EXHIBIT 10.1
(With certain confidential information deleted and
marked with bracketed asteriks)
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
between
Vertex Pharmaceuticals Incorporated
and
Novartis Pharma AG
Research and Early Development Agreement
TABLE OF CONTENTS
Page Number
INTRODUCTION.................................................................1
ARTICLE I -- DEFINITIONS.....................................................2
ARTICLE II -- RESEARCH PROGRAM...............................................9
2.1. Commencement.........................................................9
2.2. Term.................................................................9
2.3. Research Diligence...................................................9
2.4. Research Plan; Early Development Plan...............................10
2.5. Joint Research Committee............................................11
2.6. Joint Steering Committee............................................13
2.7. Exchange of Information.............................................14
2.8. Redirection or Termination of Research Program......................14
2.9 Exclusivity.........................................................15
ARTICLE III -- PAYMENTS.....................................................17
3.1. Signature Payment by NOVARTIS.......................................17
3.2. Staffing and Research Support Payments..............................17
3.3. Development Loan Facility...........................................19
3.4. Records.............................................................20
ARTICLE IV -- LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS.............21
4.1. Development Election................................................21
4.2. Process for Determining Drug Candidates.............................22
4.3. Optional Exercise...................................................23
4.4. Refused Candidate...................................................24
4.5. Subsequent Candidates...............................................25
4.6. Unexpected Results..................................................25
4.7. Clinical Trial Material.............................................26
ARTICLE V -- CONFIDENTIALITY................................................27
5.1. Undertaking..........................................................27
5.2. Exceptions...........................................................28
5.3. Publicity............................................................29
5.4. Survival.............................................................29
ARTICLE VI -- PUBLICATION...................................................29
ARTICLE VII -- INDEMNIFICATION..............................................31
7.1. Indemnification by VERTEX............................................31
7.2. Indemnification by NOVARTIS..........................................31
7.3. Claims Procedures....................................................32
7.4. Compliance...........................................................33
ARTICLE VIII -- PATENTABLE INVENTIONS.......................................33
8.1. Ownership............................................................33
Research and Early Development Agreement -- Confidential -- Page i
Research and Early Development Agreement
TABLE OF CONTENTS
Page Number
8.2. Preparation..........................................................34
8.3. Costs................................................................34
ARTICLE IX -- TERM AND TERMINATION..........................................35
9.1. Term.................................................................35
9.2. Termination of the Research Program by NOVARTIS for Cause............35
9.3. Termination of the Research Program by VERTEX for Cause..............36
9.4. Early Termination of Research Program by NOVARTIS....................36
9.5. Termination for Scientific Cause.....................................37
9.6. Effect of Termination................................................37
ARTICLE X -- REPRESENTATIONS AND WARRANTIES.................................38
10.1. Representations and Warranties of VERTEX...........................38
10.2. Representations and Warranties of NOVARTIS.........................39
ARTICLE XI -- DISPUTE RESOLUTION............................................40
11.1. Governing Law, and Jurisdiction....................................40
11.2. Dispute Resolution Process.........................................40
ARTICLE XII -- MISCELLANEOUS PROVISIONS.....................................41
12.1. Official Language..................................................41
12.2. Waiver.............................................................41
12.3. Force Majeure......................................................41
12.4. Severability.......................................................42
12.5. Government Acts....................................................42
12.6. Government Approvals...............................................42
12.7. Export Controls....................................................43
12.8. Assignment.........................................................43
12.9. Affiliates.........................................................43
12.10. Counterparts.......................................................44
12.11. No Agency..........................................................44
12.12. Notice.............................................................44
12.13. Headings...........................................................45
12.14. Authority..........................................................45
12.15. Entire Agreement...................................................45
12.16. Standstill.........................................................45
12.17. Notice of Pharmaceutical Side-Effects..............................46
12.18 Inflation Adjustment...............................................47
12.19 Invoice Requirement................................................48
12.20 Hardship...........................................................48
Exhibit A Form of License, Development and Commercialization Agreement
Exhibit B Form of Invoice
Schedule 1.13 Excluded Compounds and Excluded Kinases
Schedule 2.4.3 General Criteria and Guidelines
Research and Early Development Agreement -- Confidential -- Page ii
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
AGREEMENT made this 8th day of May, 2000 between VERTEX PHARMACEUTICALS
INCORPORATED ("VERTEX"), a Massachusetts corporation with principal offices at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, and NOVARTIS PHARMA AG
("NOVARTIS"), a Swiss corporation with principal offices at ▇▇-▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇.
This Agreement has been executed by the parties on the date stated above,
and shall become effective (the "Effective Date") upon the later of (a) approval
of the execution of this Agreement by each party's Board of Directors; and (b)
clearance of the Agreement and the transactions contemplated herein under the
United States statute known as the ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ Anti-Trust Improvements
Act of 1976 ("HSR"), either pursuant to notice to that effect from the United
States Federal Trade Commission or the Justice Department, or as a result of
passage, without comment, of the waiting period specified under HSR; provided,
that this Agreement shall terminate unless extended by written mutual agreement
of the parties if it has not become effective as set forth above on or before
July 14, 2000.
INTRODUCTION
WHEREAS, VERTEX has undertaken a broad drug discovery program with the
objective of designing novel, small-molecule compounds targeting the kinase
protein super-family;
WHEREAS, NOVARTIS is also interested in developing and commercializing
drugs targeting kinase proteins and has particular expertise in developing,
registering, manufacturing, marketing and selling pharmaceuticals worldwide;
WHEREAS, both parties desire to enter into a collaboration the objective
of which will be for VERTEX to generate eight (8) novel chemical entities,
targeting selected Kinases, that establish proof of concept with results
sufficient to justify further clinical studies, and thereafter for NOVARTIS to
develop, market and sell those compounds as drugs upon the terms set forth
herein and in a License, Development and Commercialization Agreement identical
in substance to Exhibit A hereto;
Research and Early Development Agreement -- Confidential -- Page 1
NOW THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, and other good and valuable consideration, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1. "Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled by, or is under direct or indirect common control
with, such Person. The term "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise. Control will be presumed if one Person owns, either of record or
beneficially, more than 50% of the voting stock of any other Person. For the
avoidance of any doubt, the Novartis Institute for Functional Genomics, Inc. and
The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Institute, as currently operated, are not Affiliates of
NOVARTIS for the purposes of this Agreement.
1.2. "Bulk Drug Substance" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.
1.3. "Compound" shall mean any chemical compound, including salts thereof,
which affects a kinase and which is synthesized and/or tested (including by
screening) by or under the direction of either party hereto or its Affiliates
during the term of the Research Program conducted under this Agreement, or was
synthesized or tested by either party or its Affiliates prior to the Effective
Date in a program targeted toward kinase modulation; provided that the term
"Compound" shall not include any Excluded Compounds unless those Excluded
Compounds have been designated as Compounds hereunder by agreement of the
parties hereto after the Effective Date.
1.4. "Controlled" shall mean the legal authority or right of a party
hereto to grant a license or sublicense of intellectual property rights to
another party hereto, or to otherwise disclose proprietary or trade secret
information to such other party, without breaching the terms of any agreement
with a Third Party, infringing upon the intellectual property rights of a Third
Party, or misappropriating the proprietary or trade secret information of a
Third Party.
Research and Early Development Agreement -- Confidential -- Page 2
1.5. "Development Candidate" shall mean a Compound selected by VERTEX,
during the term of the Research Program and (if the Program is not terminated
early) during the six-month period immediately following expiration of the
Research Program, for formal pre-clinical development in the Field.
1.6. "Development Election" shall have the meaning set forth in Section
4.1 hereof.
1.7. "Development Program" shall mean activities associated with
development of a Drug Product Candidate as specified in the License Agreement.
1.8. "Drug Candidate" shall mean any Development Candidate which has
completed Proof of Concept Studies with results sufficient to satisfy the Proof
of Concept Study requirements adopted by the JRC with respect to that
Development Candidate.
1.9. "Drug Product" shall mean a finished dosage form which is prepared
from Bulk Drug Substance and is ready for administration to the ultimate
consumer as a pharmaceutical.
1.10. "Drug Product Candidate" shall mean a Drug Candidate which has been
accepted by NOVARTIS for development under the License Agreement referenced in
Section 4.3 hereof.
1.11. "Early Development Plan" shall have the meaning set forth in Section
2.4.2 hereof.
1.12. "Effective Date" shall mean the effective date of this Agreement as
set forth on the first page hereof.
1.13. "Excluded Compounds" shall mean any chemical compounds the
therapeutic effect of which in humans is thought to be principally derived from
an effect on one or more Excluded Kinases. "Excluded Compounds" shall also
include the Compound known as [*************************************************
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which are claimed in [**********************************************************
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Research and Early Development Agreement -- Confidential -- Page 3
************] which NOVARTIS can demonstrate by written record were synthesized
by NOVARTIS before the Effective Date.
1.14. "Excluded Kinases" shall mean the human kinases specifically
identified in Schedule 1.13 hereto. "Excluded Kinases" shall also include any
Kinase hereafter added to the list of Excluded Kinases, at VERTEX's option
exercisable upon written notice to NOVARTIS, pursuant to the provisions of
Sections 2.9.2(a) or 2.9.5 hereof.
1.15. "Extended Development Period" shall mean the two-year period
immediately following expiration of the term of the Research Program.
1.16. "Field" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.
1.17. "Filing Outside the U.S." means any application or regulatory filing
to be made hereunder with a regulatory authority outside the United States, for
approval to manufacture and sell Drug Product(s) outside the U.S., and any
correspondence, approvals or governmental licenses relating thereto.
1.18. "FTE" shall mean the equivalent of the work of one VERTEX scientist
or other project managerial professional, full time for one year, which equates
to a total of forty-seven (47) weeks or one thousand eight hundred eighty (1880)
hours per year of work, on or directly related to the Research Program. Work in
the Research Program can include, but is not limited to, experimental laboratory
work, work related to Proof of Concept Studies, project and research management,
activities directed toward evaluation of the commercial potential of a possible
Drug Candidate, recording and writing up results, reviewing literature and
references, holding scientific discussions, attending appropriate seminars and
symposia, and carrying out Joint Research Committee duties. FTE's shall include
equivalent scientific work in the Research Program delegated to and carried out
by contractors, under the general direction of VERTEX scientists; provided, that
the nature and quantity (as a percentage of total program FTE's) of the
delegated work shall not be such that the most substantial parts of the overall
Research Program, in terms of projected value creation, have been delegated to
Third Parties. FTE's which result from work delegated to and carried out by
contractors will be separately identified by VERTEX on its invoices provided to
NOVARTIS under Section 12.19 hereof.
Research and Early Development Agreement -- Confidential -- Page 4
1.19. "GLP" shall mean the current Good Laboratory Practices regulations
promulgated by the FDA, published at 21 CFR Part 58, as such regulations may be
from time to time amended, and such equivalent regulations or standards of
countries outside the United States as may be applicable to activities conducted
hereunder.
1.20. "GMP" shall mean the current Good Manufacturing Practice regulations
promulgated by the FDA, published at 21 CFR Part 210 et seq., as such
regulations may from time to time be amended, and such equivalent regulations or
standards of countries outside the United States as may be applicable to
activities conducted hereunder.
1.21. "Joint Research Committee" or "JRC" shall have the meaning ascribed
to it in Section 2.5 of this Agreement.
1.22. "Joint Steering Committee" or "JSC" shall have the meaning ascribed
to it in Section 2.6 of this Agreement.
1.23. "Kinase" shall mean a human enzyme that catalyzes the transfer of a
phosphate group from a nucleoside triphosphate to a protein.
1.24. "Kinase Technology" shall mean all data, technical information,
know-how, experience, inventions (whether or not patented) trade secrets,
processes and methods discovered, developed or applied (with the consent of its
owner) and Controlled by either party or its Affiliates, in connection with
performance by either party under the Research Program, or in connection with
the conduct of a Development Program under the License Agreement prior to
termination of the Research Program, that relate to the research, development,
utilization, manufacture or use of Compounds, Development Candidates, Drug
Candidates, Drug Product Candidates or Drug Products (other than any such
technology which is exclusive to Excluded Kinases); provided, however, that the
term Kinase Technology shall not apply to VERTEX's general drug design
technology whether in hardware or software form, tangible or intangible.
1.25. "Know-How" means all Kinase Technology other than inventions which
are the subject of Patents.
Research and Early Development Agreement -- Confidential -- Page 5
1.26. "License Agreement" shall mean the License, Development and
Commercialization Agreement, identical in substance to Exhibit A hereto, to be
executed by VERTEX and NOVARTIS with respect to each Drug Product Candidate.
1.27. "NOVARTIS Know-How" shall mean all Know-How of NOVARTIS.
1.28. "NOVARTIS Patents" shall mean any Patents controlled by NOVARTIS or
its Affiliates claiming Kinase Technology.
1.29. "NOVARTIS Kinase Technology" shall mean all NOVARTIS Patents and
NOVARTIS Know-How.
1.30. "Patents" means all existing patents and patent applications and all
patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary 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.
1.31. "Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.
1.32. "Pivotal Registration Study" shall mean a human clinical trial
conducted for inclusion in (i) that portion of the FDA submission and approval
process which provides for the continued trials of a Drug Candidate on
sufficient numbers of patients to generate safety and efficacy data to support
Regulatory Approval in the proposed therapeutic indication, as more fully
defined in 21 C.F. R. ss. 312.21(c), and (ii) equivalent submissions with
similar requirements in other countries.
1.33. "Proof of Concept Studies" shall mean clinical studies conducted in
up to 50 patients with multiple dose exposure, or in healthy volunteers if, with
the approval of NOVARTIS (which shall not be unreasonably withheld), the
objectives of the proof of concept can be achieved in volunteers. The clinical
studies will demonstrate the following results (or such other results as may be
agreed by NOVARTIS and VERTEX):
Research and Early Development Agreement -- Confidential -- Page 6
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In addition to human clinical studies, Proof of Concept Studies shall include
completion of the following activities. These activities may be modified from
time to time by the JRC with respect to a particular Drug Candidate, with the
consent of NOVARTIS (which shall not be unreasonably withheld):
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1.34. "Refused Candidate" shall have the meaning set forth in Section 4.4
hereof.
1.35. "Regulatory Approval" shall mean, with respect to any country, all
authorizations by the appropriate governmental entity or entities necessary for
commercial sale of a Drug Product in that country including, without limitation
and where applicable, approval of labeling, price, reimbursement and
manufacturing. "Regulatory Approval" in the United States shall mean final
approval of a new drug application pursuant to 21 CFR ss. 314, permitting
marketing of the applicable Drug Product in interstate commerce in the United
States. "Regulatory Approval" in the European Union shall mean final approval of
a Marketing
Research and Early Development Agreement -- Confidential -- Page 7
Authorization Application pursuant to Council Directive 75/319/EEC, as amended,
or Council Regulation 2309/93/EEC, as amended.
1.36. "Research Plan" shall have the meaning set forth in Section 2.4.1
hereto.
1.37. "Research Program" shall mean all research activities and
development activities undertaken under this Agreement, including the activities
addressed by Proof of Concept Studies, associated with the identification,
design and development of Compounds and Drug Candidates as provided herein;
including but not limited to identification and initial testing of Compounds;
selection of Development Candidates from Compounds and preparation for
preclinical assessment of those Candidates; formulation and manufacture of
Development Candidates for use in preclinical and clinical studies; preclinical
animal studies performed in accordance with GLP (or the applicable equivalent);
planning, implementation, administration and evaluation of human clinical trials
included in Proof of Concept Studies; and manufacturing process development and
scale-up as appropriate at the stage of development encompassed within the Proof
of Concept Studies.
1.38. "Research Year" means a twelve-month period during the term of the
Research Program commencing on May 1, and ending on April 30 of each year. The
first Research Year hereunder shall be deemed to have commenced on May 1, 2000.
1.39. "Subsequent Candidate" shall mean any Drug Candidate proposed by
VERTEX for further development at the First Opportunity, prior to the end of the
Extended Development Period, after NOVARTIS has accepted eight (8) Drug
Candidates for development at the First or Second Opportunity.
1.40. "Technology" shall mean NOVARTIS Kinase Technology and VERTEX Kinase
Technology.
1.41. "Third Party" shall mean any person or entity which is not a party
or an Affiliate of any party to this Agreement.
1.42. "Third Party Referral" shall mean the procedure for resolution of
certain disputes hereunder which is set forth in Section 11.2 hereof.
1.43. "VERTEX Know-How" shall mean all Know-How of VERTEX.
Research and Early Development Agreement -- Confidential -- Page 8
1.44. "VERTEX Patents" shall mean any Patents Controlled by VERTEX or its
Affiliates claiming Kinase Technology.
