the expiration of the Target Discovery Program Term or (b) the
commencement of a Phase 1 Trial in the U.S. for an ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇ "▇▇▇▇▇
Option Period"), BMS shall have the following right of first offer. During the
LG617 Option Period, Lexicon shall not grant any license or otherwise transfer
rights to any Third Party for the development or commercialization of any LG617
Compound (any such arrangement being referred to herein as an "LG617 License"),
[**] unless and until [**]. In the event that, at any time during the LG617
Option Period after an LG617 Compound [**], Lexicon desires to enter into an
LG617 License (or after the LG617 Option Period, if Lexicon has not previously
notified BMS of such desire), [**], Lexicon shall first notify BMS of its desire
to enter into an LG617 License and, if requested by BMS within [**] days of such
notice, shall enter into good faith negotiations with BMS with respect to an
LG617 License for a period of [**] days following such notice (the "LG617
Negotiation Period"). In the event Lexicon and BMS do not enter into an LG617
License within such LG617 Negotiation Period, Lexicon will be free, at any time
thereafter, to enter into negotiations with respect to an LG617 License with any
Third Party; provided that, during the LG617 Option Period (but not thereafter),
[**]. [**].
29
ARTICLE 5. PAYMENTS
5.1 Upfront Payment. In consideration of the rights granted to BMS
under this Agreement, BMS shall pay to Lexicon an upfront payment of thirty-six
million dollars (U.S. $36,000,000), which shall be due and payable within ten
(10) business days of the Effective Date, but in no event later than December
31, 2003.
5.2 Target Discovery Program Payments. Subject to the other terms
and conditions of this Agreement, in consideration for and as a contribution
toward the Lexicon's costs of development and analysis of Mutant Mice in the
Target Discovery Program, BMS shall make the following payments to Lexicon on
the following schedule:
(a) annual research payments of ten million dollars (U.S.
$10,000,000) for each of the first three Contract Years of the Target
Discovery Program Term, which annual research payments shall be payable
[**];
(b) in the event BMS elects to extend the Target
Discovery Program Term under Section 2.2.2(a), annual research payments
of [**] for each of the fourth and fifth Contract Years of the Target
Discovery Program Term, which annual research payments shall be payable
[**]; and
(c) in the event BMS elects to extend the Target
Discovery Program Term under Section 2.2.2(b), annual research payments
of [**] for each of the fourth and fifth Contract Years of the Target
Discovery Program Term, which annual research payments shall be payable
[**].
5.3 Research Program Milestone Payments. BMS shall pay Lexicon the
following Research Program milestone payments within [**] days of the occurrence
of the event giving rise to such payment:
(a) after Compound Library Screening has been first
commenced for a total of [**] Selected Targets [**], BMS shall pay
Lexicon [**] for each subsequent Selected Target for which Compound
Library Screening is first commenced [**];
(b) during the Target Discovery Program Term, after a
Full Phase Program has been first commenced for [**] Selected Target
[**], BMS shall pay Lexicon [**] for each subsequent Selected Target
[**] for which a Full Phase Program is first commenced; and
(c) during the period beginning after the Target
Discovery Program Term, after Full Phase Programs have been first
commenced for a total of [**] Selected Targets in the Research Program
(a total of [**] Selected Targets in the event BMS elected to extend
the Target Discovery Program Term under Section 2.2.2), BMS shall pay
Lexicon [**] for each subsequent Selected Target for which a Full Phase
Program is first commenced;
provided that [**]. The Research Program milestone payments payable under this
Section 5.3 shall not be considered part of, or included in the calculation of
the Research Program Costs contributed by BMS to the Research Program. For
clarification, for purposes of determining the above Research Program milestone
payments, [**].
30
5.4 Product Development Milestone Payments.
5.4.1 BMS Products. For each BMS Target, BMS shall pay
Lexicon the following milestone payments for [**]:
PAYMENTS FOR BMS TARGET PAYMENTS FOR BMS TARGET
FOR WHICH [**] FOR WHICH [**]
MILESTONE EVENT
--------------------------------------------------- -------------------------- -------------------------
IND filing U.S. $ [**] U.S. $ [**]
Commencement of a Phase 2 Trial [**] [**]
Commencement of a Phase 3 Trial [**] [**]
NDA Filing [**] [**]
MAA Filing [**] [**]
NDA Approval or MAA Approval (upon the first to [**] [**]
occur)
-------------------------- -------------------------
TOTAL U.S. $ [**] U.S. $ 76,000,000
Subject to Section 5.4.3, BMS shall pay Lexicon milestone payments for
[**]. For each BMS Product that is a Post Opt-out Product, milestone
payment [**] as set forth in Section 2.5.3.4. For each BMS Product that
acts through a BMS Target that was designated from a BMS Inactive
Selected Target, the milestone payment [**] as set forth in Section
2.3.4.2.
5.4.2 Lexicon Products. For each Lexicon Target, Lexicon
shall pay BMS the following milestone payments for [**]:
PAYMENTS FOR LEXICON
MILESTONE EVENT TARGET
-------------------------------------------------------------------------------- -------------------------
IND filing U.S. $ [**]
Commencement of a Phase 2 Trial [**]
Commencement of a Phase 3 Trial [**]
NDA Filing [**]
MAA Filing [**]
NDA Approval or MAA Approval (upon the first to occur) [**]
-------------------------
TOTAL U.S. $ 25,000,000
Subject to Section 5.4.3, Lexicon shall pay BMS milestone payments for
[**]. For each Lexicon Product that is a Post Opt-out Product,
milestone payment [**] as set forth in Section 2.5.3.4. For each
Lexicon Product that acts through a Lexicon Target that was designated
from a Lexicon Inactive Selected Target, the milestone payment [**] as
set forth in Section 2.3.4.2.
5.4.3 Milestone Conditions. The milestone payments payable
under Sections 5.4.1 and 5.4.2 with respect to Products acting through
a given BMS Target or Lexicon Target, as the case may be, shall be
subject to the following conditions.
(a) Only one set of milestone payments will be
paid for all Products containing a given Development Compound
(including all forms and formulations of Products containing
such Development Compound) upon the first occurrence of the
milestone event for a Product containing that Development
Compound, regardless of the number of times a milestone event
may be achieved for Products containing such
31
Development Compound (for example, regardless of the number of
Phase 3 Trials and NDA Filings and Approvals that may be
obtained for Products containing such Development Compound).
(b) Each milestone payment shall be payable upon
the first achievement of the milestone event for a given
Development Compound; provided, however, [**].
(c) Subject to the foregoing provisions of this
Section 5.4.3, if any milestone event for a Product is
achieved prior to or in the absence of the achievement of any
preceding milestone event for such Product (e.g., an NDA
filing for a Product without a Phase 3 Trial) then, effective
upon achievement of any such milestone event, all previously
unpaid payments for any such preceding milestone event(s)
shall also become due and payable.
5.4.4 Notice of Milestone Achievement. Each Product
Licensee shall promptly notify the Product Licensor of the first
occurrence of any milestone with respect to each Selected Target, and
milestone payments shall be made within [**] days after such
occurrence. Such milestone payments shall be non-refundable and shall
not be credited against royalties payable to the Product Licensee under
this Agreement, subject to Section 6.2.