1.45. "VERTEX Kinase Technology" shall mean all VERTEX Patents and VERTEX
Know-How.
Capitalized terms used but not otherwise defined herein which are defined in the
License Agreement shall have the meaning ascribed to them therein.
ARTICLE II
RESEARCH PROGRAM
2.1. Commencement.
The Research Program shall commence as soon as practicable after the
Effective Date. VERTEX shall have principal responsibility for the conduct of
the Research Program and NOVARTIS shall provide consultation, advice and such
research effort as may be deemed appropriate by the JRC and accepted by
NOVARTIS. The JRC shall review and coordinate all of the parties' efforts with
respect to the Research Program.
2.2. Term.
The Research Program will conclude six (6) years from the Effective
Date, unless earlier terminated in accordance with the provisions hereof. At the
request of either party made during the Fourth Research Year, the parties will
discuss whether, and upon what basis, the Research Program might be extended on
comparable terms beyond its initial 6 year term.
2.3. Research Diligence.
The common objective of the parties is to identify at least eight
(8) Drug Product Candidates as soon as practicable for worldwide development and
marketing under the terms of the License Agreement. VERTEX will work diligently
and use all reasonable efforts, consistent with prudent business judgment, to
identify and develop such Drug Candidates for acceptance by NOVARTIS as Drug
Product Candidates. VERTEX intends to dedicate to the Research Program at least
that level of staffing referenced in Section 3.2 hereof, and expects to employ
an optimal combination of experience and training in the Field. As a matter of
corporate strategy,
Research and Early Development Agreement -- Confidential -- Page 9
VERTEX has chosen to dedicate a significant amount of its overall research and
early development efforts to work in the Field, and will not change that overall
strategy during the term of the Research Program without prior notice to and
approval by NOVARTIS.
2.4. Research Plan; Early Development Plan.
2.4.1. General. VERTEX will prepare an overall research plan (the
"Research Plan") for the Research Program which it will submit to the JRC for
its review and comment at the first meeting of the JRC after the Effective Date.
The Research Plan will be revised, updated and submitted to the JRC at least
annually for its review and comment.
2.4.2. Plan for Development Candidates. As soon as practicable after
VERTEX has selected a Development Candidate for formal development in accordance
with its usual internal procedures, the JRC shall meet and discuss a specific
pre-clinical and clinical development plan for that Candidate, including process
development and formulation activities necessary or useful for the manufacture
of clinical trial material for Proof of Concept Studies, and preparation for
more extensive clinical trials and commercial supply. Based on these
discussions, VERTEX will finalize a development plan for the Development
Candidate (an "Early Development Plan") for review by the JRC. To the extent
practicable at the time, the Early Development Plan will include, among other
things, a full description of the Proof of Concept Studies to be undertaken with
respect to that Drug Candidate, a target product profile, a preliminary
assessment of the market potential [********************************************
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and the identity of the development team to be responsible for implementing the
Early Development Plan.
2.4.3. Plan Review. VERTEX, in developing the Research Plan and the
Early Development Plan, will take into account the general criteria and
guidelines (without being bound in each detail) attached as Schedule 2.4.3
hereto, to ensure a timely continuation of further clinical development of the
Drug Candidate after completion of Proof of Concept Studies in accordance with
the normal sequence of clinical development activity. The Research Plan, the
Research and Early Development Agreement -- Confidential -- Page 10
Early Development Plan with respect to each Development Candidate, and the
target product profile with respect to a Development Candidate will be reviewed
as necessary at each meeting of the JRC, and at any other time upon the request
of either party, and shall be modified as appropriate to reflect material
scientific or commercial developments. Any disagreements among the parties with
respect to these matters may be referred by either party to the Joint Steering
Committee for resolution. Notwithstanding the foregoing, VERTEX shall have the
final say with respect to the Research Plan and the Early Development Plan.
2.5. Joint Research Committee.
2.5.1. Composition and Purposes. Upon the execution of this
Agreement, VERTEX and NOVARTIS will establish a Joint Research Committee ("JRC")
which shall consist of at least eight (8) representatives (as may be increased
or decreased by the JRC), half of whom shall be designated from time to time by
each party. If the JRC chooses to designate a Committee Chair, the Chair will be
appointed from among the members of the Committee designated by VERTEX. The JRC
shall meet formally at least quarterly, or with such other frequency, and at
such time and location, as may be established by the Committee, for the
following purposes:
(i) To receive and review reports by VERTEX and its project
teams, and by NOVARTIS if it is involved in research and early development
activities in the Field, which shall be prepared and submitted to the JRC on a
quarterly basis within fifteen (15) days after the end of each calendar quarter
(commencing with the first full quarter after the execution of this Agreement),
summarizing progress under the Research Plan, and any Early Development Plan
then in effect, during the preceding quarter;
(ii) To review a proposal by either party that specified
Excluded Compounds or Excluded Kinases be included in the Research Program, or
that an included Kinase be added to the list of Excluded Kinases; provided that
the JRC shall have no authority to include or exclude any Compound or Kinase
from the Research Program;
(iii) To review Development Candidates selected by VERTEX, to
discuss recommended product profiles for those Candidates and to review Proof of
Concept Study requirements;
Research and Early Development Agreement -- Confidential -- Page 11
(iv) To review the Research Plan, any Early Development Plan,
and any proposed revisions to either;
(v) To consider whether redirection or termination of the
Research Program should be recommended under Section 2.8 hereof; and
(vi) To discuss matters relating to Patents, as may be
presented to the JRC by VERTEX or NOVARTIS.
The party hosting a particular JRC meeting shall prepare and deliver
to the members of the JRC, within thirty (30) days after the date of each
meeting, minutes of such meeting setting forth, inter alia, all decisions of the
JRC, and including a report on the progress of work performed. In case the JRC
meets by means of telephone or video conferences, this responsibility shall lie
with VERTEX. VERTEX also expects to provide NOVARTIS with reports from its early
development project teams if and when they become available and are appropriate
for distribution.
2.5.2. Decision-Making.
(i) Each of VERTEX and NOVARTIS shall have one vote on the
JRC. The objective of the JRC shall be to reach agreement by consensus on all
matters within the scope of the Research Plan and the Early Development Plan.
However, in the event of a deadlock with respect to any action (which shall be
deemed to have occurred if either party shall request a vote of the JRC on a
matter and that vote shall either not be taken within thirty (30) days of the
request or if taken shall result in a tie vote) and subject to the procedure set
forth in subsection (ii) below as to certain matters, the vote of VERTEX,
rendered after reasonable and open discussion among the members of the JRC,
shall be final and controlling.
(ii) Notwithstanding the foregoing, if VERTEX and NOVARTIS
deadlock on any matters being considered by the JRC which might have a
significant impact on the time or likely success of the Research Program, the
matter shall be referred to the JSC for resolution in accordance with Section
2.6 hereof.
Research and Early Development Agreement -- Confidential -- Page 12
(iii) Each party shall retain the rights, powers, and
discretion granted to it under this Agreement, and the JRC shall not be
delegated or vested with any such rights, powers or discretion except as
expressly provided in this Agreement. The JRC shall not have the power to amend
or modify this Agreement, which may only be amended or modified as provided in
Section 12.15.
2.6. Joint Steering Committee.
2.6.1. Composition and Purposes. Upon execution of this Agreement,
VERTEX and NOVARTIS will establish a Joint Steering Committee ("JSC") which
shall consist of an equal number of senior executives as may be designated by
each party from time to time. The JSC shall initially have four (4) members. If
the JSC chooses to designate a Committee Chair, the Chair will be appointed from
among the members of the JSC designated by NOVARTIS. The JSC shall meet
annually, or with such other frequency, and at such time and location, as may be
established by the Committee, for the following purposes:
(i) General oversight of the entire collaboration between
VERTEX and NOVARTIS, including the Research Program and any development and
commercialization of a Drug Product Candidate under the License Agreement;
(ii) Periodically review the overall goals and strategy of the
Research Program;
(iii) Attempt to resolve any disagreement between the parties
with regard to Proof of Concept Studies for a particular Development Candidate,
and discuss and attempt to resolve any other deadlocked issues submitted to it
by the JRC (although the vote of VERTEX's representatives shall prevail if the
JSC is unable to reach a consensus on any of these matters);
(iv) To address any matters raised under relevant provisions
(such as Section 3.2.3 or Section 4.2.3) of the License Agreement.
Research and Early Development Agreement -- Confidential -- Page 13
2.7. Exchange of Information.
2.7.1. VERTEX and NOVARTIS will share information with the JRC, as
soon as it is available, necessary to facilitate mutual understanding of the
status of the Research Program and decision-making in connection therewith.
2.7.2. Neither VERTEX nor NOVARTIS shall use Kinase Technology
disclosed by the other party (excluding information which is no longer subject
to confidentiality restrictions under Article V by reason of the exceptions set
forth in Section 5.2) for any purpose, including the filing of patent
applications containing such information without the other party's consent
(which shall not be reasonably withheld), other than for carrying out the
Research Program or discharging its responsibilities under the License
Agreement, or as otherwise permitted under the License Agreement or under
Section 9.6 hereof.
2.7.3. Upon conclusion of the Research Program and subject to the
provisions of Article V hereof, each party shall disclose to the other all
technical information known to it which constitutes Kinase Technology covered by
Patents. The parties will have the right to use the other party's Kinase
Technology to the full extent set forth in Section 9.6 hereto.
2.7.4. [************************************************************
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2.8. Redirection or Termination of Research Program.
If at any time during the term of this Agreement, the JRC shall
determine in good faith (i) that the Research Program or any portion thereof
cannot be successfully completed or if so completed will not produce Compounds
that are commercially viable, or (ii) that in other
Research and Early Development Agreement -- Confidential -- Page 14
material respects the Research Program will not conform to the parties'
reasonable expectations when entering into this Agreement, then the JRC may
suggest revision, reorientation or termination of the Research Program to each
party's top management, and upon mutual consent VERTEX and NOVARTIS shall
thereafter promptly modify their respective activities in connection with the
Research Program, or terminate the Research Program, accordingly.
2.9. Exclusivity.
2.9.1. If a proprietary Kinase target or Compound (other than an
Excluded Kinase or Excluded Compound) is made available to NOVARTIS through
collaborations, or under the framework of collaborations, existing on the
Effective Date of this Agreement between NOVARTIS and any Third Party, [********
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********************************]; and if, during the term of the Research
Program and the six (6) month period immediately thereafter, NOVARTIS decides to
commence any material research work (e.g., chemistry efforts aimed at
identifying lead compounds or biology efforts aimed at target validation)
targeting that Kinase (a "Special Kinase"), or decides to commence formal
preclinical development of any such initial Compound in the Field (a "Special
Compound"), then the following shall apply:
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2.9.2. NOVARTIS will promptly notify VERTEX if NOVARTIS decides to
commence any material research work (e.g., chemistry efforts aimed at
identifying lead compounds or biology efforts aimed at target validation)
targeting a novel Kinase other than an
Research and Early Development Agreement -- Confidential -- Page 15
Excluded Kinase (an "Internal Kinase"), or decides to commence formal
preclinical development of any novel Compound in the Field other than an
Excluded Compound (an "Internal Compound"), in either case identified or
discovered by NOVARTIS or any of its Affiliates, and will provide along with
that notice a summary of available information concerning that Internal Kinase
or Internal Compound. Within ninety (90) days after receipt of that notice and
information, VERTEX shall decide whether it wishes to include the Internal
Kinase or Internal Compound in the collaboration, and will notify NOVARTIS of
that decision.
(a) If VERTEX decides to include the Internal Kinase or Internal
Compound, then it will diligently pursue the exploitation of
that Kinase or Compound under the terms of this Research
Agreement.
(b) If VERTEX chooses not to include the Internal Kinase or
Internal Compound in the collaboration, then NOVARTIS shall be
free to pursue exploitation of the Internal Kinase or Internal
Compound free of the provisions of this Agreement, including
the provisions of Section 2.9.3 which shall not be applicable
to any such Internal Kinase or Internal Compound.
2.9.3. During the term of the Research Program neither VERTEX nor
NOVARTIS, nor any of their Affiliates: (a) will enter into any agreement or
collaboration with a Third Party (other than an amendment to any agreements
referenced in Section 2.9.1); nor (b) establish an internal drug discovery
effort; which in either case are aimed at identifying or developing Compounds,
other than Excluded Compounds, unless those Compounds are included in the
collaboration between VERTEX and NOVARTIS.
2.9.4. It is not the intention of NOVARTIS to use
[************************] to form the basis of new Kinase research programs
within NOVARTIS. However, NOVARTIS has identified [***********************] as
an Excluded Compound and is currently conducting research aimed at determining
its principal mode of action. If that principal mode of action is determined to
involve an effect on Kinases which are not, on the Effective Date hereof,
Excluded Kinases, then at its option upon written notice to NOVARTIS, VERTEX may
designate those Kinases as additional Excluded Kinases
Research and Early Development Agreement -- Confidential -- Page 16
hereunder, unless NOVARTIS shall agree within thirty (30) days after receipt of
the foregoing notice from VERTEX that [**********************] shall no longer
be considered as Excluded Compounds but shall be considered Compounds hereunder
subject to the provisions of this Agreement otherwise applicable to Compounds.
2.9.5. If NOVARTIS selects a compound (other than a compound which
was in late stage development or commercialization on the Effective Date) for
formal pre-clinical development and
(a) at the time of selection there is no scientific basis for
concluding that the compound acts through an effect on a
Kinase other than an Excluded Kinase; and
(b) it is later discovered that the compound's principal mode of
action derives from its effect on a Kinase or Kinases (other
than an Excluded Kinase);
then, that compound shall be considered a Special Compound under Section 2.9.1
as to which a Special Notice has been given, and the parties' rights and
responsibilities thereafter with respect to that Special Compound shall be as
set forth in and determined by Section 2.9.1.
2.9.6. Except as specified in Sections 2.9.1 through 2.9.5 hereof,
no Kinase targets or Compounds Controlled by NOVARTIS and its Affiliates shall
be subject to or included in this Agreement.
ARTICLE III
PAYMENTS
3.1. Signature Payment by NOVARTIS.
Upon the Effective Date of this Agreement NOVARTIS will make an
initial non-refundable payment of $15,000,000 to VERTEX.
3.2. Staffing and Research Support Payments.
NOVARTIS will make the payments specified below to VERTEX during
each Research Year in support of the Research Program under this Agreement. The
required
Research and Early Development Agreement -- Confidential -- Page 17
payments are based upon the following assumptions: (a) the average number of
FTE's which VERTEX will have employed in the Research Program during a Research
Year will be approximately equal to the FTE Level listed in the third column
below; and (b) the annual rate per FTE is approximately [**********]. If the
average FTE level for any Research Year is less than the level specified below
for that year (the difference being referred to in this section as an "FTE
Shortfall"), then the amount of funding specified below for that Research Year
shall be reduced by an amount (the "FTE Shortfall Amount") which bears the same
relation to the total funding specified below for that Research Year as the FTE
Shortfall bears to the projected FTE Level for that Year. The FTE Shortfall
Amount shall be carried over from year to year and applied to compensate VERTEX
for FTE Levels in subsequent Research Years which exceed the level for those
Years as specified below. In any such subsequent Research Year, VERTEX shall be
entitled to receive out of any remaining FTE Shortfall Amount a payment equal to
the value (computed with reference to the inflation-adjusted FTE rate specified
above) of any FTE's actually employed during that Research Year in excess of the
FTE Level specified for that year ("Excess FTE's"). Notwithstanding the
foregoing, the FTE Shortfall Amount will not be applied to compensate VERTEX on
account of more than 20 Excess FTE's in any one Research Year.
Research Year Funding FTE Level
------------- ------- ---------
1 [*******] [****]
2 [*******] [****]
3 [*******] [****]
4 [*******] [****]
5 [*******] [****]
6 [*******] [****]
Research Year 1 will be deemed to have commenced on May 1, 2000. Payments
due for each Research Year shall be made quarterly in advance on or before May
1, August 1, November 1 and February 1 of each Research Year except that the
quarterly payment due May 1, 2000 shall be made within thirty business days
after the Effective Date of this Agreement. All payments shall be made without
deduction for withholding or other similar taxes, in United States dollars to
the credit of such bank account as may be designated by VERTEX in writing to
NOVARTIS. Any payments which fall due on a date which is a legal holiday in the
Research and Early Development Agreement -- Confidential -- Page 18
Commonwealth of Massachusetts may be made on the next following day which is not
a legal holiday in the Commonwealth.
3.3. Development Loan Facility.
3.3.1. General. During the term of the Research Program and the
Extended Development Period, NOVARTIS shall create, reserve and maintain an
internal loan facility of [**********], from which it shall advance funds to
VERTEX, and from which VERTEX may draw funds from time to time, for purposes of
supporting Proof of Concept Studies for Development Candidates hereunder. For
any Development Candidate, VERTEX may draw no more than the budgeted cost of the
Proof of Concept Studies for that Candidate, as specified in the budget
submitted to the JRC by VERTEX as provided in Section 2.4.2 above, [**********],
whichever is less. No loan may be drawn to finance development activities
undertaken by VERTEX with respect to a Drug Candidate after the expiration of
the First Opportunity with respect to that Candidate. VERTEX may draw no more
than [***********] in the aggregate, and the available amount of the facility
shall be reduced by the principal amount of each loan drawn by VERTEX. All loans
shall be interest-free.
3.3.2. Draw. To draw on the loan facility, VERTEX shall submit a
notice of funding (a "Funding Notice") to NOVARTIS, signed by its Principal
Financial Officer, specifying the amount requested (which shall not be less than
[**********] per request), the Development Candidate to which the advance
relates, and certifying that the advance, plus any prior advances with respect
to that Development Candidate, do not exceed [***********] or the budgeted cost
of Proof of Concept Studies for that Development Candidate, whichever is less.
Advances shall be made by NOVARTIS by wire transfer at VERTEX's direction within
thirty (30) days after receipt of a Funding Notice.
3.3.3. Repayment. The full amount of any advances relating to a
particular Development Candidate will be forgiven by NOVARTIS, and the repayment
obligation of VERTEX in connection therewith automatically extinguished, upon
acceptance of that Development Candidate by NOVARTIS as a Drug Product Candidate
hereunder, whether at the First Opportunity, the Second Opportunity or as a
Subsequent Candidate. If the Development Candidate is not accepted by NOVARTIS
as a Drug Product Candidate or a Subsequent
Research and Early Development Agreement -- Confidential -- Page 19
Candidate, then VERTEX shall repay the full amount of the Development Loan
advanced with respect to that Development Candidate no later than the last day
of the Extended Development Period. The unpaid amount of any such Development
Loans not theretofore forgiven as provided above shall be repaid in full: (a) on
or before April 30, 2006, if NOVARTIS terminates the Research Program early
under Section 9.4 of this Agreement; and (b) on or before the first anniversary
of the effective date of any termination of this Agreement by NOVARTIS for cause
under Section 9.2 hereof.
3.4. Records.
VERTEX shall keep accurate records and books of accounts containing
all data reasonably required for the calculation and verification of FTE's
employed by VERTEX in the Research Program.
At NOVARTIS' request, VERTEX shall make those records available, no
more than once a year, during reasonable working hours, for review by a
recognized independent accounting firm acceptable to both parties, at NOVARTIS'
expense, for the sole purpose of verifying the accuracy of those records in the
calculation of Research Program FTE's. VERTEX shall not, however, be required to
retain or make available to NOVARTIS or its accountants, any such records or
books of account for any Research Year, beyond thirty-six (36) months from the
conclusion of that Research Year. NOVARTIS shall cause the accounting firm to
retain all such information in confidence.
In the event of a negative difference between the average number of
FTE's stated to be involved in the Research Program and the number of FTE's
actually employed, the amount previously advanced to VERTEX and attributable to
any such negative difference shall be due and payable to NOVARTIS without delay.
If the negative difference is more than [***] in any Research Year, then VERTEX
shall also pay the reasonable costs of the independent accountant employed by
NOVARTIS in the review. Interest at the rate of [******************], assessed
from the end of the Research Year to which the negative difference relates,
shall be due from VERTEX upon prior written notice.
Research and Early Development Agreement -- Confidential -- Page 20
ARTICLE IV
LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS
4.1. Development Election.
NOVARTIS shall have the exclusive right (the "Development Election")
to develop and commercialize each Drug Candidate proposed to it by VERTEX as set
forth below, for any and all Indications, under the terms and conditions set
forth in the License Agreement. While the Development Election is in effect,
VERTEX will not grant to any Third Party rights to VERTEX Kinase Technology
which are inconsistent with the grant of the Development Election to NOVARTIS
hereunder. The Development Election will expire and NOVARTIS shall no longer
have the right to select Drug Candidates hereunder upon the first to occur of:
(1) Expiration of the Research Program in the ordinary course without
early termination;
(2) Early termination of the Research Program by NOVARTIS under Section
9.4 hereof;
(3) Termination of the Research Program by VERTEX for Cause under
Section 9.3 hereof;
(4) Termination of the Research Program by either party hereto for
Scientific Cause under Section 9.5 hereof.
Notwithstanding the foregoing, in the circumstance set forth in Section
4.1(1) above, the Development Election shall expire only at the end of the
Extended Development Period, with respect to any Drug Candidates which were
selected as Development Candidates by VERTEX during the Research Program (if
they were still active Development Candidates on the date of expiration of the
Research Program) or the six month period after normal expiration of the
Research Program. NOVARTIS may exercise its Development Election with respect to
any such Development Candidates upon completion of Proof of Concept Studies
during the Extended Development Period. If Proof of Concept Studies with respect
to a particular Development Candidate are underway but have not yet been
completed, or if a Drug Candidate not accepted by NOVARTIS at the First
Opportunity is still in development but has not yet reached the Second
Research and Early Development Agreement -- Confidential -- Page 21
Opportunity stage, ninety (90) days prior to the end of the Extended Development
Period, NOVARTIS may nonetheless exercise its Development Election during that
ninety (90) day period with respect to that Development Candidate as if Proof of
Concept Studies had been successfully completed, or with respect to that Drug
Candidate as if it had reached the Second Opportunity, and the Election will
have the same effect hereunder as if it had been exercised upon successful
completion of Proof of Concept Studies hereunder with respect to that
Development Candidate or at the Second Opportunity with respect to that Drug
Candidate. Upon written request from NOVARTIS delivered one hundred twenty (120)
days prior to the end of the Extended Development Period, VERTEX will deliver to
NOVARTIS, as soon as practicable thereafter, all Development Information (as
referenced in Section 4.2 hereof) in its possession with respect to any such
Development Candidate, specifically identified in the foregoing Notice from
NOVARTIS, and all Further Development Information (as referenced in Section
4.4.1 hereof) in its possession with respect to any such Drug Candidate,
specifically identified in the foregoing Notice from NOVARTIS. In the event
NOVARTIS terminates the Research Program early under Section 9.4 hereof,
NOVARTIS may exercise the Development Election with respect to any Development
Candidate, during the one-year period between the date of notice and the
effective date of early termination, whether or not that Development Candidate
has completed Proof of Concept Studies during that period. VERTEX will provide
NOVARTIS with Development Information, as referenced in the preceding sentence,
with respect to any such Development Candidate(s), upon sixty (60) days prior
written notice from NOVARTIS delivered not less than one hundred twenty (120)
days before the effective termination date. In the event NOVARTIS validly
terminates the Research Program for Cause under Section 9.2 hereof, the
Development Election may nonetheless be exercised for the one-year period after
the effective date of the termination for cause, but only with respect to
Development Candidates that had not completed Proof of Concept Studies on or
prior to the effective termination date.
4.2. Process for Determining Drug Candidates.
VERTEX will notify NOVARTIS each time it selects a Compound as a
Development Candidate. After consultation with the JRC, VERTEX will determine
the content of the Proof of Concept Studies which will be applicable with
respect to that Development
Research and Early Development Agreement -- Confidential -- Page 22
Candidate. If the Compound successfully completes the Proof of Concept Studies
and therefore becomes a Drug Candidate, VERTEX will notify NOVARTIS that the
Proof of Concept Studies have been concluded and will provide with that
notification all material information (the "Development Information") known to
VERTEX about the Drug Candidate, including analysis results and raw data from
the Proof of Concept Studies, which NOVARTIS should reasonably require in order
to decide whether to accept the Drug Candidate for further development. The
Development Information shall also include any previously undisclosed
information with respect to VERTEX Kinase Technology which is important to a
scientific and commercial evaluation of the Drug Candidate.
4.3. Optional Exercise.
NOVARTIS may exercise its Development Election and accept a Drug
Candidate for further development (a "Drug Product Candidate") by delivery to
VERTEX, within ninety (90) days after receipt of the Development Information
from VERTEX with respect to that Drug Candidate, of written notice of exercise
(an "Exercise Notice"), specifying the Drug Candidate as to which the
Development Election is being exercised. The parties shall then promptly execute
a License, Development and Commercialization Agreement identical in substance to
Exhibit A hereto (the "License Agreement"), the terms of which are incorporated
by reference into, and are a part of, this Research Agreement, pursuant to which
NOVARTIS will further develop and commercialize the Drug Product Candidate. If
the Development Election has previously been exercised with respect to another
Drug Product Candidate and a License Agreement is in effect with respect to that
Candidate, then the License Agreement will be amended to reflect the addition of
another Drug Product Candidate for development. Development of each Drug Product
Candidate shall proceed immediately after the Development Election is exercised,
in accordance with the terms of the License Agreement. The ninety (90) day
period during which the Development Election must be exercised, as referenced
above, shall be referred to in this Agreement as the "First Opportunity."
NOVARTIS may propose to VERTEX by written notice delivered during the initial
forty-five 45 days of the First Opportunity period with respect to a Drug
Candidate, that the First Opportunity for the Drug Candidate be extended for
good reason for a specified time to permit NOVARTIS, at its expense and under
its direction, to conduct such additional studies of that Drug Candidate as may
be specified in the notice. VERTEX shall
Research and Early Development Agreement -- Confidential -- Page 23
discuss this request with NOVARTIS and the parties shall attempt in good faith
to reach mutual agreement with respect to the requested extension of the First
Opportunity period and the conduct of additional studies, but failing agreement
the First Opportunity period shall expire after ninety (90) days as specified
above.
4.4. Refused Candidate.
4.4.1. If NOVARTIS does not exercise its Development Election with
respect to a particular Drug Candidate (a "Refused Candidate") within the First
Opportunity, then the Development Election shall expire with respect to that
Refused Candidate (subject to the proviso set forth below), and VERTEX will
thereafter be free to develop and commercialize the Refused Candidate at its
expense free of any obligation to NOVARTIS hereunder, including the obligation
to submit information concerning that Refused Candidate for review by the JRC;
provided that VERTEX will not enter into any agreement with a Third Party to
develop or commercialize the Refused Candidate prior to the end of the Second
Opportunity as defined below; and provided further that if VERTEX continues
development of the Refused Candidate, VERTEX will notify NOVARTIS after VERTEX
has received all data from its development studies of that Refused Candidate
concluded after the First Opportunity, including analysis results and raw data,
which is material to and will form the basis for, VERTEX's decision to commence
its first Pivotal Registration Study with respect to the Refused Candidate (the
"Further Development Information"). VERTEX will include a copy of the Further
Development Information with that notice. During the thirty (30) day period
immediately following delivery to NOVARTIS of the Further Development
Information (the "Second Opportunity"), NOVARTIS shall have the right to
exercise the Development Election with respect to that Refused Candidate; except
that the provisions of Article VI of the License Agreement shall be applicable
to any Drug Product Candidates which are accepted at the Second Opportunity.
4.4.2. The provisions of Section 4.4.1 shall not apply to [*********
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4.5. Subsequent Candidates.
After NOVARTIS has selected eight (8) Drug Candidates, whether at
the First Opportunity or the Second Opportunity, as Drug Product Candidates
hereunder it may nonetheless exercise its Development Election at the First
Opportunity with respect to additional Drug Candidates ("Subsequent Candidates")
prior to expiration of the Development Election; provided, that
(a) development of any such Subsequent Candidate as to which
NOVARTIS has exercised its Development Election shall proceed
in accordance with the terms of Article VI of the License
Agreement; and
(b) the Development Election shall expire and NOVARTIS shall have
no further rights with respect to any Subsequent Candidate
which is not accepted by NOVARTIS at the First Opportunity. As
part of the Development Information provided to NOVARTIS with
respect to any Subsequent Candidate, VERTEX shall inform
NOVARTIS whether it will propose that development of the
Subsequent Compound be undertaken pursuant to a Joint Venture
as described in Section 6.4.2 of the License Agreement, and if
not, whether VERTEX will manufacture and supply Bulk Drug
Product with respect to that Subsequent Candidate under
Section 6.4.1 of the License Agreement.
The provisions of the last sentence of Section 4.4.2 above shall apply during
the term of the Extended Development Period to any Subsequent Candidates which
fall within the category of Drug Candidates described in Section 4.4.2.
4.6. Unexpected Results.
Notwithstanding any of the foregoing provisions:
Research and Early Development Agreement -- Confidential -- Page 25
(a) if NOVARTIS has chosen not to exercise its Development
Election with respect to a particular Drug Candidate at the
First Opportunity, and during development activities conducted
by VERTEX thereafter, but prior to the Second Opportunity,
VERTEX discovers significant evidence that the Drug Candidate
being studied for specified Indications and with reference to
one or more particular mechanisms of action (i) would be a
promising candidate for development in an Indication which was
not previously considered by the JRC to be relevant to the
targeted mechanism of action (a "New Indication"); or (ii)
acts by means of a mechanism of action not previously
considered by the JRC with respect to that Drug Candidate (a
"New Mechanism"), and by reason of that New Mechanism would be
a promising candidate for development in a New Indication;
(b) then NOVARTIS shall have the right to elect to develop that
Drug Candidate, for the New Indication only, as if development
were being proposed by VERTEX as a First Opportunity Candidate
under Section 4.3 hereof.
If NOVARTIS elects under (b) above to develop that Drug Candidate, it will
compensate VERTEX, on a basis to be agreed, for any development work which it
has performed beyond the First Opportunity which is useful for NOVARTIS in
development of the Drug Candidate for the New Indication. In turn, VERTEX will
allow NOVARTIS to cross-reference any of its filings with regulatory authorities
relative to that Drug Candidate, which are necessary in the course of developing
the Drug Candidate for the New Indication.
4.7. Clinical Trial Material. VERTEX will conduct its clinical studies
with clinical trial material the manufacture of which is designed to conform, as
and to the extent required by applicable U.S. federal regulations or as directed
by the JRC, to GMP standards. As soon as practicable after the exercise of its
Development Election with respect to a Drug Product Candidate, VERTEX will
deliver to NOVARTIS, and NOVARTIS will accept, all clinical trial material for
that Candidate in its possession to the extent it is usable in connection with
further
Research and Early Development Agreement -- Confidential -- Page 26
development of that Candidate. NOVARTIS will reimburse VERTEX for the
Manufacturing Cost of that material within thirty (30) days of receipt of
VERTEX's invoice therefor.
ARTICLE V
CONFIDENTIALITY
5.1. Undertaking.
During the term of this Agreement, each party shall keep
confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Kinase Technology and NOVARTIS
Kinase Technology.
(a) Each party shall take any and all lawful measures to prevent
the unauthorized use and disclosure of such information, and
to prevent unauthorized persons or entities from obtaining or
using such information.
(b) Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or
facilitate the unauthorized use or disclosure of such
information. Each party may disclose such information to its
officers, employees and agents, to authorized licensees and
sublicensees, and to subcontractors in connection with the
development or manufacture of Drug Candidates, Drug Product
Candidates or Drug Products, to the extent necessary to enable
such parties to perform their obligations hereunder or under
the applicable license, sublicense or subcontract, as the case
may be; provided, that such officers, employees, agents,
licensees, sublicensees and subcontractors have entered into
appropriate confidentiality agreements for secrecy and non-use
of such information which by their terms shall be enforceable
by injunctive relief at the instance of the disclosing party.
Research and Early Development Agreement -- Confidential -- Page 27
(c) Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and
agents and any such sublicensees and subcontractors.
5.2. Exceptions.
Notwithstanding the foregoing, the provisions of Section 5.1 hereof
shall not apply to knowledge, information, documents or materials which the
receiving party can conclusively establish:
(a) have entered the public domain without such party's breach of
any obligation owed to the disclosing party;
(b) are permitted to be disclosed by the prior written consent of
the disclosing party;
(c) have become known to the receiving party from a source other
than the disclosing party, other than by breach of an
obligation of confidentiality owed to the disclosing party;
(d) are disclosed by the disclosing party to a Third Party without
restrictions on its disclosure;
(e) are independently developed by the receiving party without
breach of this Agreement; or
(f) are required to be disclosed by the receiving party to comply
with applicable laws or regulations, to defend or prosecute
litigation or to comply with governmental regulations,
provided that the receiving party provides prior written
notice of such disclosure to the disclosing party and takes
reasonable and lawful actions to avoid or minimize the degree
of such disclosure.
Research and Early Development Agreement -- Confidential -- Page 28
5.3. Publicity.
The parties will agree upon the timing and content of any initial
press release or other public communications relating to this Agreement and the
transactions contemplated herein.