5.5 Product Royalties.
5.5.1 BMS Products. For each BMS Product, BMS shall pay to
Lexicon the following royalties on aggregate annual Net Sales in the
Territory of such BMS Product:
ROYALTY ON NET ROYALTY ON NET
SALES FOR BMS SALES FOR BMS
PRODUCT ACTING PRODUCT ACTING
THROUGH A BMS THROUGH A BMS
AGGREGATE ANNUAL WORLDWIDE TARGET THAT IS TARGET THAT IS A
NET SALES OF BMS PRODUCT IN CONTRACT YEAR NOT A LISTED LISTED TARGET
TARGET
---------------------------------------------------------- ------------------- ---------------------
Under U.S. $[**] [**]% [**]%
From U.S. $[**]to U.S. $[**] [**]% [**]%
Above $[**] [**]% [**]%
By way of example, in a given Contract Year, if the aggregate annual
worldwide Net Sales of a given BMS Product acting through a BMS Target
that is not a Listed Target is [**], the following royalty payment
would be payable under this Section 5.5.1: [**]. For BMS Products which
are Post Opt-out Products, the foregoing royalty payment amounts [**]
as provided in Section 2.5.3.4. For BMS Products that act through a BMS
Target that was designated from a BMS Inactive Selected Target, the
above royalty payment amounts shall be reduced as set forth in Section
2.3.4.2.
5.5.2 Lexicon Products. For each Lexicon Product, Lexicon
shall pay to BMS the following royalties on aggregate annual Net Sales
in the Territory of such Lexicon Product:
AGGREGATE ANNUAL WORLDWIDE ROYALTY ON NET
NET SALES OF LEXICON PRODUCT IN CONTRACT YEAR SALES
---------------------------------------------------------------- ----------------------
Under U.S. $[**] [**]%
From U.S. $[**] to U.S. $[**] [**]%
Above $[**] [**]%
32
By way of example, in a given Contract Year, if the aggregate annual
worldwide Net Sales of a given Lexicon Product is [**], the following
royalty payment would be payable under this Section 5.5.2: [**]. For
Lexicon Products which are Post Opt-out Products, the foregoing royalty
payment amounts [**] as provided in Section 2.5.3.4. For Lexicon
Products that act through a Lexicon Target that was designated from a
Lexicon Inactive Selected Target, the above royalty payment [**] as set
forth in Section 2.3.4.2.
5.5.3 Royalty Term. Royalties shall be payable, on a
Product-by-Product and country-by-country basis, on Net Sales of
Products for the longer of (a) the term of any Patents Rights
Controlled by a party with a Valid Claim Covering the composition of
matter or therapeutic use of such Product and providing marketing
exclusivity for such Product in such country or (b) [**] years after
the First Commercial Sale of such Product in such country.
5.5.4 Royalty Reduction. [**].
5.5.5 Third Party Patents. If the Product Licensee, in its
reasonable judgment, is required to obtain a license from any Third
Party under any patent in order to [**], and if the Product Licensee is
required to pay to such Third Party a royalty under such license
calculated on sales of a Product, and the infringement of such patent
cannot reasonably be avoided by the Product Licensee, or if the Product
Licensee is required by a court of competent jurisdiction to pay such a
royalty to such a Third Party (and the infringement of such patent
cannot reasonably be avoided by the Product Licensee), then the Product
Licensee's obligation to pay royalties under Section 5.5.1 and 5.5.2
hereof shall [**], provided however, that [**]. In addition, if the
Product Licensee is required to pay upfront payments or milestone
payments to such Third Party in consideration for such license, or if
the Product Licensee is required by a court of competent jurisdiction
to pay a similar such payment, then the royalties payable under Section
5.5.1 and 5.5.2 shall [**], provided however, that [**]. The Product
Licensee shall use its commercially reasonable efforts to minimize the
amount of any of the foregoing payments owed by the Product Licensee to
a Third Party. Prior to the Product Licensee exercising its reasonable
judgment under this Section 5.5.5, the Product Licensee shall provide
the Product Licensor with written notice of a potential need to obtain
any license from Third Parties. The parties shall discuss the best
course of action to resolve such potential license requirement(s),
provided that such discussions shall not limit the Product Licensee's
right to exercise its reasonable judgment.
5.5.6 Royalty Conditions. The royalties under Section 5.5.1
and 5.5.2 shall be subject to the following conditions:
(a) that only one royalty shall be due with
respect to the same unit of Product;
(b) that no royalties shall be due upon the sale
or other transfer among Product Licensee, its Affiliates or
Sublicensees, but in such cases the royalty shall be due and
calculated upon Product Licensee's or its Affiliate's or
Sublicensee's Net Sales of Product to the first independent
Third Party; and
(c) no royalties shall accrue on the disposition
of Product in reasonable quantities by Product Licensee, its
Affiliates or Sublicensees as part of an expanded access
program or as bona fide samples or as donations to non-profit
institutions or government agencies for non-commercial
purposes, provided, in each case, that neither Product
Licensee, its Affiliate or Sublicensees receives any payment
for such Product.
33
5.5.7 Royalty Reports; Exchange Rates. During the term of
this Agreement following the First Commercial Sale of any Product, the
Product Licensee shall provide Product Licensor, within [**] days after
the end of each Contract Quarter, an initial quarterly royalty report
in a manner sufficient to enable Product Licensor to comply with its
reporting requirements. Within [**] days after each Contract Quarter,
Product Licensee shall furnish to the Product Licensor a written
quarterly report showing, on a Product-by-Product basis:
(a) the gross sales and Net Sales of Products
sold by such Product Licensee, its Sublicensees and their
respective Affiliates during the reporting period and the
calculation of Net Sales from such gross sales;
(b) the royalties payable in United States
dollars which shall have accrued hereunder
in respect of such Net Sales;
(c) withholding taxes, if any, required by
applicable Law to be deducted in respect of such royalties;
(d) the dates of the First Commercial Sales of
Products in any country during the reporting period; and
(e) the exchange rates used in determining the
amount of United States dollars payable hereunder.
Royalties payable on sales in countries other than the United States
shall be calculated in accordance with the standard exchange rate
conversion practices used by the Product Licensee for financial
accounting purposes. If no royalty or payment is due for any royalty
period hereunder, the Product Licensee shall so report. Each Product
Licensee shall keep, and shall require its Sublicensees to keep (all in
accordance with generally accepted accounting principles, consistently
applied), complete and accurate records in sufficient detail to
properly reflect all gross sales and Net Sales and to enable the
royalties payable hereunder to be determined.
5.5.8 Audits. Upon the written request of a Product
Licensor, the Product Licensee shall permit an independent certified
public accountant selected by the Product Licensor and acceptable to
the Product Licensee, which acceptance shall not be unreasonably
withheld, to have access, at reasonable times and during normal
business hours, to such records of the Product Licensee as may be
reasonably necessary to verify the accuracy of the royalty reports
described herein, in respect of any fiscal year ending not more than
[**] prior to the date of such request. The Product Licensor and the
Product Licensee shall use commercially reasonable efforts to schedule
all such verifications within [**] days after the Product Licensor
makes its written request. All such verifications shall be conducted
not more than [**]. The report of the Product Licensor's independent
certified public accountant shall be made available to both parties.
Subject to the Product Licensee's rights under Section 12.6, in the
event the Product Licensor's independent certified public accountant
concludes that additional royalties were owed to the Product Licensor
for such period, the additional royalty shall be paid by the Product
Licensee within [**] days of the date the Product Licensor delivers to
the Product Licensee such independent certified public accountant's
written report so concluding, unless such report contains manifest
error. In the event the Product Licensor's independent certified public
accountant concludes that there was an overpayment of royalties to the
Product Licensor during such period, the overpayment shall be repaid by
the Product Licensor within [**] days of the date the Product Licensor
received such independent certified public accountant's written report
so concluding, unless such report contains manifest error. The fees
charged by such independent
34
certified public accountant shall be paid by the Product Licensor
unless such audit discloses an underpayment of more than [**] of the
amount due under this Agreement for the period in question, in which
case the Product Licensee will bear the full cost of such audit. The
Product Licensee shall include in each agreement with each applicable
Sublicensee a provision requiring such Sublicensee to make reports to
the Product Licensee, to keep and maintain records of sales made
pursuant to such agreement and to grant access to such records by the
Product Licensor's independent certified public accountant to the same
extent required of the Product Licensee under this Agreement. The
Product Licensor agrees that all information subject to review under
this Section 5.5.8 or under any agreement with a Sublicensee of the
Product Licensee is confidential and that the Product Licensor shall
cause its independent certified public accountant to retain all such
information in confidence. The Product Licensor's independent certified
public accountant shall only report to the Product Licensor as to the
computation of the royalties and other payments due to the Product
Licensor under this Agreement and shall not disclose to the Product
Licensor any other information of the Product Licensee or its
Sublicensee.
5.5.9 Royalty Payment Terms. Royalty payments for each
Contract Quarter shall be due at the time the Product Licensee's report
under Section 5.5.7 for such Contract Quarter shall be due.
5.6 Withholding Taxes. In the event that any royalties or other
payments due to a Product Licensor are subject to withholding tax required by
applicable Law to be paid to the taxing authority of any foreign country, the
amount of such tax may be withheld from the applicable royalties or other
payment due the Product Licensor. The Product Licensee shall promptly pay such
tax on behalf of the Product Licensor and shall furnish the Product Licensor
with a certificate of withholding tax so deducted for the Product Licensor's
avoidance of duplicate taxation in United States. The Product Licensee may not
deduct any other withholding or any other governmental charges from the payments
agreed upon under this Agreement, except to the extent same are paid on behalf
of, or for the benefit of, the Product Licensor. The Product Licensee shall
maintain official receipts of payment of any such withholding taxes and shall
forward such receipts to the Product Licensor.
5.7 Blocked Currency. If by applicable Law or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to the United States is restricted or forbidden, the
Product Licensee shall give the Product Licensor prompt written notice and shall
pay the royalty due under this Article 5 through such means or methods as are
lawful in such country as the Product Licensor may reasonably designate. Failing
the designation by the Product Licensor of such lawful means or methods within
[**] days after such written notice is given to the Product Licensor, the
Product Licensee shall deposit such royalty payment in local currency to the
credit of the Product Licensor in a recognized banking institution designated by
the Product Licensor, or if none is designated by the Product Licensor within
the [**] period described above, in a recognized banking institution selected by
the Product Licensee and identified in a written notice to the Product Licensor
by the Product Licensee, and such deposit shall fulfill all obligations of the
Product Licensee to the Product Licensor with respect to such royalties.
5.8 Interest on Late Payments. A Product Licensor shall have the
right to seek to collect interest on any payments that are not paid on or before
[**] days after the date such payments are due under this Agreement at a rate
equal to [**], calculated on the total number of days payment is delinquent.
5.9 Manner of Payment. Except as provided in Section 5.7, payments
to be made by a Product Licensee to the Product Licensor under this Agreement
shall be payable in United States dollars and shall be paid by check delivered
to the Product Licensor at its principal office at the address for notice
indicated in this Agreement or bank wire transfer in immediately available funds
to such bank account in
35
the state in which such principal office is located as is designated in writing
by the Product Licensor from time to time.
ARTICLE 6. PRODUCT DEVELOPMENT DILIGENCE
6.1 Diligence Obligations. Each Product Licensee shall use
Diligent Efforts to pursue the research and development of, and to obtain
Regulatory Approvals in major markets throughout the world as expeditiously as
possible for, at least one Product that acts through each Selected Target for
which such Product Licensee holds a license under Section 4.2 and, following
such Regulatory Approvals, to maximize Net Sales of such Product(s), in each
case in a manner consistent with the efforts such party devotes to products or
research, development or marketing projects of similar market potential, profit
potential or strategic value resulting from its own research efforts, based on
conditions then prevailing, without any diminution on account of any interest of
such Product Licensee in any competitive product in development or being
marketed for the same indication(s).
6.2 Effect of Failure to Satisfy Diligence Obligations.
6.2.1 With respect to each Selected Target for which the
Product Licensee fails to satisfy its Product diligence obligations
under Section 6.1 above, at the option of the other party as its sole
and exclusive remedy therefor, (a) the commercial licenses granted
under Section 4.2 with respect to such Product(s) and related Selected
Target shall terminate and [**]; provided, however, that Product
Licensee's exclusive rights under Section 4.1 and 4.2 shall not
terminate as set forth above [**] unless (i) Product Licensee is given
[**] days' prior written notice by Product Licensor of Product
Licensor's intent to terminate such licenses, stating the reasons and
justification for such termination and recommending steps which Product
Licensee should take, and (ii) Product Licensee, or any Sublicensee,
has not used Diligent Efforts during such [**] period to pursue the
research and/or development of, and/or to obtain Regulatory Approvals
for, Products with respect to such Selected Target. The Product
Licensor shall have the right, within the period of [**] days following
the Product Licensee's [**] by delivering written notice thereof to the
Product Licensee, subject to [**].
6.2.2 With respect to each Selected Target and related
Products and Development Compounds for which a party exercises its
right, under Section 6.2.1, [**] relating to such Product and related
Development Compounds.
6.3 Research and Development Reports. Each party shall keep
complete and accurate records of its activities conducted under this Agreement
and the results thereof. Within [**] after the end of each [**] following the
end of the Research Program Term, each party shall prepare and provide the other
party with a reasonably detailed written report of the activities conducted
under this Agreement, and the results thereof, through such date with respect to
the development and/or commercialization of Products.
ARTICLE 7. INTELLECTUAL PROPERTY
7.1 Ownership of Intellectual Property.
7.1.1 Ownership by BMS of the BMS Background Materials and
BMS Background Technology. Subject to the rights and licenses granted
under this Agreement, BMS (and its licensors, as applicable) shall own
and retain all rights to the BMS Background Materials and BMS
Background Technology.
36
7.1.2 Ownership by Lexicon of the Lexicon Background
Materials and Lexicon Background Technology. Subject to the rights and
licenses granted under this Agreement, Lexicon (and its licensors, as
applicable) shall own and retain all rights to the Lexicon Background
Materials and Lexicon Background Technology. Without limiting the
foregoing, subject to the rights and licenses granted under this
Agreement, Lexicon shall own and retain all rights to (a) all Mutant
Mice and progeny thereof and any cells or other materials derived by
Lexicon therefrom and (b) any invention or discovery that is conceived
or first reduced to practice by Lexicon or any of its Affiliates during
the course of any analysis of Mutant Mice performed in the Target
Discovery Program.