(a) Except to the extent already disclosed in that initial press
release or other public communication, no public announcement
concerning the existence or the terms of this Agreement or
concerning the transactions described herein shall be made,
either directly or indirectly, by VERTEX or NOVARTIS, except
as may be legally required by applicable laws, regulations, or
judicial order, without first obtaining the approval of the
other party and agreement upon the nature, text, and timing of
such announcement, which approval and agreement shall not be
unreasonably withheld.
(b) The party desiring to make any such public announcement shall
provide the other party with a written copy of the proposed
announcement in sufficient time prior to public release to
allow such other party to comment upon such announcement,
prior to public release.
5.4. Survival.
The provisions of this Article V shall survive the termination of
this Agreement and shall extend for a period of five (5) years thereafter.
ARTICLE VI
PUBLICATION
Each of NOVARTIS and VERTEX reserves the right to publish or publicly
present the results (the "Results") of the Research Program, subject to the
following terms and conditions. The party proposing to publish or publicly
present the Results (the "publishing party") will submit a draft of any proposed
manuscript or speech to the other party (the "non-publishing party") for
comments at least thirty (30) days prior to submission for publication or oral
presentation. The non-publishing party shall notify the publishing party in
writing within fifteen
Research and Early Development Agreement -- Confidential -- Page 29
(15) days of receipt of such draft whether such draft contains (i) information
of the non-publishing party which it considers to be confidential under the
provisions of Article V hereof, (ii) information that if published would have an
adverse effect on a patent application covering the subject matter of this
Agreement which the non-publishing party intends to file, or (iii) information
which the non-publishing party reasonably believes would be likely to have a
material adverse impact on the development or commercialization of a Development
Candidate, a Drug Candidate or a Drug Product Candidate. In any such
notification, the non-publishing party shall indicate with specificity its
suggestions regarding the manner and degree to which the publishing party may
disclose such information. In the case of item (ii) above, the non-publishing
party may request a delay and the publishing party shall delay such publication,
for a period not exceeding ninety (90) days, to permit the timely preparation
and filing of a patent application or an application for a certificate of
invention on the information involved. In the case of item (i) above, no party
may publish confidential information of the other party without its consent in
violation of Article V of this Agreement. In the case of item (iii) above, if
the publishing party shall disagree with the non-publishing party's assessment
of the impact of the publication, then the issue shall be referred to the JSC
for resolution. If the JSC is unable to reach agreement on the matter within
thirty (30) days after such referral, the matter shall be referred by the JSC to
the Chief Executive Officer of NOVARTIS and the Chief Executive Officer of
VERTEX who shall attempt in good faith to reach a fair and equitable resolution
of this disagreement. If the disagreement is not resolved in this manner within
two (2) weeks of referral by the JSC as aforesaid, then the decision of the
publishing party as to publication of any information generated by it, subject
always to the confidentiality provisions of Article V hereof, shall be final,
provided that such decision shall be exercised with reasonable regard for the
interests of the non-publishing party. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal. The parties will use their best
efforts to gain the right to review proposed publications relating to the
subject matter of the Research Program by consultants or contractors.
This Article VI shall terminate with the termination of this Agreement,
but the provisions of Article V hereof shall continue to govern the disclosure
by one party, whether by publication or otherwise, of Confidential Information
of the other, during the period set forth in Section 5.4.
Research and Early Development Agreement -- Confidential -- Page 30
ARTICLE VII
INDEMNIFICATION
7.1. Indemnification by VERTEX.
VERTEX will indemnify and hold NOVARTIS and its Affiliates, and
their employees, officers and directors harmless against any loss, damages,
action, suit, claim, demand, liability, expense, bodily injury, death or
property damage (a "Loss"), that may be brought, instituted or arise against or
be incurred by such persons to the extent such Loss is based on or arises out
of:
(a) the development, manufacture, use, sale, storage or handling
of a Compound, a Development Candidate, a Drug Candidate, a
Drug Product Candidate or a Drug Product by VERTEX or its
Affiliates or their representatives, agents, authorized
sublicensees or subcontractors under this Agreement, or any
actual or alleged violation of law resulting therefrom (with
the exception of Losses based on infringement or
misappropriation of intellectual property rights); or
(b) the breach by VERTEX of any of its covenants, representations
or warranties set forth in this Agreement; and
(c) provided however, that the foregoing indemnification shall not
apply to any Loss to the extent such Loss is caused by the
negligent or willful misconduct of NOVARTIS or its Affiliates.
7.2. Indemnification by NOVARTIS.
NOVARTIS will indemnify and hold VERTEX, and its Affiliates, and
their employees, officers and directors harmless against any Loss that may be
brought, instituted or arise against or be incurred by such persons to the
extent such Loss is based on or arises out of:
(a) the development, manufacture, use, sale, storage or handling
of a Compound, a Development Candidate, a Drug Candidate, a
Drug Product Candidate or a Drug Product by NOVARTIS or its
Affiliates or their representatives, agents, authorized
sublicensees or subcontractors under
Research and Early Development Agreement -- Confidential -- Page 31
this Agreement, or any actual or alleged violation of law
resulting therefrom (with the exception of Losses based on
infringement or misappropriation of intellectual property
rights); or
(b) the breach by NOVARTIS of any of its covenants,
representations or warranties set forth in this Agreement; and
(c) provided that the foregoing indemnification shall not apply to
any Loss to the extent such Loss is caused by the negligent or
willful misconduct of VERTEX or its Affiliates.
7.3. Claims Procedures.
Each Party entitled to be indemnified by the other Party (an
"Indemnified Party") pursuant to Section 7.1 or 7.2 hereof shall give notice to
the other Party (an "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any threatened or asserted claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided:
(a) That counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense
(unless (i) the employment of counsel by such Indemnified
Party has been authorized by the Indemnifying Party; or (ii)
the Indemnified Party shall have reasonably concluded that
there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in the defense of such action,
in each of which cases the Indemnifying Party shall pay the
reasonable fees and expenses of one law firm serving as
counsel for the Indemnified Party, which law firm shall be
subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and
Research and Early Development Agreement -- Confidential -- Page 32
(b) The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement to the extent that the
failure to give notice did not result in harm to the
Indemnifying Party.
(c) No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each
Indemnified Party which approval shall not be unreasonably
withheld, consent to entry of any judgment or enter into any
settlement which (i) would result in injunctive or other
relief being imposed against the Indemnified Party; or (ii)
does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or
litigation.
(d) Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and shall be
reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
7.4. Compliance.
The parties shall comply fully with all applicable laws and
regulations in connection with their respective activities under this Agreement.
ARTICLE VIII
PATENTABLE INVENTIONS
8.1. Ownership.
All inventions made and all Know-How generated exclusively by either
party or its Affiliates (directly or through others acting on its behalf) prior
to and during the term of this Agreement shall be owned by the party making the
invention or generating the Know-How claimed, or if such invention is made
jointly (a "Joint Invention"), shall be owned jointly, all as determined in
accordance with United States laws of inventorship.
Research and Early Development Agreement -- Confidential -- Page 33
8.2. Preparation.
VERTEX shall take responsibility for the preparation, filing,
prosecution and maintenance of all VERTEX Patents, and any patents and patent
applications claiming Joint Inventions, and NOVARTIS shall take responsibility
for the preparation, filing, prosecution and maintenance of all NOVARTIS
Patents. VERTEX shall provide the JRC with periodic reports listing, by name,
patents filed by VERTEX in the United States and other jurisdictions, along with
a general summary of the claims made and the jurisdictions of filing. In good
time, before the deadline for foreign filing of any patent application filed in
the United States, VERTEX will notify NOVARTIS whether it intends to foreign
file such patent application, and if it intends to do so, in what countries it
proposes to foreign file. Upon timely written notice from NOVARTIS, VERTEX will
file in such additional countries -- all being countries in which NOVARTIS would
customarily file its own cases dealing with similar subject matter -- as
NOVARTIS shall request.
8.3. Costs.
(a) During the Research Program. NOVARTIS shall reimburse VERTEX for
[*******************************************************************************
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***********************************]. If the full amount of any reimbursement
commitment is not applied in any Research Year, the unused balance may be
carried over from year to year during the Research Program.
(b) After the Research Program. Upon expiration of the Research
Program, the parties shall determine which Patents covering Drug Product
Candidates and Drug Products, and Development Candidates as to which the
Development Election is still applicable (until it expires), are included in the
Kinase Technology, and thereafter [*********************************************
********************************************************************************
***]. Either party may at any time thereafter elect, by written notice to the
other party, to discontinue support for one or more such Patents (a
"Discontinued Patent") and shall not be responsible for any costs relating to a
Discontinued Patent which are incurred more than sixty (60) days after receipt
of that notice by the other party. In such case, the other party may elect at
its sole discretion to continue
Research and Early Development Agreement -- Confidential -- Page 34
preparation, filing, prosecution or maintenance of the Discontinued Patent at
its sole expense. The party so continuing shall own any such Patent, and if the
party electing to discontinue support is the owner of the Discontinued Patent,
it shall execute such documents of transfer or assignment and perform such acts
as may be reasonably necessary to transfer ownership of the Discontinued Patent
to the other party and enable that party to file or to continue prosecution or
maintenance, if the other party elects to do so. Discontinuance may be on a
country-by-country basis or for a Patent series in total.
ARTICLE IX
TERM AND TERMINATION
9.1. Term.
This Agreement will extend until the termination (including any
early termination hereunder) of the Research Program (including any extension
thereof) and thereafter until the end of the Extended Development Period, unless
earlier terminated by either party hereto in accordance with this Agreement, or
unless extended by mutual agreement of the parties.
9.2. Termination of the Research Program by NOVARTIS for Cause.
Upon written notice to VERTEX, NOVARTIS may at its sole discretion
unilaterally terminate the Research Program and this Agreement upon the
occurrence of any of the following events:
(a) VERTEX shall materially breach any of its material
obligations, such as its obligations under Section 3.2 hereof,
under this Agreement or the License Agreement, and such
material breach shall not have been remedied or steps
initiated to remedy the same to NOVARTIS' reasonable
satisfaction, within sixty (60) days after NOVARTIS sends
written notice of breach to VERTEX; or
(b) VERTEX shall cease to function as a going concern by
suspending or discontinuing its business for any reason except
for interruptions caused by Force Majeure, strike, labor
dispute or any other events over which it has no control.
Research and Early Development Agreement -- Confidential -- Page 35
In the event of any valid termination under this Section 9.2,
NOVARTIS shall not be required to make any payments under Section 3.2 hereof
which are not due and payable prior to receipt by VERTEX of the notice of breach
referenced under Section 9.2(a) or receipt by VERTEX of the notice of
termination pursuant to Section 9.2(b), as the case may be. Notwithstanding the
foregoing, any License Agreement then in effect shall continue in effect unless
it is expressly terminated in accordance with its terms.
9.3. Termination of the Research Program by VERTEX for Cause.
VERTEX may at its sole discretion terminate this Agreement upon
written notice to NOVARTIS upon the occurrence of any of the following events:
(a) NOVARTIS shall materially breach any of its material
obligations under this Agreement or the License Agreement and
such material breach shall not have been remedied or steps
initiated to remedy the same to VERTEX's reasonable
satisfaction, within sixty (60) days after VERTEX sends
written notice of breach to NOVARTIS; or
(b) NOVARTIS shall cease to function as a going concern by
suspending or discontinuing its business for any reason except
for interruptions caused by Force Majeure, strike, labor
dispute or any other events over which it has no control.
Notwithstanding the foregoing, any License Agreement then in effect
shall continue in effect unless it is expressly terminated in accordance with
its terms.
9.4. Early Termination of Research Program by NOVARTIS.
NOVARTIS may in its absolute discretion terminate its participation
in the Research Program effective no earlier than the end of the Fourth Research
Year, upon one year's prior written notice to VERTEX (the "Notice Period"), in
which event NOVARTIS must nevertheless make all of the payments required to be
made hereunder which accrue or fall due during the Notice Period. The
Development Election shall terminate on the effective date of termination of the
Research Program pursuant to the foregoing.
Research and Early Development Agreement -- Confidential -- Page 36
9.5. Termination for Scientific Cause.
Either party may terminate this Agreement upon six months' prior
written notice to the other party, if (a) the terminating party can demonstrate
to the reasonable satisfaction of the other party that, by reason of scientific
developments unknown on the Effective Date, the Research Program is unlikely to
produce any Compounds that can achieve a commercially viable therapeutic effect
through an effect on a Kinase target; and (b) the parties have not agreed, prior
to expiration of the six month notice period, to redirect the Research Program
as provided in Section 2.8 herein.
9.6. Effect of Termination.
(a) Except where explicitly provided elsewhere herein, termination
of this Agreement for any reason, or expiration of this
Agreement, will not affect: (i) obligations which have accrued
as of the date of termination or expiration, and (ii)
obligations and rights which, expressly or from the context
thereof, are intended to survive termination or expiration of
this Agreement, including obligations of confidentiality under
Article V hereof and the indemnification provisions of Article
VII hereof.
(b) Upon termination or expiration of this Agreement, VERTEX and
NOVARTIS shall each have a worldwide, non-exclusive,
royalty-free license in the Field to the other party's Kinase
Technology which is the subject of a Valid Patent Claim as
defined in the License Agreement, including the use of any
Kinase claimed under the other party's Kinase Technology as a
drug target; except that the foregoing license (i) shall not
include a right on the part of NOVARTIS to make, use or sell,
as drugs, Compounds claimed under VERTEX Patents, except as
Drug Product Candidates and Drug Products under the License
Agreement; (ii) shall not include a right on the part of
VERTEX to make, use or sell Compounds claimed under NOVARTIS
Patents (other than a prodrug of a Compound claimed under
VERTEX Patents if that Compound is not included in a Drug
Product Candidate or a Drug Product under the License
Agreement);
Research and Early Development Agreement -- Confidential -- Page 37
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ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1. Representations and Warranties of VERTEX.
VERTEX represents and warrants to NOVARTIS as follows:
(a) Authorization. This Agreement has been duly executed and
delivered by VERTEX and constitutes the valid and binding
obligation of VERTEX, enforceable against VERTEX in accordance
with its terms except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, bankruptcy,
reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of VERTEX, its officers and directors.
(b) No Third Party Rights. VERTEX owns or possesses adequate
licenses or other rights to use all VERTEX Kinase Technology
relating to the Field and to grant the licenses herein. The
granting of the Development Election to NOVARTIS hereunder
does not violate any right known to VERTEX of any Third Party.
(c) Third Party Patents. Except as disclosed in writing between
the parties to this Agreement or their respective agents,
VERTEX is not aware of any
Research and Early Development Agreement -- Confidential -- Page 38
issued patents or pending patent application that, if issued,
would be infringed by the development, manufacture, use or
sale of any Compound, Development Candidate, Drug Candidate or
Drug Product pursuant to this Agreement.
10.2. Representations and Warranties of NOVARTIS.
NOVARTIS represents and warrants to VERTEX as follows:
(a) Authorization. This Agreement has been duly executed and
delivered by NOVARTIS and constitutes the valid and binding
obligation of NOVARTIS, enforceable against NOVARTIS in
accordance with its terms except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency,
bankruptcy, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally and by general
equitable principles. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
action on the part of NOVARTIS, its officers and directors.
(b) Third Party Rights. NOVARTIS owns or possesses adequate
licenses or other rights to use all NOVARTIS Kinase Technology
relating to the Field in accordance with the provisions of
this Agreement.
(c) Third Party Patents. Except as disclosed in writing between
the parties to this Agreement or their respective agents,
NOVARTIS is not aware of any issued patent or pending patent
application that, if issued, would be infringed by the
development, manufacture, use or sale of any Compound,
Development Candidate, Drug Candidate or Drug Product pursuant
to this Agreement.
Research and Early Development Agreement -- Confidential -- Page 39
ARTICLE XI
DISPUTE RESOLUTION
11.1. Governing Law, and Jurisdiction.
This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York.
11.2. Dispute Resolution Process.
(a) General. Except as set forth in (b) below or as otherwise
explicitly provided herein, in the event of any controversy or
claim arising out of or relating to any provision of this
Agreement, or the collaborative effort contemplated hereby,
the parties shall, and either party may, initially refer such
dispute to the JSC, and failing resolution of the controversy
or claim within thirty (30) days after such referral, the
matter shall be referred to the Chief Executive Officer of
VERTEX and the Chief Executive Officer of NOVARTIS who shall,
as soon as practicable, attempt in good faith to resolve the
controversy or claim. If such controversy or claim is not
resolved within sixty (60) days of the date of initial
referral of the matter to the JSC, either party shall be free
to initiate proceedings in any court having requisite
jurisdiction.
(b) Third Party Referral. Any dispute or claim relating to the
"Referral Matters" as defined below which the parties are
unable to resolve pursuant to the other dispute resolution
mechanisms provided in this Agreement (other than litigation)
shall, upon the written request of one party delivered to the
other party, be submitted to and settled by a panel of Third
Parties (a "Third Party Panel") appointed by VERTEX and
NOVARTIS as provided below. The "Referral Matter" shall
consist solely of disagreements concerning whether Proof of
Concept Studies as specified by the JRC have been completed.