7.1.3 Ownership of Program Intellectual Property.
7.1.3.1 Inventorship. Inventorship for patentable
inventions and discoveries conceived or reduced to practice
during the course of the performance of activities pursuant to
this Agreement shall be determined in accordance with U.S.
patent laws for determining inventorship. In the event of a
dispute regarding inventorship, if the parties are unable to
resolve such inventorship dispute, the Joint Management
Committee shall establish a procedure to resolve such dispute,
which may include engaging a Third Party patent attorney
jointly selected by the parties to resolve such dispute, which
resolution by such patent attorney shall be binding upon the
parties.
7.1.3.2 Ownership of Program Technology and Program
Intellectual Property for Selected Targets. Subject to the
rights and licenses granted under this Agreement, Lexicon
shall own all Program Technology and Program Intellectual
Property that directly relates to [**] ("Selected Target
Inventions"), whether such Selected Target Invention was
invented or discovered by employees, Affiliates, agents,
independent contractors or consultants of BMS, Lexicon or both
parties; provided, however, that Selected Target Inventions
shall not include Program Technology and Program Intellectual
Property [**].
7.1.3.3 Ownership of Other Program Technology and
Program Intellectual Property. Except as set forth in Section
7.1.3.2, title to all Program Technology and Program
Intellectual Property shall be based upon the inventorship for
such Program Technology and Program Intellectual Property.
Except as set forth in Section 7.1.3.2, Lexicon shall own,
Program Technology and Program Intellectual Property invented
solely by employees, agents, consultants and/or contractors of
Lexicon or a Lexicon Affiliate ("Lexicon Sole Program
Inventions"). Except as set forth in Section 7.1.3.2, BMS
shall own, Program Technology and Program Intellectual
Property invented solely by employees, agents, consultants
and/or contractors of BMS or a BMS Affiliate ("BMS Sole
Program Inventions"). Lexicon and BMS shall jointly own
Program Technology and Program Intellectual Property invented
jointly by employees, agents, consultants and/or contractors
of both Lexicon and BMS or Affiliates of Lexicon and BMS
("Joint Program Inventions"). All Joint Program Inventions,
BMS Sole Program Inventions, Lexicon Sole Program Inventions
and Selected Target Inventions shall be collectively the
"Program Inventions." Each party shall disclose to the other
party promptly any Program Inventions made by such party's
Affiliates, employees, agents or consultants.
7.2 Prosecution and Maintenance of Program Patent Rights.
7.2.1 Primary Prosecution Rights. The responsibility for
(a) preparing, filing and prosecuting patent applications (including,
but not limited to, provisional, reissue, continuing,
37
continuation, continuation-in-part, divisional, and substitute
applications and any foreign counterparts thereof) Covering a Program
Invention; (b) maintaining any Program Patent Rights; and (c) managing
any interference or opposition or similar proceedings relating to the
foregoing ((a) through (c), collectively, "Patent Prosecution") shall
be the responsibility of the party owning such Program Invention;
provided, however, that with respect to any Joint Program Inventions,
such responsibility shall be assigned by the Joint Management Committee
on a case-by-case basis. In determining which party shall be
responsible for Patent Prosecution of a jointly owned patent
application, the Joint Management Committee shall consider, among other
factors, the relative contribution of each party to the claimed subject
matter and the relatedness of the claimed subject matter to that in
other patent applications being prosecuted by each party. Each party
shall bear all Patent Prosecution expenses, including attorneys' fees,
incurred by such party in the performance of Patent Prosecution, except
that, unless the parties agree otherwise the Patent Prosecution
expenses, including attorneys' fees, for Joint Program Inventions shall
be shared equally by the parties.
7.2.2 Secondary Prosecution Rights. If the prosecuting
party elects not to continue pursuing Patent Prosecution for Program
Inventions (and the other party has joint ownership of or a license
under such Program Patent Rights pursuant to this Agreement), then the
prosecuting party shall notify the other party in writing of such
election at least [**] days prior to the last available date for action
to preserve such Program Patent Rights. If such other party elects to
continue Patent Prosecution, it may do so at its own expense. The party
taking over Patent Prosecution responsibility will not be liable to the
other party in any way with respect to its handling of, or the results
obtained from, such Patent Prosecution. The other party will provide
the party taking over Patent Prosecution with such assistance and
execute such documents as are necessary to continue or permit such
Patent Prosecution.
7.2.3 Cooperation. Each party hereby agrees:
(a) to take all reasonable additional actions
and execute such agreements, instruments and documents as may
be reasonably required to perfect the other's ownership
interest in accordance with the intent of this Agreement;
(b) to make its employees, Affiliates, agents,
independent contractors and consultants reasonably available
to the other party (or to the other party's authorized
attorneys, agents or representatives), to the extent
reasonably necessary to enable the prosecuting party to
undertake Patent Prosecution;
(c) to provide the other party with copies of
all material correspondence with the U.S. Patent and Trademark
Office or its foreign counterparts;
(d) to cooperate, if necessary and appropriate,
with the other party in gaining patent term extensions
wherever applicable to Program Patent Rights for Program
Inventions; and
(e) to endeavor in good faith to coordinate its
efforts with the other party to minimize or avoid interference
with the Patent Prosecution of the other party's patent
applications related to Program Inventions.
7.3 Patent Term Extension. The Product Licensor shall cooperate
with the Product Licensee in obtaining patent term extension or supplemental
protection certificates or their equivalents in any country with respect to the
Program Patent Rights. In the event that elections with respect to obtaining
38
such patent term extension, supplemental protection certificates or their
equivalents are to be made, the Product Licensee shall have the right to make
the election and the Product Licensor agrees to abide by such election, provided
that such election by the Product Licensee will be made so as to maximize the
period of marketing exclusivity for the Product.
7.4 Enforcement of the Program Patent Rights.
7.4.1 Notices of Third Party Infringement. Each Party shall
promptly provide the other Party with written notice reasonably
detailing any known or alleged infringement of Program Patent Rights by
a Third Party.
7.4.2 ▇▇▇▇▇-▇▇▇▇▇▇ Notifications. Each party shall provide
to the other party copies of any allegations of alleged patent
invalidity, unenforceability or non-infringement of a patent or patents
with respect to Program Technology, Program Materials or Products
pursuant to a Paragraph IV Patent Certification by a Third Party filing
an Abbreviated New Drug Application (i.e., an action under the
▇▇▇▇▇-▇▇▇▇▇▇ Act). Such copies shall be provided promptly after receipt
of such certification.
7.4.3 Other Notifications. Each party shall provide to the
other party copies of any notices it receives from Third Parties
regarding any patent nullity actions, any declaratory judgment actions,
any alleged infringement of Program Patent Rights or any alleged
misappropriation of intellectual property with respect to Program
Technology, Program Materials or Products. Such copies shall be
provided promptly following receipt thereof.
7.4.4 Product-Related Infringement.
7.4.4.1 The Product Licensee for a Product shall
have the sole right, but not the obligation, to institute and
direct legal proceedings against any Third Party believed to
be infringing the Program Patent Rights of either party
(including, without limitation, the Program Patent Rights
Claiming Selected Target Inventions related to the Selected
Target through which such Product acts) by the manufacture,
use, importation, offer for sale or sale of a product
competitive with such Product (whether a clinical or
commercial product). Each party will bear its own costs,
including attorneys' fees, relating to such legal proceedings;
provided that the Product Licensee shall bear the Product
Licensor's out-of-pocket expenses, including attorneys' fees,
incurred in complying with requests for cooperation made by
the Product Licensee. Any recovery in connection with such
suit or proceeding will first be applied to reimburse the
parties for their out-of-pocket expenses, including attorney's
fees. All recoveries resulting from such legal proceedings
that are in excess of the parties' costs of bringing or
participating in such action, including attorney's fees, shall
be allocated fifty percent (50%) to BMS and fifty percent
(50%) to Lexicon; provided, however, that, [**]. The Product
Licensee and the Product Licensor shall share in any enhanced
damages due to willful infringement in proportion to their
entitlement to actual damages.
7.4.4.2 In the event that a Product Licensee takes
action under this Section 7.3.2, the other party shall
cooperate to the extent reasonably necessary at the sole
expense of the Product Licensee. Upon the reasonable request
of the Product Licensee, the other party shall join the suit
and shall be represented in any such legal proceedings using
counsel of its own choice. Neither party shall settle any
claim or proceeding relating to Program Patent Rights
Controlled in whole or in part by the other party or licensed
under
39
this Agreement to the other party without the prior written
consent of such other party, which consent shall not be
unreasonably withheld.
7.4.5 Non-Product-Related Infringement. Each party shall
have the sole right, but not the obligation, to institute and direct
legal proceedings against any Third Party believed to be infringing the
Sole Program Patent Rights of such party other than infringement
relating to a Product. All costs, including attorneys' fees, relating
to such legal proceedings shall be borne by the party instituting such
legal proceedings, and all recoveries resulting from such legal
proceedings shall be retained by such party. The parties shall consult
with each other regarding the institution, prosecution and control of
any action or proceeding with respect to infringement of any of the
Joint Program Patent Rights other than infringement relating to a
Product.
7.5 Notices of Other Proceedings.
7.5.1 Each party shall notify the other in writing of any
allegations it receives from a Third Party that the manufacture, use,
sale, offer for sale or import of Program Technology, Program Materials
or any Product infringes the intellectual property rights of such Third
Party. Such notice shall be provided promptly following receipt of such
allegations.
7.5.2 In the event that a party receives notice that it or
any of its Affiliates have been individually named as a defendant in a
legal proceeding by a Third Party alleging infringement of a Third
Party patent or other intellectual property right as a result of the
manufacture, use, sale, offer for sale or import of Program Technology,
Program Materials or a Product, such party shall immediately notify the
other party in writing after the receipt of such notice. Such written
notice shall include a copy of any summons or complaint (or the
equivalent thereof) received regarding the foregoing.
ARTICLE 8. CONFIDENTIALITY
8.1 Nondisclosure Obligations.
8.1.1 General. Except as otherwise provided in this Article
8, each Receiving Party shall maintain the Confidential Information of
each Disclosing Party in confidence and use it only for purposes
specifically authorized under this Agreement. Except as otherwise
specifically provided in this Article 8, each party shall disclose
Confidential Information of the other party only to those employees,
representatives and agents requiring knowledge thereof in connection
with fulfilling the party's obligations under this Agreement, and not
to any other Third Party. Each party further agrees to inform all such
employees, representatives and agents of the terms and provisions of
this Agreement relating to Confidential Information and their duties
hereunder and to have obtained their prior written agreement to keep
such Confidential Information in confidence under terms and conditions
no less restrictive than those contained herein. Each party shall
exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no event less than
a reasonable standard of care) to protect and preserve the proprietary
and confidential nature of the Confidential Information disclosed to it
by the other party. Upon termination or expiration of this Agreement,
each party shall promptly, upon request of the other party, use good
faith commercially reasonable efforts to return or destroy (as
requested by the disclosing party) all documents and any copies thereof
containing Confidential Information belonging to, or disclosed by, such
other party, save that it may retain one copy of the same solely for
the purposes of ensuring compliance with this Section 8.1. Any breach
of this Section 8.1 by any person to whom Confidential Information is
disclosed by a party is considered a breach by the party itself.
40
8.1.2 Limitations. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under
this Agreement and subject to advance written notification to the
Disclosing Party: (a) a party may disclose to Third Parties
Confidential Information it is otherwise obligated not to disclose
under this Section 8.1, to its Affiliates, Sublicensees, consultants,
outside contractors and clinical investigators, on a strict
need-to-know basis for the purposes contemplated by this Agreement and
on the condition that such entities or persons agree to keep the
Confidential Information confidential for the same time periods and to
the same extent as such party is required to keep the Confidential
Information confidential hereunder; and (b) a party or its Sublicensees
may disclose, using appropriate measures to preserve confidentiality,
such Confidential Information to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary
to obtain authorizations to conduct clinical trials of, and to
commercially market, Products pursuant to this Agreement. Furthermore,
a Receiving Party may request permission from the Disclosing Party to
disclose such Confidential Information to the extent that such
disclosure is [**].
8.1.3 Required Disclosure. A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued
by a court or governmental agency or as otherwise required by Law;
provided, however, that the Receiving Party shall notify the Disclosing
Party promptly upon receipt thereof, giving [**] the Disclosing Party
sufficient advance notice to permit it to oppose, limit or seek
confidential treatment for such disclosure; and provided, further, that
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by counsel is legally required whether
or not a protective order or other similar order is obtained by the
Disclosing Party.
8.1.4 Securities Filings. In the event either party
proposes to file with the Securities and Exchange Commission or the
securities regulators of any state or other jurisdiction a registration
statement or any other disclosure document which describes or refers to
this Agreement under the Securities Act of 1933, as amended, the
Securities Exchange Act, of 1934, as amended, or any other applicable
securities law, the party shall notify the other party of such
intention and shall provide such other party with a copy of relevant
portions of the proposed filing not less than ten (10) business days
prior to such filing (and any revisions to such portions of the
proposed filing a reasonable time prior to the filing thereof),
including any exhibits thereto relating to the Agreement, and shall
[**] to obtain confidential treatment of any information concerning the
Agreement that such other party requests be kept confidential, and
shall only disclose Confidential Information which it is advised by
counsel is legally required to be disclosed. No such notice shall be
required under this Section 8.1.4 if the substance of the description
of or reference to this Agreement contained in the proposed filing has
been included in any previous filing made by the either party hereunder
or otherwise approved by the other party.
8.2 Terms of Agreement. The existence and the terms and conditions
of the Agreement that the parties have not specifically agreed to disclose
pursuant to Section 8.1.4 and Section 12.8 shall be considered Confidential
Information of both parties. Either party may disclose such terms to bona fide
potential Sublicensee, investor, investment banker, acquiror, merger partner or
other potential financial partner, and their attorneys and agents, provided that
each such person to whom such information is to be disclosed is informed of the
confidential nature of such information and has entered into a written agreement
with the party requiring such person to keep such information confidential.
8.3 Injunctive Relief. The parties hereto understand and agree
that remedies at law may be inadequate to protect against any breach of any of
the provisions of this Article 8 by either party or their
41
employees, agents, officers or directors or any other person acting in concert
with it or on its behalf. Accordingly, each party shall be entitled to the
granting of injunctive relief by a court of competent jurisdiction against any
action that constitutes any such breach of this Article 8.