Within thirty (30) days after delivery of the above-referenced
written request, each party will appoint one person who is not
an Affiliate of the party appointing that person, and
Research and Early Development Agreement -- Confidential -- Page 40
who is knowledgeable in the areas of pharmaceutical science,
business and commercial aspects of drug development and sale,
or the clinical development of pharmaceuticals, to hear and
determine the dispute. The two persons so chosen will select
another impartial Third Party and their majority decision will
be final and conclusive upon the parties hereto. If either
party fails to designate its appointee within the thirty (30)
day period referenced above, then the appointee who has been
designated by the other party will serve as the sole member of
the Third Party Panel and will be deemed to be the single,
mutually approved party to resolve the dispute. Each party
will bear its own costs in the Third Party Referral process,
and the parties will split equally the costs of the Third
Party Panel members. The Third Party Panel will, upon the
request of either party, issue its final determination in
writing.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Official Language.
English shall be the official language of this Agreement and the
License Agreement, and all communications between the parties hereto shall be
conducted in that language.
12.2. Waiver.
No provision of this Agreement may be waived except in writing by
both parties hereto. No failure or delay by either party hereto in exercising
any right or remedy hereunder or under applicable law will operate as a waiver
thereof, or a waiver of any right or remedy on any subsequent occasion.
12.3. Force Majeure.
Neither party will be in breach hereof by reason of its delay in the
performance of or failure to perform any of its obligations hereunder, if that
delay or failure is caused by strikes, acts of God or the public enemy, riots,
incendiaries, interference by civil or military authorities,
Research and Early Development Agreement -- Confidential -- Page 41
compliance with governmental priorities for materials, or any fault beyond its
control or without its fault or negligence.
12.4. Severability.
Should one or more provisions of this Agreement be or become
invalid, then the parties hereto shall attempt to agree upon valid provisions in
substitution for the invalid provisions, which in their economic effect come so
close to the invalid provisions that it can be reasonably assumed that the
parties would have accepted this Agreement with those new provisions. If the
parties are unable to agree on such valid provisions, the invalidity of such one
or more provisions of this Agreement shall nevertheless not affect the validity
of the Agreement as a whole, unless the invalid provisions are of such essential
importance for this Agreement that it may be reasonably presumed that the
parties would not have entered into this Agreement without the invalid
provisions.
12.5. Government Acts.
In the event that any act, regulation, directive, or law of a
country or its government, including its departments, agencies or courts, should
make impossible or prohibit, restrain, modify or limit any material act or
obligation of NOVARTIS or VERTEX under this Agreement, the party, if any, not so
affected, shall have the right, at its option, to suspend or terminate this
Agreement as to such country, if good faith negotiations between the parties to
make such modifications therein as may be necessary to fairly address the impact
thereof, are not successful after a reasonable period of time in producing
mutually acceptable modifications to this Agreement.
12.6. Government Approvals.
Each party will obtain any government approval required in its
country of domicile to enable this Agreement to become effective, or to enable
any payment hereunder to be made, or any other obligation hereunder to be
observed or performed. Each party will keep the other informed of progress in
obtaining any such government approval, and will cooperate with the other party
in any such efforts.
Research and Early Development Agreement -- Confidential -- Page 42
12.7. Export Controls.
This Agreement is made subject to any restrictions concerning the
export of materials and Technology from the United States which may be imposed
upon or related to either party to this Agreement from time to time by the
Government of the United States. Furthermore, NOVARTIS will not export, directly
or indirectly, any VERTEX Kinase Technology or any Bulk Drug Substance, Drug
Product Candidates or Drug Products utilizing such Technology to any countries
for which the United States Government or any agency thereof at the time of
export requires an export license or other governmental approval, without first
obtaining the written consent to do so from the Department of Commerce or other
agency of the United States Government when required by applicable statute or
regulation.
12.8. Assignment.
This Agreement may not be assigned or otherwise transferred by
either party without the prior written consent of the other party; provided,
however, that either party may assign this Agreement, without the consent of the
other party, (i) to any of its Affiliates, if the assigning party guarantees the
full performance of its Affiliates' obligations hereunder, or (ii) in connection
with the transfer or sale of all or substantially all of its assets or business
or in the event of its merger or consolidation with another company. Any
purported assignment in contravention of this Section 12.8 shall, at the option
of the nonassigning party, be null and void and of no effect. No assignment
shall release either party from responsibility for the performance of any
accrued obligation of such party hereunder. This Agreement shall be binding upon
and enforceable against the successor to or any permitted assignees from either
of the parties hereto.
12.9. Affiliates.
Each party may perform its obligations hereunder personally or
through one or more Affiliates, although each party shall nonetheless be solely
responsible for the performance of its Affiliates. Neither party shall permit
any of its Affiliates to commit any act (including any act or omission) which
such party is prohibited hereunder from committing directly. The use of
subcontractors by either party shall not increase the financial obligations of
the other party hereunder in any respect.
Research and Early Development Agreement -- Confidential -- Page 43
12.10. Counterparts.
This Agreement may be executed in duplicate, each of which shall be
deemed to be original and both of which shall constitute one and the same
Agreement.
12.11. No Agency.
Nothing herein contained shall be deemed to create an agency, joint
venture, amalgamation, partnership or similar relationship between NOVARTIS and
VERTEX. Notwithstanding any of the provisions of this Agreement, neither party
to this Agreement shall at any time enter into, incur, or hold itself out to
third parties as having authority to enter into or incur, on behalf of the other
party, any commitment, expense, or liability whatsoever, and all contracts,
expenses and liabilities in connection with or relating to the obligations of
each party under this Agreement shall be made, paid, and undertaken exclusively
by such party on its own behalf and not as an agent or representative of the
other.
12.12. Notice.
All communications between the parties with respect to any of the
provisions of this Agreement will be sent to the addresses set out below, or to
such other addresses as may be designated by one party to the other by notice
pursuant hereto, by prepaid, certified air mail (which shall be deemed received
by the other party on the seventh business day following deposit in the mails),
or by facsimile transmission, or other electronic means of communication (which
shall be deemed received when transmitted), with confirmation by first class
letter, postage pre-paid, given by the close of business on or before the next
following business day:
if to NOVARTIS, at:
NOVARTIS PHARMA AG
Business Development and Licensing
P.O. Box ________
▇▇-▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
with a copy to: Legal Services, at the address referenced above
Research and Early Development Agreement -- Confidential -- Page 44
if to VERTEX, at:
Vertex Pharmaceuticals Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President and Chief
Business Officer
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.13. Headings.
The paragraph headings are for convenience only and will not be
deemed to affect in any way the language of the provisions to which they refer.
12.14. Authority.
The undersigned represent that they are authorized to sign this
Agreement on behalf of the parties hereto. The parties each represent that no
provision of this Agreement will violate any other agreement that such party may
have with any other person or company. Each party has relied on that
representation in entering into this Agreement.
12.15. Entire Agreement.
This Agreement contains the entire understanding of the parties
relating to the matters referred to herein, and may only be amended by a written
document, duly executed on behalf of the respective parties.
12.16. Standstill.
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12.17. Notice of Pharmaceutical Side-Effects.
During the term of this Agreement, the parties shall keep each other
promptly and fully informed and will promptly notify appropriate authorities in
accordance with applicable law, after receipt of information with respect to any
serious adverse reaction, as defined by the World Health Organization, directly
or indirectly attributable to the use or application of Compounds, a Development
Candidate, Bulk Drug Substance, a Drug Product Candidate or a Drug Product.
12.18. Inflation Adjustment.
All payments required to be made to VERTEX hereunder (except any
royalty payments required to be made under the provisions of Sections 5.3 and
6.4.3 of the License Agreement, and any product supply payments required to be
made under Section 6.4.1 of the License Agreement) shall be adjusted at the
beginning of each Research Year (commencing at the beginning of Research Year 2)
to reflect the impact of inflation since the Effective Date of the Agreement, as
measured by the biotech worker inflation rate defined and reported in the
▇▇▇▇▇▇▇ Survey (▇▇▇▇▇▇▇/AON Consulting Inc., San Francisco, CA), or other
mutually acceptable index. Notwithstanding the foregoing, no adjustment shall be
required in any Research Year in which the appropriate inflation adjustment, if
applied, would result in a change of less than 3% in the relevant payment
amount.
12.19. Invoice Requirement.
Any amounts payable to VERTEX hereunder (except any royalty payments
required to be made under the provisions of Sections 5.3 and 6.4.3 of the
License Agreement) shall be made within thirty days after receipt by NOVARTIS,
or its nominee designated for that
Research and Early Development Agreement -- Confidential -- Page 46
purpose in advance by NOVARTIS in writing to VERTEX, of an invoice covering such
payment, which invoice shall conform to the extent reasonably practicable to the
form of invoice contained in Exhibit B to this Agreement.
12.20. Hardship.
If as a result of unforeseen events or developments relating to the
subject matter of this Agreement, the performance of this Agreement shall cause
inequitable economic hardship for one party which runs counter to the objectives
of this Agreement and which the other party cannot reasonably and in good faith
expect the first party to bear unrelieved, the parties will meet and seek in
good faith to find equitable means of amending this Agreement to reestablish a
fair and reasonable economic balance under this Agreement between the parties
hereto.
Research and Early Development Agreement -- Confidential -- Page 47
VERTEX PHARMACEUTICALS INCORPORATED
By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and Chief Executive Officer
NOVARTIS PHARMA AG
By:___________________________________________________
Title:________________________________________________
By:___________________________________________________
Title:________________________________________________
Research and Early Development Agreement -- Confidential -- Page 48
Schedule 1.13
Excluded Compounds and Excluded Kinases
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Excluded Kinases
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SWISSPROT Designation
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*SPTREMBL Designation
Excluded Compounds
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Research and Early Development Agreement -- Confidential
Schedule 2.4.3
General Criteria and Guidelines
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Research and Early Development Agreement -- Confidential
EXHIBIT A
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
between
Vertex Pharmaceuticals Incorporated
and
Novartis Pharma AG
License, Development and Commercialization Agreement
TABLE OF CONTENTS
Page Number
ARTICLE I -- DEFINITIONS.................................................1
ARTICLE II -- LICENSE...................................................10
2.1 Grant to NOVARTIS...............................................10
2.2 Grant to VERTEX.................................................11
2.3 Information Transfer............................................12
ARTICLE III -- DEVELOPMENT..............................................13
3.1 Commencement of Development Program.............................13
3.2 International Project Team......................................13
3.3 Development Responsibility and Costs............................15
3.4 Regulatory Approvals............................................15
3.5 Assistance Rights...............................................16
3.6 Reasonable Efforts in Development...............................18
ARTICLE IV -- MANUFACTURING AND SUPPLY..................................18
4.1 Supply of Bulk Drug Substance and Drug Product..................18
4.2 Bulk Supply Option..............................................18
4.3 Formulation and Packaging.......................................19
ARTICLE V -- COMMERCIALIZATION..........................................19
5.1 Marketing and Promotion.........................................19
5.2 Global Brand Team...............................................19
5.3 Co-Promotion in North America and the European Union ("EU").....21
5.4 Termination of Co-Promotion Obligation..........................23
5.5 Co-labeling.....................................................23
5.6 Due Diligence...................................................24
ARTICLE VI -- PAYMENTS..................................................24
6.1 Development Election Payment....................................24
6.2 Development Milestone Payments by NOVARTIS......................25
6.3 Royalties.......................................................27
6.4 Performance Reductions..........................................29
6.5 Sales Reports...................................................28
6.6 Withholding Tax.................................................31
ARTICLE VII -- SECOND OPPORTUNITY CANDIDATES AND SUBSEQUENT
CANDIDATES.............................................31
7.1 General.........................................................31
7.2 Information.....................................................32
7.3 Additional Second Opportunity Information and Payment...........32
License, Development and Commercialization Agreement -- Confidential --
Table of Contents -- Page i
LICENSE AND DEVELOPMENT AGREEMENT
TABLE OF CONTENTS (continued)
Page Number
7.4 Development and Commercialization Option........................32
ARTICLE VIII -- INTELLECTUAL PROPERTY...................................36
8.1 Patentable Inventions and Know-How..............................36
8.2 Infringement Claims by Third Parties............................37
8.3 Infringement Claims Against Third Parties.......................39
8.4 Notice of Certification.........................................40
8.5 Patent Term Extensions..........................................40
ARTICLE IX -- REPRESENTATIONS AND WARRANTIES............................41
9.1 Representations and Warranties of VERTEX........................41
9.2 Representations and Warranties of NOVARTIS......................42
ARTICLE X -- CONFIDENTIALITY............................................43
10.1 Undertaking.....................................................43
10.2 Exceptions......................................................44
10.3 Publicity.......................................................45
10.4 Survival........................................................45
ARTICLE XI -- PUBLICATIONS..............................................46
ARTICLE XII -- DISPUTE RESOLUTION.......................................47
12.1 Governing Law, and Jurisdiction.................................47
12.2 Dispute Resolution Process......................................47
ARTICLE XIII -- TERM AND TERMINATION....................................48
13.1 Term............................................................48
13.2 Termination For Cause...........................................47
13.3 Termination for Bankruptcy......................................48
13.4 Termination by NOVARTIS.........................................50
13.5 Effect of Termination...........................................49
ARTICLE XIV -- INDEMNIFICATION..........................................50
14.1 Indemnification by VERTEX.......................................50
14.2 Indemnification by NOVARTIS.....................................50
14.3 Claims Procedures...............................................51
14.4 Compliance......................................................52
14.5 Insurance.......................................................52
ARTICLE XV -- MISCELLANEOUS PROVISIONS..................................52
License, Development and Commercialization Agreement -- Confidential --
Table of Contents -- Page ii
LICENSE AND DEVELOPMENT AGREEMENT
TABLE OF CONTENTS (continued)
Page Number
15.1 Notice of Pharmaceutical Side-Effects...........................52
15.2 Waiver..........................................................53
15.3 Force Majeure...................................................53
15.4 Registration of License.........................................53
15.5 Severability....................................................53
15.6 Government Acts.................................................54
15.7 Government Approvals............................................54
15.8 Assignment......................................................54
15.9 Affiliates......................................................54
15.10 Counterparts....................................................55
15.11 No Agency.......................................................55
15.12 Notice..........................................................55
15.13 Headings........................................................56
15.14 Authority.......................................................56
15.15 Entire Agreement................................................56
15.16 Inflation Adjustment............................................58
15.17 Invoice Requirement.............................................58
15.18 Hardship........................................................58
SCHEDULES
Schedule 1.12 -- List of Drug Product Candidates
Schedule 1.25 -- List of Major Markets
Schedule 1.29 -- NOVARTIS Patents
Schedule 1.44 -- VERTEX Patents
Schedule 4.6 -- Terms of Supply
License, Development and Commercialization Agreement -- Confidential --
Table of Contents -- Page iii
License, Development and Commercialization Agreement
This Agreement is made and entered into as of ________, _____ (the
"Effective Date") between Vertex Pharmaceuticals Incorporated (hereinafter
"VERTEX"), a Massachusetts corporation with principal offices at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, and NOVARTIS PHARMA AG (hereinafter
"NOVARTIS"), a Swiss corporation with principal offices at ▇▇-▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇.
INTRODUCTION
WHEREAS, VERTEX and NOVARTIS are parties to a certain Research and Early
Development Agreement dated May 8, 2000 (the "Research Agreement") under which
VERTEX is attempting to design novel, small-molecule compounds targeting the
Kinase protein superfamily; and
WHEREAS, NOVARTIS may elect to develop and commercialize compounds
proposed by VERTEX under the terms set forth in the Research Agreement; and
WHEREAS, in accordance with the Research Agreement NOVARTIS has elected to
develop and commercialize the Drug Product Candidates designated on Schedule
1.12 hereto, and the parties therefore wish to execute this License, Development
and Commercialization Agreement, which is identical in substance to the
agreement attached as Exhibit A to the Research Agreement, to memorialize the
provisions specific to development and commercialization of Drug Product
Candidates and Subsequent Candidates; and
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly, by itself or through one or more intermediaries,
controls, or is controlled
License, Development and Commercialization Agreement -- Confidential -- Page 1
by, or is under direct or indirect common control with, such Person. The term
"control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. Control will be
presumed if one Person owns, either of record or beneficially, more than 50% of
the voting stock of any other Person. For the avoidance of any doubt, the
Novartis Institute for Functional Genomics, Inc. and The ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Institute, as currently operated, are not Affiliates of NOVARTIS for the
purposes of this Agreement.