8.4 Publication. BMS and/or Lexicon (each, a "Submitting Party")
may each publish or present data and/or results relating to a Product for which
the Submitting Party holds a commercial license, subject to the prior written
approval of the other party and the prior review of the proposed disclosure by
the other party (each, a "Reviewing Party"), solely to determine (a) whether the
proposed disclosure contains the Confidential Information of the Reviewing Party
or (b) whether the information contained in the proposed disclosure should be
the subject of a patent application to be filed prior to such disclosure. The
Submitting Party shall provide the Reviewing Party with the opportunity to
review any proposed abstract, manuscript or presentation which discloses the
results of research relating to the Product by delivering a copy thereof to the
Reviewing Party no less than [**] days before its intended submission for
publication or presentation. The Reviewing Party shall have [**] days from its
receipt of any such abstract, manuscript or presentation in which to notify the
Submitting Party in writing of any specific objections to the disclosure, based
on either the need to seek patent protection or concern regarding the specific
disclosure of the Confidential Information of the Reviewing Party. In the event
the Reviewing Party objects to the disclosure, the Submitting Party agrees not
to submit the publication or abstract or make the presentation containing the
objected-to information until the Reviewing Party is given a reasonable
additional period of time (not to exceed an additional [**] days) to seek patent
protection for any material in the disclosure which the Reviewing Party believes
is patentable (subject, in all events, to Section 8.3) or, in the case of
Confidential Information, to allow the Submitting Party to delete any
Confidential Information of the Reviewing Party from the proposed disclosure.
The Submitting Party agrees to delete from the proposed disclosure any
Confidential Information of the Reviewing Party upon request.
ARTICLE 9. REPRESENTATIONS AND WARRANTIES
9.1 Representations, Warranties and Covenants of Lexicon. Lexicon
represents and warrants to and covenants with BMS that:
9.1.1 Lexicon is a corporation duly organized, validly
existing and in corporate good standing under the Laws of the state of
Delaware;
9.1.2 Lexicon has the corporate and legal right, authority
and power to enter into this Agreement, and to extend the rights and
licenses granted to BMS in this Agreement;
9.1.3 Lexicon has taken all necessary action to authorize
the execution, delivery and performance of this Agreement;
9.1.4 upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of
Lexicon, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' and
contracting parties' rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
9.1.5 the performance of Lexicon's obligations under this
Agreement will not conflict with its charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
42
9.1.6 Lexicon will not after the Effective Date enter into
any agreements, contracts or other arrangements with others that would
be inconsistent with or in conflict with or in derogation of BMS's
rights and licenses under this Agreement or Lexicon's obligations under
this Agreement;
9.1.7 except as otherwise disclosed to BMS prior to the
Effective Date, Lexicon is not aware of any legal obstacles, including
the patent rights of others, that are likely to prevent it from
carrying out the provisions of this Agreement;
9.1.8 Lexicon has enforceable written agreements with all
of its employees who receive Confidential Information under this
Agreement assigning to Lexicon ownership of all intellectual property
rights created in the course of their employment;
9.1.9 [**];
9.1.10 [**]; and
9.1.11 [**].
9.2 Representations, Warranties and Covenants of BMS. BMS
represents and warrants to and covenants with Lexicon that:
9.2.1 BMS is a corporation duly organized, validly existing
and in corporate good standing under the Laws of the state of Delaware;
9.2.2 BMS has the corporate and legal right, authority and
power to enter into this Agreement, and to extend the rights and
licenses granted to Lexicon in this Agreement;
9.2.3 BMS has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
9.2.4 upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of BMS
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
9.2.5 the performance of its obligations under this
Agreement will not conflict with BMS's charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
9.2.6 BMS will not after the Effective Date enter into any
agreements, contracts or other arrangements with others that would be
inconsistent with or in conflict with or in derogation of its
obligations under this Agreement;
9.2.7 except as otherwise disclosed to Lexicon prior to the
Effective Date, BMS is not aware of any legal obstacles, including the
patent rights of others, that are likely to prevent it from carrying
out the provisions of this Agreement;
43
9.2.8 BMS has enforceable written agreements with all of
its employees who receive Confidential Information under this Agreement
assigning to BMS ownership of all intellectual property rights created
in the course of their employment; and
9.2.9 [**].
9.3 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY PRODUCT,
PATENT RIGHTS, GOODS, SERVICES, PROGRAM MATERIALS, BACKGROUND MATERIALS OR ANY
OTHER SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
9.4 Limited Liability. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, NEITHER LEXICON NOR BMS WILL BE LIABLE WITH RESPECT TO ANY MATTER
ARISING UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS.
ARTICLE 10. INDEMNITY
10.1 BMS Indemnity Obligations. BMS agrees to defend, indemnify and
hold Lexicon, its Affiliates and their respective employees and agents harmless
from all claims, losses, damages or expenses (including reasonable attorneys'
fees and costs of litigation) in connection with any claims made or suits
brought against Lexicon by a Third Party relating to this Agreement arising as a
result of: (a) actual or asserted violations of any applicable Law by BMS, its
Sublicensees and their respective Affiliates by virtue of which any BMS Products
manufactured, distributed or sold hereunder shall be alleged or determined to be
adulterated, misbranded, mislabeled or otherwise not in compliance with any
applicable Law; (b) claims for bodily injury, death or property damage
attributable to the manufacture, distribution, sale or use of any BMS Products
by BMS, its Sublicensees and their respective Affiliates; (c) a BMS Product
recall ordered by a governmental agency or required by a confirmed BMS Product
failure as reasonably determined by the parties hereto; (d) BMS's breach of any
of its representations, warranties or covenants hereunder; or (e) the negligence
or willful misconduct of BMS, its officers, employees or agents.
10.2 Lexicon Indemnity Obligations. Lexicon agrees to defend,
indemnify and hold BMS, its Affiliates and their respective employees and agents
harmless from all claims, losses, damages or expenses (including reasonable
attorneys' fees and costs of litigation) in connection with any claims made or
suits brought against BMS by a Third Party relating to this Agreement arising as
a result of: (a) actual or asserted violations of any applicable Law by Lexicon,
its Sublicensees and their respective Affiliates by virtue of which any Lexicon
Products manufactured, distributed or sold hereunder shall be alleged or
determined to be adulterated, misbranded, mislabeled or otherwise not in
compliance with any applicable Law; (b) claims for bodily injury, death or
property damage attributable to the manufacture, distribution, sale or use of
any Lexicon Products by Lexicon, its Sublicensees and their respective
Affiliates; (c) a Lexicon Product recall ordered by a governmental agency or
required by a confirmed Lexicon Product failure as reasonably determined by the
parties hereto; (d) Lexicon's breach of any of its representations, warranties
or covenants hereunder; or (e) the negligence or willful misconduct of Lexicon,
its officers, employees or agents.
44
10.3 Limitation on Indemnity Obligations. Neither party, its
Affiliates or their respective employees and agents shall be entitled to the
indemnities set forth in Sections 10.1 or 10.2, respectively, to the comparative
extent the claim, loss, damage or expense for which indemnification is sought
was caused by the negligence, willful misconduct, reckless or intentional act or
omission or material breach of this Agreement by such party, its directors,
officers, employees or authorized agents.