1.2 "Global Brand Team" or "GBT" shall have the meaning set forth in
Section 5.2 hereof.
1.3 "Bulk Commercial Supply Option" shall have the meaning set forth in
Section 7.4.1 hereof.
1.4 "Bulk Drug Substance" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.
1.5 "Controlled" shall mean the legal authority or right of a party hereto
to grant a license or sublicense of intellectual property rights to another
party hereto, or to otherwise disclose proprietary or trade secret information
to such other party, without breaching the terms of any agreement with a Third
Party, infringing upon the intellectual property rights of a Third Party, or
misappropriating the proprietary or trade secret information of a Third Party.
1.6 "Co-promote" shall mean, as applied to VERTEX, to promote and Detail
(as defined in this Section) Drug Products through its own sales force and to
otherwise engage in activities in accordance with the provisions of Section 5.3
hereof. "Detail" as used above, shall mean a personal in-office visit by a
VERTEX sales representative to a health care provider, during which the
representative promotes the use of a Drug Product according to generally
recognized standards in the pharmaceutical industry.
1.7 "Development Candidate" shall mean a Compound selected by VERTEX,
during the term of the Research Program under the Research Agreement, and (if
the Program is
License, Development and Commercialization Agreement -- Confidential -- Page 2
not terminated early) during the six-month period immediately following
expiration of the Research Program, for formal pre-clinical development in the
Field.
1.8 "Development Plan" shall have the meaning set forth to it in Section
3.2.2 hereof.
1.9 "Development Program" shall mean activities associated with
development of a Drug Product Candidate which are conducted by or at the
direction of NOVARTIS after the Development Election has been exercised with
respect to that Drug Candidate, including but not limited to (a) manufacture and
formulation of Drug Product Candidates for clinical studies; (b) planning,
implementation, evaluation and administration of human clinical trials; (c)
manufacturing process development and scale-up for the commercial manufacture of
Bulk Drug Substance and Drug Product; (d) preparation and submission of
applications for Regulatory Approval; and (e) post-market surveillance of
approved drug indications, as required or agreed as part of a marketing approval
by any governmental regulatory authority.
1.10 [This Section is intentionally left blank.]
1.11 "Drug Product" shall mean a finished dosage form which is prepared
from Bulk Drug Substance and is ready for administration to the ultimate
consumer as a pharmaceutical.
1.12 "Drug Product Candidate" shall mean any Drug Candidate listed from
time to time on Schedule 1.12 hereof, as to which NOVARTIS has exercised the
Development Election under Article IV of the Research Agreement and which has
become a subject of this License Agreement in accordance with the provisions
thereof.
1.13 "Effective Date" shall mean the effective date of this Agreement as
set forth on the first page hereof.
1.14 "Extended Development Period" shall mean the two-year period
immediately following expiration of the term of the Research Program.
1.15 "Field" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.
License, Development and Commercialization Agreement -- Confidential -- Page 3
1.16 "First Commercial Sale" shall mean the first sale of a Drug Product
by NOVARTIS or an Affiliate or sublicensee of NOVARTIS in a country in the
Territory following Regulatory Approval of the Drug Product in that country or,
if no such Regulatory Approval or similar marketing approval is required, the
date upon which the Drug Product is first commercially launched in such country.
1.17 "Filing Outside the U.S." shall mean any application or regulatory
filing to be made hereunder with a regulatory authority outside the United
States, for approval to manufacture and sell Drug Product(s) outside the U.S.,
and any correspondence, approvals or governmental licenses relating thereto.
1.18 "First Opportunity" shall mean the ninety (90) day period following
completion of Proof of Concept Studies with respect to a Drug Candidate, during
which NOVARTIS may first exercise its Development Election and accept the Drug
Candidate for development under the License Agreement, in accordance with
Section 4.3 of the Research Agreement.
1.19 "GMP" shall mean the current Good Manufacturing Practice regulations
promulgated by the FDA, published at 21 CFR Part 210 et seq., as such
regulations may from time to time be amended, and such equivalent regulations or
standards of countries outside the United States as may be applicable to
activities conducted hereunder.
1.20 "Indication" shall mean a recognized disease or condition, an
important manifestation of a disease or condition, or symptom associated with a
disease or syndrome for which use of a Drug Product is indicated, as would be
identified in the Drug Product's label under applicable FDA regulations or the
foreign equivalent thereof.
1.21 "IND" means the investigational new drug application relating to a
Drug Product Candidate filed with the FDA pursuant to 21 CFR Part 312, including
any amendments thereto. References herein to IND shall include, to the extent
applicable, any comparable Filing(s) Outside the U.S. (such as a CTX in the
European Union).
1.22 "International Project Team" or "IPT" shall have the meaning set
forth in Section 3.2.1 hereof.
License, Development and Commercialization Agreement -- Confidential -- Page 4
1.23 "Joint Steering Committee" or "JSC" shall have the meaning set forth
in Section 2.6 of the Research Agreement.
1.24 "Know-How" means all proprietary material and information including
data, technical information, know-how, experience, inventions, discoveries,
trade secrets, compositions of matter and methods, whether currently existing or
developed or obtained during the course of this Agreement and whether or not
patentable or confidential, that are now Controlled by a Party or its Affiliates
and that relate to the development, utilization, manufacture or use of any Drug
Product Candidate or Drug Product, including but not limited to processes,
techniques, methods, products, materials and compositions; provided however,
that for the purposes of the definition of VERTEX Know-How only, the term
"Know-How" shall not include VERTEX's general drug design technology, whether in
software or hardware, tangible or intangible, form.
1.25 "Major Markets" shall mean those countries listed on Schedule 1.25
hereto.
1.26 "Manufacturing Cost" shall mean [**********************************
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1.27 "Net Sales" with respect to any Drug Product shall mean the gross
amount invoiced by NOVARTIS and any NOVARTIS Affiliate, licensee or sublicensee
for that Drug Product sold to Third Parties in bona fide, arms-length
transactions, less [***********************************************************
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all as determined in accordance with NOVARTIS' usual and customary accounting
methods, which are in accordance with generally accepted accounting principles
(GAAP).
1.27.1 In the case of any sale or other disposal of a Drug Product
between or among NOVARTIS and its Affiliates, licensees and
sublicensees, for resale, Net Sales shall be calculated as
above only on the value charged or invoiced on the first
arm's-length sale thereafter to a Third Party;
1.27.2 In the case of any sale which is not invoiced or is delivered
before invoice, Net Sales shall be calculated at the time of
shipment or when the Drug Product is paid for, if paid for
before shipment or invoice;
1.27.3 In the case of any sale or other disposal for value, such as
barter or counter-trade, of any Drug Product, or part thereof,
other than in an arm's length transaction exclusively for
money, Net Sales shall be calculated as above on the value of
the consideration received or the fair market price (if
higher) of the Drug Product in the country of sale or
disposal;
1.27.4 In the event the Drug Product is sold in a finished dosage
form containing the Drug Product in combination with one or
more other active ingredients (a "Combination Product"), the
Net Sales of the Drug Product, for the purposes of determining
royalty payments, shall be determined by
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1.28 "NOVARTIS Know-How" shall mean all Know-How of NOVARTIS.
1.29 "NOVARTIS Patents" shall mean any Patents Controlled by NOVARTIS or
any of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate or
a Drug Product, or a formulation or prodrug thereof, discovered or identified by
NOVARTIS or its Affiliates during the course of the Research Program or a
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of NOVARTIS
Patents is appended hereto as Schedule 1.29 and will be updated periodically to
reflect additions thereto during the term of this Agreement. NOVARTIS shall keep
VERTEX periodically informed in writing of all NOVARTIS patents.
1.30 "NOVARTIS Technology" shall mean all NOVARTIS Patents and all
NOVARTIS Know-How which is applied by NOVARTIS to the development, manufacture
or use of Bulk Drug Substance, a Drug Product Candidate or a Drug Product.
1.31 "Patents" means all existing patents and patent applications and all
patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary 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.
1.32 "Person" shall mean any individual, corporation, partnership,
association. joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.
License, Development and Commercialization Agreement -- Confidential -- Page 7
1.33 "Pivotal Registration Study" shall mean a human clinical trial
conducted for inclusion in (i) that portion of the FDA submission and approval
process which provides for the continued trials of a Drug Candidate on
sufficient numbers of patients to generate safety and efficacy data to support
Regulatory Approval in the proposed therapeutic indication, as more fully
defined in 21 C.F. R. ss. 312.21(c), and (ii) equivalent submissions with
similar requirements in other countries.
1.34 "Regulatory Approval" shall mean, with respect to any country, all
authorizations by the appropriate governmental entity or entities necessary for
commercial sale of a Drug Product in that country including, without limitation
and where applicable, approval of labeling, price, reimbursement and
manufacturing. "Regulatory Approval" in the United States shall mean final
approval of a new drug application pursuant to 21 CFR ss. 314, permitting
marketing of the applicable Drug Product in interstate commerce in the United
States. "Regulatory Approval" in the European Union shall mean final approval of
a Marketing Authorization Application pursuant to Council Directive 75/319/EEC,
as amended, or Council Regulation 2309/93/EEC, as amended.
1.35 "Research Agreement" shall mean that certain Research Agreement
between VERTEX and NOVARTIS dated May 8, 2000.
1.36 "Second Opportunity" shall mean the thirty (30) day period
immediately following delivery to NOVARTIS of the Further Development
Information in accordance with Section 4.4.1 of the Research Agreement, relating
to development studies completed by VERTEX with respect to a Refused Candidate
after the First Opportunity, during which period NOVARTIS may exercise its
Development Election and accept the Refused Candidate for development under the
License Agreement in accordance with Section 4.4 of the Research Agreement.
1.37 "Subsequent Candidate" shall mean any Drug Candidate proposed by
VERTEX for further development at the First Opportunity, prior to the end of the
Extended Development Period, after NOVARTIS has accepted eight (8) Drug
Candidates for development at the First or Second Opportunity.
License, Development and Commercialization Agreement -- Confidential -- Page 8
1.38 "Technology" shall mean VERTEX Technology and NOVARTIS Technology.
1.39 "Territory" shall mean all the countries in the world.
1.40 "Third Party" shall mean any person or entity which is not a party or
an Affiliate of any party to this Agreement.
1.41 "Total Costs" shall mean
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1.42 "Valid Patent Claim" shall mean either (a) a claim of an issued and
unexpired Patent which has not been revoked or held permanently 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
which has not been admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise, or (b) a claim of a pending patent application which
claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application.
1.43 "VERTEX Know-How" shall mean all Know-How of VERTEX.
1.44 "VERTEX Patents" shall mean any Patents Controlled by VERTEX or any
of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate or a
Drug Product, or a formulation or prodrug thereof, discovered or identified by
VERTEX or its Affiliates during the course of the Research Program and the
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of VERTEX
License, Development and Commercialization Agreement -- Confidential -- Page 9
Patents is appended hereto as Schedule 1.44 and will be updated periodically to
reflect additions thereto during the term of this Agreement.
1.45 "VERTEX Technology" shall mean all VERTEX Patents and all VERTEX
Know-How.
1.46 The term "North America" shall mean Canada, the United States and
Mexico, and the term "European Union" shall mean those countries which are now
or later become members of the European Union.
Capitalized terms used but not otherwise defined herein which are defined in the
Research Agreement shall have the meaning ascribed to them therein.
ARTICLE II
LICENSE
2.1 Grant to NOVARTIS.
(a) Subject to the other provisions of this Agreement, VERTEX
hereby grants to NOVARTIS an exclusive worldwide license under
VERTEX Technology to the extent useful to permit NOVARTIS to
carry out its rights and obligations set forth in this
Agreement and to develop, manufacture, have manufactured,
market, use, sell and import for sale, as provided herein,
Bulk Drug Substance, Drug Product Candidates and Drug Products
worldwide. NOVARTIS shall have the right to sublicense under
this Agreement. Subject to the provisions of this Agreement,
VERTEX shall have the right to use VERTEX Technology to
discharge its obligations and exercise its rights under this
Agreement. VERTEX retains all rights to VERTEX Technology
except to the extent explicitly granted to NOVARTIS hereunder.
License, Development and Commercialization Agreement -- Confidential -- Page 10
(b) NOVARTIS may subcontract its rights to manufacture Bulk Drug
Substance and Drug Product and may contract with reputable
organizations to conduct or assist in the conduct of human
clinical trials and the evaluation of trials data, after prior
notice to, but without the consent of, VERTEX. NOVARTIS shall
be responsible to VERTEX for the performance of any of its
sublicensees or subcontractors under any provisions of this
Agreement for which NOVARTIS is responsible. NOVARTIS shall
not permit any subcontractors or sublicensees to use VERTEX
Technology without provisions safeguarding confidentiality at
least equivalent to those provided in this Agreement. Any such
provisions will allow VERTEX the right to directly enforce the
obligations of confidentiality with respect to VERTEX
Technology in possession of the Third Party.
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2.2 Grant to VERTEX. Subject to the other provisions of this Agreement,
NOVARTIS hereby grants to VERTEX a non-exclusive, worldwide license or (as
appropriate) sublicense under NOVARTIS Technology, only to the extent necessary
to permit VERTEX to
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carry out the activities which it is permitted to undertake in this Agreement.
VERTEX shall not sublicense the foregoing license to the NOVARTIS Technology
without the consent of NOVARTIS (which shall not be unreasonably withheld). Any
permitted sublicense will contain provisions safeguarding confidentiality at
least equivalent to those provided in this Agreement, which will allow NOVARTIS
the right to directly enforce the obligations of confidentiality with respect to
NOVARTIS Technology in possession of the Third Party. NOVARTIS retains all
rights to NOVARTIS Technology except to the extent explicitly granted to VERTEX
hereunder.
2.3 Information Transfer.
(a) Each party shall deliver to the other all information
Controlled by it and requested by the other party relating to
Bulk Drug Substance, Drug Product Candidates and Drug
Products, and methods of manufacturing the same, which is
necessary or useful for exercise by such other party of the
rights granted hereunder. The information to be delivered
shall include copies of all Patents, copyrights, copyright
registrations and applications therefor and all other
manifestations of the intellectual property embodied in the
Bulk Drug Substance, Drug Product Candidates or Drug Products,
whether in human or machine readable form.
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ARTICLE III
DEVELOPMENT
3.1 Commencement of Development Program. NOVARTIS shall promptly and
diligently commence and pursue a Development Program with respect to each Drug
Candidate as soon as practicable after exercise by NOVARTIS of its Development
Election with respect to that Drug Candidate. Any Drug Candidate for which a
Development Program has been commenced by NOVARTIS hereunder shall be called a
Drug Product Candidate under this Agreement. The provisions set forth in this
Article III shall not apply to any Subsequent Candidates or Drug Candidates
accepted by NOVARTIS at the Second Opportunity as to which development and
marketing will proceed in the form of a joint venture, as provided in Section
7.4.2.
3.2 International Project Team.
3.2.1 Formation and Responsibilities. As soon as practicable after
the exercise by NOVARTIS of its Development Election with
respect to a Drug Product Candidate, NOVARTIS will establish
an International Project Team ("IPT") which shall include one
representative designated by VERTEX from time to time.
Additional IPT's, which shall also include one VERTEX
representative, may be established from time to time in
connection with the development of additional Drug Product
Candidates. The IPT (or its successor organization, as
designated by NOVARTIS) will be the principal organization
through which the development of a Drug Product Candidate is
planned, administered, evaluated and completed, subject to
appropriate review and approval at senior management levels as
required by NOVARTIS from time to time. In addition to the
VERTEX member, the IPT will typically have members from the
various functional groups (e.g., research, preclinical safety,
clinical, regulatory, marketing) which are or will be expected
to be involved in development and launch of the Drug Product
Candidate and Drug Product. NOVARTIS will appoint the IPT
Chair. The IPT will typically meet every four to six weeks,
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depending on the level of current development activity, and
will be responsible for preparation and implementation of the
Development Plan described in Section 3.2.2 below with respect
to each Drug Product Candidate.
3.2.2 Development Plan. The IPT shall prepare and oversee the
implementation of the overall Development Plan for each Drug
Product Candidate. The Development Plan shall, among other
things, detail, schedule and fully describe the proposed
toxicology studies, clinical trials, regulatory plans,
clinical trial and commercial material requirements, and
process development and manufacturing plans for each Drug
Product Candidate, along with relevant budget information for
the described items, and will outline the key elements
involved in obtaining Regulatory Approval in each country
where the Drug Product is to be marketed. The parties expect
that development tasks will be advanced in parallel rather
than serially where practicable and appropriate, if doing so
would be likely to advance the ultimate date of Regulatory
Approval and launch and is otherwise commercially reasonable.
3.2.3 Meeting Materials. The IPT will consider all information that
is material to an assessment of the status, direction and
progress of the Development Program, including all clinical
trials protocols, data and reports. The IPT Leader will ensure
that full and complete minutes are prepared and distributed to
each member of the IPT promptly after each meeting. Those
minutes shall contain a full report on the activities of the
IPT during its meeting. VERTEX's representative on the IPT
will receive all documents and information distributed or
communicated to members of the IPT generally, and may review
copies of all other information relative to the development of
a Drug Product Candidate unless the IPT Leader denies access
to that information for good reason.
License, Development and Commercialization Agreement -- Confidential -- Page 14
3.2.4 Referral to JSC. If VERTEX disagrees with the decision of the
IPT on any matter which might have a significant impact on the
presumed value of the Drug Product Candidate or the timing of
the Development Program, then VERTEX may refer the matter for
consideration by the JSC, by written notice to the IPT chair
and the JSC Chair, describing the basis for its disagreement
in reasonable detail. The matter will be promptly reviewed and
discussed at a special meeting of the JSC to be called and
held within 30 days of the referral.
3.3 Development Responsibility and Costs. Except as provided in Section
3.5 below, NOVARTIS will have sole responsibility for, and bear the cost of
conducting, the Development Program with respect to each Drug Product Candidate.
3.4 Regulatory Approvals. NOVARTIS shall be solely responsible for
preparing and submitting registration dossiers for Regulatory Approval of Drug
Product Candidates in the Territory.
3.4.1 NOVARTIS Ownership. All Regulatory Approvals shall be held by
and in the name of NOVARTIS, and NOVARTIS shall own all
submissions in connection therewith, provided that VERTEX
shall have a right of reference to all or any part of the
submissions if the "Assistance Rights" become effective under
Section 3.5 hereof.
3.4.2 Principal Interface. All formulary or marketing approvals
shall also be obtained by and in the name of NOVARTIS, and
NOVARTIS will be the principal interface with and will
otherwise handle all interactions with regulatory agencies
concerning any Drug Product including, to the extent legally
possible, being the sole contact with such agencies, subject
to the rights of VERTEX under Section 3.4.3.
3.4.3 Regulatory Meetings. To the extent not prohibited by law or
regulation, VERTEX shall have the right, after consultation
with NOVARTIS and unless VERTEX's presence would impede the
regulatory approval
License, Development and Commercialization Agreement -- Confidential -- Page 15
process, to have one representative participate in all
material meetings between representatives of NOVARTIS and any
of the FDA, the EMEA and Koseisho (MHW Japan).
(a) NOVARTIS will undertake to provide VERTEX with
information reasonably in advance of the meeting
sufficient to ensure that the VERTEX
representative is adequately informed about the
issues to be presented at any such meeting.
(b) VERTEX may request NOVARTIS to provide VERTEX with
a copy of any correspondence between the FDA, the
EMEA and Koseisho that relates to any material
issues involving Regulatory Approval of a Drug
Product Candidate, and NOVARTIS shall provide that
information upon request, unless NOVARTIS has good
reason to withhold any such correspondence, in
which case it will notify VERTEX of that reason
promptly.
(c) Notwithstanding the foregoing, NOVARTIS will have
sole discretion as to the regulatory strategy and
decision-making for any Drug Product Candidate or
Drug Product.
3.5 Assistance Rights.
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License, Development and Commercialization Agreement -- Confidential -- Page 16
3.5.1 [*******************************************************************
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3.5.2 If VERTEX pursues its Assistance Rights:
(a) Regulatory Actions. NOVARTIS will continue to make
any necessary and appropriate regulatory filings
with respect to the Development Work and will, if
required for VERTEX to exercise its Assistance
Rights effectively, transfer to VERTEX at VERTEX's
expense any IND material (or equivalents thereof)
relevant to such Development Work.
(b) Manufacture of Clinical Supply of Drug Product
Candidate. NOVARTIS will supply VERTEX (for up to
two years) with the necessary clinical supply of
Drug Product Candidate required to perform such
Development Work in accordance with NOVARTIS' then
current scale of manufacturing at NOVARTIS'
Manufacturing Cost and upon such other reasonable
and customary terms as to shipment, delivery and
similar matters as may be agreed.
(c) Milestones. If NOVARTIS elects to resume the
Development Program for a Drug Product Candidate,
it will provide VERTEX with ninety (90) days prior
notice thereof, and will reimburse VERTEX for the
actual direct cost of the Development Work of good
quality, if such work conforms with the
requirements of the relevant Development Plan.
NOVARTIS will pay VERTEX interest on the
reimbursable costs incurred by VERTEX in the
conduct of the Development Work, at a rate
compounded quarterly equal to the thirty-day
London InterBank Offered Rate ("LIBOR") for the
local currency in which payment is made, as quoted
in The Financial Times as determined on the date
the Development
License, Development and Commercialization Agreement -- Confidential -- Page 17
Work is first undertaken by VERTEX and on the last
Business Day of each calendar quarter thereafter.
3.6 Reasonable Efforts in Development. NOVARTIS will use diligent,
commercially reasonable efforts consistent with those used by NOVARTIS for its
own compounds of similar commercial potential to develop Drug Product Candidates
and Subsequent Candidates into Drug Products. NOVARTIS will promptly notify
VERTEX in writing if it should determine that development of any Drug Product
Candidate or Drug Product is not technically feasible or commercially
justifiable, specifying in reasonable detail the reasons for that determination.
ARTICLE IV
MANUFACTURING AND SUPPLY
4.1 Supply of Bulk Drug Substance and Drug Product. Subject to VERTEX's
Bulk Supply Option set forth in Section 7.4.1 below, NOVARTIS will be
responsible for manufacturing and supply of all Bulk Drug Substance, Drug
Product Candidates and Drug Product as necessary for the conduct of the
Development Plan and for all commercial purposes in the Territory. The parties
will agree on reasonable and appropriate measures by which manufacturing
previously being undertaken by VERTEX shall be transitioned to NOVARTIS
following the exercise of its Development Election with respect to a particular
Drug Product Candidate. The objective of both parties will be to accomplish a
smooth and timely transition. Any Bulk Drug Substance provided to NOVARTIS
during the transition period will be supplied at VERTEX's reasonable
Manufacturing Cost.
4.2 Bulk Supply Option. If VERTEX elects under the circumstances set forth
in Section 7.4 hereof to exercise its Bulk Supply Option, all Bulk Drug
Substance will be supplied under the terms of a supply agreement to be
negotiated as set forth in Section 7.4.1(d) hereof.
4.3 Formulation and Packaging. In all events, NOVARTIS will be responsible
for formulation and packaging of Drug Products.
License, Development and Commercialization Agreement -- Confidential -- Page 18
ARTICLE V
COMMERCIALIZATION
5.1 Marketing and Promotion. NOVARTIS shall have exclusive rights to
market, sell and distribute all Drug Products in the Territory, subject to
VERTEX's Co-promotion rights set forth in Section 5.3, and subject to the
provisions relating to Subsequent and Second Opportunity Candidates set forth in
Article VI hereof. NOVARTIS will book all sales of Drug Products (unless
otherwise specified with respect to any joint venture established as provided in
Section 7.4.2 hereof) and will report those sales to VERTEX as specified in
Section 6.5 of this Agreement.
5.2 Global Brand Team. Not later than six months prior to the commencement
of Phase III Clinical Trials for any Drug Product Candidate, NOVARTIS will form
a Global Brand Team ("GBT"), which will include one representative designated by
VERTEX. Additional GBT's, which shall also include one VERTEX representative,
may be established from time to time in connection with the marketing of
additional Drug Product Candidates. The GBT (or its successor organization, as
designated by NOVARTIS) will be the principal organization through which the
marketing of a Drug Product is planned, administered, evaluated and effected,
subject to appropriate review at senior management levels as required by
NOVARTIS. NOVARTIS will appoint the chair of the GBT, who will normally be the
Brand Director. The GBT will periodically meet as necessary, depending on the
level of marketing activity at the time.
5.2.1 Marketing Plans. The Global Brand Team will prepare and
oversee the implementation of a detailed marketing plan (a
"Marketing Plan") for the launch of each Drug Product,
addressing the overall branding and branding elements as well
as the key promotional product claims. The GBT will select an
external agency or agencies which will be charged with the
execution of some components of the Marketing Plan. The
Marketing Plan will contain among other things budgets,
schedules, product positioning, pricing, market research plans
and results and other customary planning and marketing
material with respect to marketing and launch of
License, Development and Commercialization Agreement -- Confidential -- Page 19
the Drug Product. The Marketing Plan will be periodically
updated to reflect changes in market information, sales
performance and forecasts, sales force deployment,
communication plans and information concerning competition and
competitors.
5.2.2 Local Product Teams. Local Product Teams will be established
in each country to prepare and execute the product launch for
a Drug Product within the framework of the Marketing Plan. The
local Product Teams will be chaired by a NOVARTIS Brand
Director, and VERTEX may designate one Product Team
representative where it Co-Promotes the Drug Product.
5.2.3 Campaigns and Promotional Materials. The GBT will review all
general product campaigns (including target audience and
principal messages) and may from time to time review the
principal promotional material to be used in connection with
the marketing and sale of a Drug Product. If VERTEX is
Co-promoting a Drug Product under Section 5.3 hereof, it will
provide the GBT, for prior review and comment, with copies of
all advertising, promotional material and other literature
which VERTEX intends to use on, or in connection with, a Drug
Product in North America and the EU, which will be in
accordance with the Marketing Plan, and will also submit all
such material to NOVARTIS for approval by its regulatory
affairs group as not to be in violation of applicable laws and
regulations governing its use. Any such material shall not be
utilized by VERTEX unless and until it has been approved by
NOVARTIS.
5.2.4 Referral to JSC. If VERTEX disagrees with the GBT on any
matter which might have a significant impact on the presumed
value of the Drug Product or the timing of commercial launch,
then VERTEX may refer the matter for consideration by the JSC,
by written notice to the GBT Chair
License, Development and Commercialization Agreement -- Confidential -- Page 20
and the JSC Chair, describing the basis for its disagreement
in reasonable detail. The matter will be promptly reviewed and
discussed at a special meeting of the JSC to be called and
held within 30 days of the referral.
5.3 Co-Promotion in North America and the European Union ("EU"). VERTEX
may elect to Co-Promote a Drug Product in North America and the countries of the
European Union (except where prohibited by law) in the manner and to the extent
set forth below. The right to Co-Promote as set forth herein is non-exclusive,
and also may not be sublicensed or sub-contracted by VERTEX to a Third Party.
5.3.1 Co-Promotion Option. VERTEX will notify NOVARTIS in writing,
if it wishes to Co-Promote a Drug Product, not less than
twelve (12) months prior to the projected date of First
Commercial Sale of the Drug Product in North America or the EU
(as that projected date has been previously provided to VERTEX
a reasonable time before commencement of the twelve (12) month
period referenced above). The parties will meet as soon as
practicable to discuss a Co-Promotion Plan, which will include
terms and conditions allowing VERTEX an opportunity to promote
the Drug Product commensurate with VERTEX's sales and
marketing resources then available for the effort
[************************************************************
******************************************************].
The Co-Promotion Plan will be an amendment to the Marketing
Plan (referenced in Section 5.2.1) and will be finalized not
later than six (6) months before launch in the country to
which Co-Promotion applies. The Co-Promotion Plan will include
in particular (a) strategies and plans for the detailing and
marketing of the Product, including allocation of
responsibilities for marketing activities; (b) planned
marketing and promotion efforts by each Party (including
number of sales representatives, number of calls, target
lists, detail priority and sampling activities); (c) market
forecasts as well as sales and market-share
License, Development and Commercialization Agreement -- Confidential -- Page 21
objectives. VERTEX will establish its promotional efforts to
coincide with those of NOVARTIS (in compliance with the
marketing plans and campaigns provided in the Marketing Plan
reviewed by the GBT for the Drug Product). The Co-Promotion
Plan will provide, for both parties, for the number of
representatives, calls per day, target lists, and details to
be delivered, to achieve specific sales targets, as well as
reimbursement to VERTEX by NOVARTIS of VERTEX's Co-Promotion
costs, with respect to North America only, as provided in (a)
below, and may provide additional compensation as set forth in
(b) below.
(a) Reimbursement of Costs. NOVARTIS will reimburse
VERTEX for the cost of its Details delivered on
target in Co-Promoting the Drug Product in North
America (but not the EU) under the Co-Promotion
Plan, as follows:
[************************************************
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*************************************************
*************************************************
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(b) Additional Compensation.
[************************************************
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*************************************************
*************************************************
*************************************************
*************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 22
*************************************************
*************************************************
5.4 Termination of Co-Promotion Obligation. Upon not less than twelve (12)
months' prior written notice to NOVARTIS, VERTEX may terminate its right and
obligation to Co-promote a particular Drug Product in North America or in the
European Union. NOVARTIS shall not be responsible for reimbursement of any of
VERTEX's costs under Section 5.3.1(a) incurred after the effective date of
termination of its co-promotion rights and obligations, or any additional
compensation provided under Section 5.3.1(b), with respect to Net Sales made
after the effective date of termination.
5.5 Co-labeling. To the extent not prohibited by law or regulation and
subject to Regulatory Approval, all Drug Products (including labels, packaging
and inserts) and all promotional materials for the same, sold in North America,
the countries of the European Union and Japan will bear both NOVARTIS' and
VERTEX's company names and logos with equal prominence (including equal sized
type face), or if equal prominence is prohibited by law, with such prominence as
may otherwise be permitted by law. To the extent not prohibited by law or
regulation and subject to any required Regulatory Approval, Drug Products
(including labels, packaging and inserts) and all promotional materials for the
same, sold in the rest of the world will include VERTEX's company name (in the
English alphabet) and logo with the designation: "under license from." Any
trademark for a Drug Product will be selected by, and will be the property of,
NOVARTIS.
5.5.1 Review of Regulatory Filings. NOVARTIS will permit VERTEX to
review all material regulatory filings which relate to product
labeling, and all proposed labels, packaging, package inserts,
and promotional materials required under the Agreement to bear
VERTEX's name, if permitted by law, prior to the filing of any
such materials with any regulatory authority.
5.5.2 Regulatory Communications.
(a) NOVARTIS will permit VERTEX to participate with
NOVARTIS in material communications with
regulatory
License, Development and Commercialization Agreement -- Confidential -- Page 23
officials which concern the matters referenced in
this Section 5.5.
(b) NOVARTIS will immediately inform VERTEX of any
material regulatory communications received by
NOVARTIS which might operate to restrict VERTEX's
rights under this Section 5.5.2, and will
cooperate with any reasonable request of VERTEX
aimed at facilitating approval by a regulatory
authority for co-labeling consistent with this
provision.
5.6 Due Diligence. NOVARTIS shall use diligent and commercially reasonable
efforts consistent with the requirements of the Development Program and sound
and reasonable business practices and judgment to effect introduction of Drug
Products into Major Markets as soon as reasonably practicable, devoting the same
degree of attention and diligence to such efforts that it devotes to such
activities for other of its products of comparable market potential. Following
the First Commercial Sale of a Drug Product and until the expiration of this
Agreement, NOVARTIS shall endeavor to keep Drug Products reasonably available to
the public in each of the Major Markets. NOVARTIS shall promptly notify VERTEX
if it shall determine that the marketing and sale of a Drug Product in any
country is not commercially reasonable or economically profitable or if for
other unforeseen reasons further commercial support of the Drug Product in
certain territories is no longer prudent or practical. In determining whether
NOVARTIS is in compliance with the foregoing provisions, there shall be taken
into account the normal course of assertive drug development programs in the
pharmaceutical industry conducted with sound and reasonable business practices
and judgment.
ARTICLE VI
PAYMENTS
6.1 Development Election Payment. NOVARTIS will pay to VERTEX the amount
specified below each time NOVARTIS exercises its Development Election with
respect to a Drug Candidate, whether at the First Opportunity or the Second
Opportunity. The amount payable
License, Development and Commercialization Agreement -- Confidential -- Page 24
shall vary depending upon the Research Year or year of the Expanded Development
Period during which the particular Drug Candidate first completes Proof of
Concept Studies ("POCS"), as follows:
Year of POCS Completion Payment Amount
----------------------- --------------
1 [******
2 ********
3 *********
4 *********
5 **********
6 *********
7 *********
8 **********]
6.2 Development Milestone Payments by NOVARTIS.
6.2.1 NOVARTIS will make the following payments to VERTEX upon the
achievement of any of the following milestones with respect to
a Drug Product Candidate or Drug Product as to which NOVARTIS
has exercised its Development Election at the First
Opportunity:
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6.2.2 NOVARTIS will make the following payments to VERTEX upon the
achievement of any of the following milestones with respect to
a Subsequent Drug Product Candidate or a Drug Product as to
which
License, Development and Commercialization Agreement -- Confidential -- Page 25
NOVARTIS exercised its Development Election at the Second
Opportunity:
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6.2.3 All payments shall be made by wire transfer in United States
dollars ("Dollars") to the credit of such bank account as may
be designated by VERTEX in writing to NOVARTIS. Any payment
which falls due on a date which is a Saturday, Sunday or a
legal holiday in the Commonwealth of Massachusetts may be made
on the next succeeding day which is not a Saturday, Sunday or
a legal holiday in the Commonwealth.