10.4 Procedure. If a party or any of its Affiliates or their
respective employees or agents (collectively, the "Indemnitee") intends to claim
indemnification under this Article 10, the Indemnitee shall promptly notify the
other party (the "Indemnitor") of any loss, claim, damage, liability or action
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel selected by the
Indemnitor and reasonably acceptable to the Indemnitee, provided, however, that
an Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitee, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceedings. The Indemnitor shall have the
right to settle or compromise any claims for which it is providing
indemnification under this Article 10, provided that the consent of the
Indemnitee (which shall not be unreasonably withheld or delayed) shall be
required in the event any such settlement or compromise would adversely affect
the interests of the Indemnitee. The indemnity agreement in this Article 10
shall not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Indemnitor. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action, if prejudicial to the
Indemnitor's ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 10, but the omission so to
deliver notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Article 10. The Indemnitee
under this Article 10, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.
10.5 Insurance. Each party shall maintain appropriate product
liability insurance (and/or self-insurance) with respect to development,
manufacture and sale of Products by such party in such amount as such party
customarily maintains with respect to sales of its other products. Each party
shall maintain such insurance for so long as it continues to manufacture or sell
Products, and thereafter for so long as such party customarily maintains
insurance with respect to sales of its other products.
ARTICLE 11. EXPIRATION AND TERMINATION
11.1 Term of Agreement. The term of this Agreement shall commence
on the Effective Date and shall continue, unless earlier terminated under
Section 11.2, until the later of (a) the expiration of the obligations of both
parties to pay royalties under this Agreement and (b) the expiration or
termination of the last to expire of any Valid Claim included in the Program
Patent Rights. The expiration or termination of the Target Discovery Term and
Research Program Term shall not affect the term of this Agreement.
11.2 Termination for Material Breach.
11.2.1 If either party believes that the other is in
material breach of this Agreement, then the non-breaching party may
deliver notice of such breach to the other party. In such notice, the
non-breaching party shall identify the actions or conduct that such
party would consider to be an acceptable cure of such breach. For any
breach arising from a failure to make a payment set forth in Article 5,
the allegedly breaching party shall have [**] days to cure such breach,
unless such payment is in dispute. For all material breaches other than
a failure to make a payment set forth
45
in Article 5, the allegedly breaching party shall have [**] days to
either cure such breach or, if cure cannot be reasonably effected
within such [**] period, to deliver to the other party a plan for
curing such breach that is reasonably sufficient to effect a cure. 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 material
breach.
11.2.2 If the party receiving notice of material breach
fails to cure such breach within the [**] period or [**] period (as
applicable), the party originally delivering the notice shall have the
right, at its option exercisable in its sole discretion, in addition to
any other rights or remedies available to it at law or in equity and
subject to the limitations set forth in Sections 3.7.2, 9.4 and 12.6
hereof, to terminate this Agreement upon [**] days' notice thereof to
the other party, in which case the licenses granted to the defaulting
party pursuant to Article 4 shall terminate; provided [**]. The
provisions of Sections 5.3 through 5.9 hereof and Article 6 shall
survive any such termination of this Agreement. The rights and licenses
granted to the defaulting party under Section 4.2 with respect to any
Selected Target and related Products and Development Compounds with
respect to which no default has occurred shall, subject to such party's
obligations to pay milestones and royalties pursuant to Article 5,
continue.
11.3 Effect of Expiration or Termination of Agreement. The
expiration or termination of this Agreement shall not relieve the parties of any
obligation accruing prior to such expiration or termination. The provisions of
Articles 7, 8, 9, 10 and 11, and Sections 12.2 through 12.6 hereof shall survive
the expiration or termination of this Agreement. The provisions of Sections 5.3
through 5.9 hereof and Article 6 shall survive any termination of this Agreement
under which a party, its Sublicensees or their respective Affiliates retains the
right to sell Products until such time as all royalty payment obligations
applicable to such Products under Section 5.5 have expired in accordance with
their terms.
ARTICLE 12. MISCELLANEOUS
12.1 Force Majeure. Neither party shall be held liable or
responsible to the other party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any obligation
under this Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party, including but not
limited to fire, floods, embargoes, war, acts of war (whether war is declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of nonperformance,
and shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. Either party shall provide the other party with prompt
written notice of any delay or failure to perform that occurs by reason of force
majeure. The parties shall mutually seek a resolution of the delay or the
failure to perform as noted above.
12.2 Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by either party without the consent of the
other party; provided, however, that either Lexicon or BMS may, without such
consent, assign its rights and obligations under this Agreement (a) to any
Affiliate, or (b) in connection with a merger, consolidation or sale of all or
substantially all of its business assets to an unrelated Third Party; provided,
further, that such party's rights and obligations under this Agreement shall be
assumed by its successor in interest in any such transaction and shall not be
transferred separate from all or substantially all of its other business assets,
including those business assets that are the subject of this Agreement. Any
purported assignment in violation of the preceding sentence shall be void. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement, unless the parties otherwise agree.
46
12.3 Severability. Each party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions which valid
provisions in their economic effect are sufficiently similar to the invalid
provisions that it can be reasonably assumed that the parties would have entered
into this Agreement with such valid provisions in lieu of such invalid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.
12.4 Notices. Any consent, notice or report required or permitted
to be given or made under this Agreement by one of the notification parties
hereto to the other shall be in writing, delivered personally or by facsimile
(and promptly confirmed by telephone, personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to Lexicon: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to BMS: ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President, External Science, Technology & Licensing
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President & Senior Counsel, Corporate Development
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
All such communications shall be effective upon receipt.
47
12.5 Applicable Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without
reference to the conflicts of law principles thereof.
12.6 Dispute Resolution. Subject to Section 3.7.2, the parties
hereby agree that they will first attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiations. Any such
dispute shall be brought to the attention of the Alliance Managers for
resolution. The Alliance Managers will endeavor to propose and define mutually
acceptable solutions and facilitate communications in an attempt to bring the
dispute to a mutually agreeable resolution. If after discussing the matter in
good faith and attempting to find a mutually satisfactory resolution to the
issue, the parties are unable to resolve such dispute, the matter shall be
referred to the [**] (the "Representatives"). If the matter has not been
resolved within [**] days of the first meeting of the Representatives of the
parties (which period may be extended by mutual agreement) concerning such
matter, the parties shall be free to pursue all available recourse both at law
and in equity, subject to the following. Any dispute between the parties arising
out of or relating to the validity or interpretation of, compliance with, breach
or alleged breach of or termination of this Agreement that is not finally
resolved by the Joint Management Committee or executive officers as described
above will be resolved through binding arbitration as set forth below. Any such
binding arbitration shall be conducted in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association. To the
extent the parties cannot agree on a single arbitrator, each party shall have
the right to designate one arbitrator, who shall have no prior or existing
personal or financial relationship with the designating party, and the two (2)
arbitrators shall designate a third arbitrator. If the two (2) arbitrators
cannot agree on the designation of the third arbitrator, the American
Arbitration Association shall designate the third arbitrator. Unless otherwise
agreed by the parties, any arbitration initiated by BMS shall be conducted in
Houston, Texas and any arbitration initiated by Lexicon shall be conducted in
New York, New York. In any such arbitration proceeding, the parties shall be
entitled to all remedies to which they would be entitled in a United States
District Court and to full discovery to the same degree permitted under the
Federal Rules of Civil Procedure. Any such arbitration shall be completed and an
award rendered within [**] days of the notice of dispute. The arbitrator shall
render a "reasoned decision" within the meaning of the Commercial Arbitration
Rules which shall include findings of fact and conclusions of law. For avoidance
of doubt, the decisions set forth in Section 3.4 shall not be subject to
arbitration under this Section.
12.7 Entire Agreement. This Agreement, together with the exhibits
and appendices hereto and any confidentiality agreement(s) executed in
contemplation of this Agreement, contains the entire understanding of the
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both parties hereto. Notwithstanding the foregoing, the LexVision Agreement
shall remain in full force and effect in accordance with its terms.
12.8 Publicity. Upon execution of this Agreement, the parties shall
issue the press release announcing the existence of this Agreement in the form
and substance previously agreed to by the parties. Any announcements or similar
publicity with respect to this Agreement shall be agreed upon between the
parties in advance of such announcement. The parties understand that this
Agreement is likely to be of significant interest to investors, analysts and
others, and that the parties therefore may make such public announcements with
respect thereto, subject to the remainder of this Section 12.8. The parties
agree that any such announcement will not contain confidential business or
technical information and, if disclosure of confidential business or technical
information is required by Law, the parties will use reasonable efforts to
minimize such disclosure and obtain confidential treatment for any such
information which is disclosed to a governmental agency. Each party agrees to
provide to the other party a copy of any public announcement regarding this
Agreement or the subject matter thereof as soon as reasonably practicable under
the circumstances prior to its scheduled release. Except under extraordinary
circumstances, each
48
party shall provide the other with an advance copy of any such announcement at
least [**] prior to its scheduled release. Each party shall have the right to
expeditiously review and recommend changes to any such announcement and, except
as otherwise required by Law, the party whose announcement has been reviewed
shall remove any information the reviewing party reasonably deems to be
inappropriate for disclosure. The contents of any announcement or similar
publicity which has been reviewed and approved by the reviewing party can be
re-released by either party without a requirement for re-approval.
12.9 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
12.10 No Partnership. It is expressly agreed that the relationship
between Lexicon and BMS shall not constitute a partnership, joint venture or
agency. Neither Lexicon nor BMS shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other party to do so.
12.11 Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. Lexicon and BMS agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control Laws. Lexicon and BMS agree to obtain similar
covenants from their Sublicensees and contractors with respect to the subject
matter of this Section 12.11.
12.12 Interpretation.
12.12.1 In the event an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
12.12.2 The definitions of the terms herein shall apply
equally to the singular and plural forms of the terms defined. 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 "without
limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". The word "any" shall mean "any
and all" unless otherwise clearly indicated by context.
12.12.3 Unless the context requires otherwise, (a) any
definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented
or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein or therein), (b) any
reference to any laws herein shall be construed as referring to such
laws as from time to time enacted, repealed or amended, (c) any
reference herein to any person shall be construed to include the
person's successors and assigns, (d) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer
to this Agreement in its entirety and not to any particular provision
hereof, and (e) all references herein to Articles, Sections, Appendices
or Schedules, unless otherwise specifically provided, shall be
construed to refer to Articles, Sections, Appendices and Schedules of
this Agreement.
49
12.12.4 References to sections of the Code of Federal
Regulations and to the United States Code shall mean the cited
sections, as these may be amended from time to time.
12.13 Waiver. The waiver by either party hereto of any right
hereunder or the failure to perform or of a breach by the other party shall not
be deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
12.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * *
[signature page follows]
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IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute and deliver this Agreement as of the Effective Date.
LEXICON GENETICS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Date: December 17, 2003
------------------------------------------------------ -------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Ph.D.
President and Chief Executive Officer
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇ Date: December 17, 2003
------------------------------------------------------ -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
---------------------------------------------------
Title: President, Research and Development
------------------------------------------------
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EXHIBIT A
DESCRIPTION OF FULL PHASE PROGRAM (SEE SECTION 1.31)
OBJECTIVE: Optimization and characterization of lead
Program Compounds with the objective of
identifying Development Candidate(s) and
Back-up Compound(s) acting through a
Selected Target for full pre-clinical and
clinical development.
ESTIMATED ANNUALIZED FTE COMMITMENTS: [**]
52
EXHIBIT B
DESCRIPTION OF LEVEL 1 PHENOTYPIC ANALYSIS (SEE SECTION 1.42)
Level 1 Phenotypic Analysis is an initial screen designed to identify
primary characteristics resulting from selected mutations in Mutant Mice. Level
1 Phenotypic Analysis currently includes the following assays, which may be
changed from time to time (a) by the Joint Scientific Committee, at the Joint
Scientific Committee's reasonable scientific discretion, for assays employed in
behavioral analysis, and (b) at Lexicon's reasonable scientific discretion, for
assays in other categories.
[**]
53
EXHIBIT C
DESCRIPTION OF LEVEL 2 PHENOTYPIC ANALYSIS (SEE SECTION 1.43)
Level 2 Phenotypic Analysis involves one or more of the following
analyses, as appropriate, of the effects of selected mutations in Mutant Mice.
[**]
54
EXHIBIT D
DESCRIPTION OF MID-PHASE PROGRAM (SEE SECTION 1.60)
OBJECTIVE: Identification and characterization of Program Compounds
with the objective of identifying lead Program Compounds
that justify optimization efforts in a Full Phase Program
and that can be used to [**].
ESTIMATED ANNUALIZED FTE COMMITMENTS: [**]
55
EXHIBIT E
ALLOCATION OF NET SALES IN BUNDLED TRANSACTION (SEE SECTION 1.65)
With respect to Products sold in a Bundled Transaction in which BMS,
Lexicon or any of their respective Affiliates or Sublicensees discounts the
sales price of the Products to a greater degree than BMS, Lexicon, their
Affiliates or Sublicensees, respectively, generally discounts the price of its
other products to such customer, the amount to be included in Net Sales of such
Products shall be calculated in accordance with the following formula:
(ASP-P) x (N-P)
NS-P = --------------------------------------------------x BTF
(SIGMA)=1 (ASP-pi) x (N-pi) +(ASP-P) x (N-P)
Where:
NS-P = Amount allocated to Net Sales of the Product
ASP-P = Average Selling Price (as defined below)
per unit, during the applicable
period, of the Product when sold alone
ASP-pi = Average Selling Price per unit,
during the applicable period, of each
product, other than a Product, in the
Bundled Transaction when sold alone
N-P = Total number of units of Product included in
the Bundled Transaction during the applicable
period
N-pi = Total number of units (i.e., corresponding to
the same ASP-pi) of each product, other than a
Product, included in the Bundled Transaction
during the applicable period
(SIGMA)=1 = The sum of the products of the formula
(ASP-pi) x (N-pi) for each and every product,
other than a Product, included in the Bundled
Transaction during the applicable period
BTF = The aggregate amounts paid to the seller for
the Bundled Transaction during the applicable
period
The Average Selling Price shall be based on the actual average selling
price of the applicable Product or product other than a Product, as the case may
be, determined for the applicable period.
If a Product or other product is not sold separately, the Average
Selling Price with respect thereto shall be the bona fide list price.
If a Product or other product is not sold separately and no bona fide
list price exists for such Product or other product, the Parties shall agree
upon an imputed bona fide list price for such Product or other product, and the
Average Selling Price with respect thereto shall be based on such imputed list
price.
56
EXHIBIT F
FORM OF MATERIAL TRANSFER AGREEMENT FOR TRANSFER OF MUTANT
MICE TO BMS (SEE SECTION 2.2.5)
57