6.2.4 If a Drug Product Candidate is abandoned during the term of
this Agreement for any scientific or medical reasons after any
one or more of the foregoing milestone payments are made, and
if a backup Drug Product Candidate is developed to replace the
abandoned Drug Product Candidate for the same Indications,
then no milestone payment shall be required with respect to
the backup Drug Product Candidate to the extent that that
milestone payment has already been made with respect to the
abandoned Drug Product Candidate.
License, Development and Commercialization Agreement -- Confidential -- Page 26
6.3 Royalties. NOVARTIS shall pay to VERTEX the following annual royalties
on Net Sales of each Drug Product in the Territory.
[************************************************************
*************************************************************
*************************************************************
*************************************************************
*************************************************************]
The royalty percentage provided above shall be increased by
[*******************************************************************************
************************************************] with respect to Net Sales of
any Drug Product derived from a Drug Candidate which completes Proof of Concept
Studies during any of the first four Research Years.
6.3.1 Third Party Royalties: If NOVARTIS is required to pay
royalties to any Third Party in order to exercise its rights
to sell a Drug Product in a country, then [******************
******************] payable to such Third Party in any
calendar quarter for such Drug Product in such country shall
be deductible from the royalties payable to VERTEX under this
Agreement in respect of sales of that Drug Product in such
country for the same calendar quarter, provided that in no
event shall the net royalty rate payable fall below
[*********************************], as a result of the
application of this Section 6.3.1 and Sections 6.3.2 and 6.4.
6.3.2 Unlicensed Competition: If in any country a Third Party sells
a pharmaceutical product which is a "generic version" of a
Drug Product being sold in that country (a "Third Party
Product") -- where "generic version" means a pharmaceutical
product (other than a product originally sold as a Drug
Product) that includes the same active ingredient as that used
in a Drug Product -- then for the period in which the sales of
such Third Party Product in such country are at least
[************************************************************
**********************************************], the royalties
License, Development and Commercialization Agreement -- Confidential -- Page 27
payable to VERTEX by NOVARTIS on sales of such Product in such
country for such period shall be [***************************
******************************] in Section 6.3 or Section
7.4.3 hereof, but in no event shall the royalties owed for
such Drug Product in such country, when combined with any
royalty reduction provided under Section 6.3.1 hereof, reduce
the royalties payable on Net Sales of such Drug Product in
that country by more than [**********************************
*************************************************************
***********************]
6.4 Performance Reductions. The Research Agreement provides that VERTEX
will attempt during the term of that Agreement to produce Drug Candidates that
have successfully completed Proof of Concept Studies as defined in the Research
Agreement. NOVARTIS has an option (the "Development Election") to license any
one or more of those Drug Candidates under the terms of the Research Agreement.
If at the end of the Extended Development Period (the "Expiration Date"), VERTEX
has not presented to NOVARTIS at least [***************************] as to which
NOVARTIS has exercised its Development Election, then the royalty rate otherwise
payable to VERTEX under Section 6.3 or Section 7.4.3 hereof on Net Sales made
after the Expiration Date (but before considering the effect of Sections 6.3.1
or 6.3.2 on the royalty rate otherwise applicable) shall be reduced by
[************]. In such event, the provisions of Section 6.3.1 and Section 6.3.2
above, if applicable, shall be applied thereafter only to the royalty as reduced
under this section. The provisions of this section shall not be applicable if
the Research Agreement is validly terminated by either party prior to the end of
its six year term. Notwithstanding the foregoing, in no event shall the royalty
otherwise payable to VERTEX on Net Sales in a particular country be reduced by
operation of this Section 6.4 and Sections 6.3.1 and 6.3.2, [******************
***********].
6.5 Sales Reports.
(a) During the term of this Agreement and after the First Commercial
Sale of a Drug Product, NOVARTIS shall furnish or cause to be furnished to
VERTEX on a quarterly basis a written report or reports covering each calendar
quarter (each such calendar quarter being
License, Development and Commercialization Agreement -- Confidential -- Page 28
sometimes referred to herein as a "reporting period") showing (i) the Net Sales
of each Drug Product in each country in the world during the reporting period by
NOVARTIS and each Affiliate and sublicensee; (ii) the royalties, payable in
Dollars, which shall have accrued under Section 7.4 or Section 7.4.3 hereof in
respect of such sales and the basis of calculating those royalties; (iii)
amounts due under Section 7.4.1 hereof on account of the purchase of Bulk Drug
Substance, and the basis for calculating those amounts due (including unit sales
data); (iv) withholding taxes, if any, required by law to be deducted in respect
of any such sales; (v) the exchange rates used in converting into Dollars, from
the currencies in which sales were made, any payments due which are based on Net
Sales; (vi) dispositions of Drug Products other than pursuant to sale for cash.
With respect to sales of Drug Products invoiced in Dollars, the Net Sales
amounts and the amounts due to VERTEX hereunder shall be expressed in Dollars.
With respect to sales of Drug Products invoiced in a currency other than
Dollars, the Net Sales and amounts due to VERTEX hereunder shall be expressed in
the domestic currency of the party making the sale, together with the Dollar
equivalent of the amount payable to VERTEX, calculated using NOVARTIS'
then-current standard exchange rate methodology for the translation of foreign
currency sales into U.S. dollars. In each report the methodology will be
disclosed, will be identical to that employed by NOVARTIS, generally, in its
external financial reporting, as reviewed and approved by its independent
auditors and will be in conformity with NOVARTIS' usual and customary general
accounting principles consistently applied. If any sublicensee makes any sales
invoiced in a currency other than its domestic currency, the Net Sales shall be
converted to its domestic currency in accordance with the sublicensee's normal
accounting principles. NOVARTIS shall furnish to VERTEX appropriate evidence of
payment of any tax or other amount required by applicable laws or regulations to
be deducted from any royalty payment, including any tax or withholding levied by
a foreign taxing authority in respect of the payment or accrual of any royalty.
Reports shall be due on the thirtieth (30th) day following the close of each
reporting period, although NOVARTIS shall also provide VERTEX with a "flash"
report of Net Sales, only, within ten (10) business days after the end of each
month. NOVARTIS shall keep accurate records in sufficient detail to enable the
amounts due hereunder to be determined and to be verified by VERTEX.
License, Development and Commercialization Agreement -- Confidential -- Page 29
(b) Amounts shown to have accrued by each sales report provided for
under Subsection 5.5(a), above, shall be due and payable on the date such sales
report is due.
(c) All payments shall be made in Dollars. If at any time legal
restrictions prevent the prompt remittance of any payments with respect to any
country of the Territory where Drug Products are sold, NOVARTIS or its
sublicensees shall have the right and option to make such payments by depositing
the amount thereof in local currency to VERTEX's account in a bank or depository
in such country.
(d) Upon the written request of VERTEX, at VERTEX's expense and not
more than once in or in respect of any calendar year, NOVARTIS shall permit an
independent accountant of national prominence selected by VERTEX, to have access
during normal business hours to those records of NOVARTIS as may be reasonably
necessary to verify the accuracy of the sales reports furnished by NOVARTIS
pursuant to this Section 5.5, in respect of any calendar year ending not more
than thirty-six (36) months prior to the date of such notice. NOVARTIS shall
include in each sublicense entered into by it pursuant to this Agreement a
provision requiring the sublicensee to keep and maintain adequate records of
sales made pursuant to such sublicense and to grant access to such records by
the aforementioned independent accountant for the reasons specified in this
Section 6.5. Upon the expiration of thirty-six (36) months following the end of
any calendar year, the calculation of amounts payable with respect to such
fiscal year shall be binding and conclusive upon VERTEX, and NOVARTIS and its
sublicensees shall be released from any liability or accountability with respect
to payments for such year. The report prepared by such independent accountant, a
copy of which shall be sent or otherwise provided to NOVARTIS by such
independent accountant at the same time it is sent or otherwise provided to
VERTEX, shall contain the conclusions of such independent accountant regarding
the audit and will specify that the amounts paid to VERTEX pursuant thereto were
correct or, if incorrect, the amount of any underpayment or overpayment. If such
independent accountant's report shows any underpayment, NOVARTIS shall remit or
shall cause its sublicensees to remit to VERTEX within thirty (30) days after
NOVARTIS' receipt of such report, (i) the amount of such underpayment and (ii)
if such underpayment exceeds [*************************************] for the
calendar year then being audited, the
License, Development and Commercialization Agreement -- Confidential -- Page 30
reasonable and necessary fees and expenses of such independent accountant
performing the audit, subject to reasonable substantiation thereof. Any
overpayments shall be fully creditable against amounts payable in subsequent
payment periods. VERTEX agrees that all information subject to review under this
Section 6.5 or under any sublicense agreement is confidential and that VERTEX
shall retain and cause its accountant to retain all such information in
confidence.
(e) In case of any delay in payment by NOVARTIS to VERTEX not
occasioned by Force Majeure, interest at the rate of [***********************],
assessed from the thirty-first day after the due date of the payment, shall be
due from NOVARTIS upon prior written notice.
6.6 Withholding Tax. If during the term of this Agreement, withholding tax
should be required by law to be deducted from any payments required to be made
by NOVARTIS to VERTEX hereunder, the parties will agree upon an equitable
division of liability for any sum which is withheld and for which VERTEX is not
compensated or reimbursed by way of usable tax credits or otherwise. In that
connection VERTEX at NOVARTIS' request shall sign a usual and customary
exemption application and in addition shall apply for a tax refund at the
request of NOVARTIS from any tax authority to which NOVARTIS has paid
withholding tax on account of any payments made by NOVARTIS to VERTEX hereunder.
ARTICLE VII
SECOND OPPORTUNITY CANDIDATES AND SUBSEQUENT CANDIDATES
7.1 General. Under the conditions provided in the Research Agreement,
NOVARTIS has the right to exercise its Development Election with respect to each
Drug Candidate at the First Opportunity or the Second Opportunity, and also has
the right to exercise its Development Election at the First Opportunity for
Subsequent Candidates. The following specific provisions will apply to any
Subsequent Candidates as to which NOVARTIS exercises its Development Election (a
"Subsequent Drug Candidate"), and to any Drug Candidate as to which NOVARTIS
exercises its Development Election at the Second Opportunity (a "Second
Opportunity Candidate"). The provisions of Section 6.3 shall not be applicable
to any Drug Product containing a Second Opportunity Candidate or a Subsequent
Drug Candidate.
License, Development and Commercialization Agreement -- Confidential -- Page 31
7.2 Information. As part of the Development Information with respect to a
Subsequent Drug Candidate supplied by VERTEX to NOVARTIS under Section 5.2 of
the Research Agreement, or as part of the Further Development Information with
respect to a Second Opportunity Candidate supplied by VERTEX to NOVARTIS under
Section 5.4 of the Research Agreement, VERTEX will include binding notice to
NOVARTIS of the Development and Commercialization Option undertaken by VERTEX
under Section 7.4 below, with respect to a particular Second Opportunity
Candidate or Subsequent Drug Candidate if NOVARTIS exercises its Development
Election with respect thereto.
7.3 Additional Second Opportunity Information and Payment. VERTEX will
also provide to NOVARTIS as part of the Further Development Information with
respect to a Second Opportunity Candidate, a detailed summary of the Total Costs
reasonably incurred by VERTEX with respect to the development of that Second
Opportunity Candidate between the First Opportunity and the Second Opportunity
(the "Second Opportunity Costs"). If NOVARTIS exercises its Development Election
with respect to that Second Opportunity Candidate, it shall pay to VERTEX, along
with and as part of its notice of exercise, an amount equal to one hundred fifty
(150%) percent of the reasonable Second Opportunity Costs.
7.4 Development and Commercialization Option. Pursuant to the binding
notice referenced in Section 7.2 above, VERTEX shall elect one of the following
options with respect to each Subsequent Candidate and Second Opportunity
Candidate:
7.4.1 VERTEX Bulk Supply Option. VERTEX shall have the option (the
"Bulk Supply Option") to manufacture or have manufactured and
to supply NOVARTIS with its entire requirements of Bulk Drug
Substance for all clinical trials and for commercial sales of
Drug Product in the Territory. If VERTEX exercises the Bulk
Supply Option and NOVARTIS exercises its Development Election,
with respect to that Candidate, NOVARTIS, its Affiliates and
sublicensees, shall purchase from VERTEX all of their
respective requirements of Bulk Drug Substance to be
incorporated in the Drug Product Candidate and Drug Product.
No
License, Development and Commercialization Agreement -- Confidential -- Page 32
payments shall be required under the provisions of Section 6.3
hereof with respect to any Subsequent Candidate or Second
Opportunity Candidate as to which the Bulk Supply Option is
exercised by VERTEX.
(a) Supply Prices for Clinical Trials.
Bulk Drug Substance supplied to NOVARTIS under
Section 7.4.1 hereto shall be supplied at a price
equal to
[*********************************************].
(b) Commercial Supply.
(i) The total supply price for a unit of Bulk Drug
Substance supplied by VERTEX for the manufacture
of Drug Product sold in the Territory shall be
[************************************************
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License, Development and Commercialization Agreement -- Confidential -- Page 33
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(c) Third Party Manufacture. In the event that VERTEX
has exercised its Bulk Supply Option with respect
to Bulk Drug Substance for a particular Drug
Product, VERTEX may engage as a manufacturing
subcontractor any Third Party which has a
demonstrated ability to deliver high quality
pharmaceutical products on a timely basis. VERTEX
will notify NOVARTIS of its intention to
subcontract to a Third Party not less than sixty
(60) days (and earlier if reasonably practicable)
prior to concluding a manufacturing arrangement
with any such Third Party. If NOVARTIS notifies
VERTEX within sixty (60) days after receipt of
that notice that NOVARTIS wishes to manufacture
the Bulk Drug Substance, VERTEX will provide
NOVARTIS with an opportunity to negotiate a
mutually agreeable manufacturing agreement before
entering into any manufacturing agreement with a
Third Party.
(d) Bulk Drug Substance Supply Terms. All Bulk Drug
Substance manufactured by VERTEX for NOVARTIS
hereunder shall be supplied to NOVARTIS (for
formulation and packaging) pursuant to the terms
of a supply agreement containing usual and
customary terms of supply not inconsistent with
any provisions of this Agreement, including a
requirement that any Bulk Drug Substance supplied
will meet mutually agreed specifications.
7.4.2 Joint Venture Option. VERTEX may propose that the parties enter into
a worldwide joint venture or other mutually agreeable form of
collaborative arrangement ("Joint Venture") that involves
[***********]
License, Development and Commercialization Agreement -- Confidential -- Page 34
sharing of costs and profits, to develop, manufacture and
commercialize the Subsequent Drug Candidate or Second Opportunity
Candidate. The party or parties performing development activities,
or providing manufacturing and marketing to the Joint Venture, will
be entitled to recovery from the Joint Venture of their associated
development costs, Manufacturing Cost and marketing costs with
respect to those services. The parties will share leadership of the
Joint Venture as may be agreed at the time of its organization. The
specific terms and conditions of the Joint Venture will be discussed
and agreed between the parties prior to the exercise by NOVARTIS of
its Development Election with respect to the Drug Product Candidate
to which the Joint Venture proposal relates. Nothing in this Section
7.4.2 shall be interpreted to require NOVARTIS to exercise its
Development Election if the parties do not come to agreement on the
specific terms of the proposed Joint Venture.
7.4.3 Royalty Option. In the event that VERTEX does not exercise the Bulk
Supply Option or the Joint Venture Option with respect to a
particular Second Opportunity Candidate or Subsequent Drug
Candidate, NOVARTIS shall undertake production using its own
manufacturing resources or Third Party manufacturers pursuant to the
license granted in Section 2.1 of this Agreement, and shall have
access to all information generated by VERTEX relating to the supply
of that Bulk Drug Substance. In such event, NOVARTIS shall pay the
following royalties to VERTEX (subject to the provisions of Section
6.3 providing for royalty reduction in certain instances), in lieu
of the royalties set forth in Section 6.3 hereof, on Net Sales of a
Drug Product containing the foregoing Second Opportunity or
Subsequent Drug Candidate:
[******************************************************************
*******************************************************************
*********************************************]
License, Development and Commercialization Agreement -- Confidential -- Page 35
ARTICLE VIII
INTELLECTUAL PROPERTY
8.1 Patentable Inventions and Know-How.
8.1.1 Ownership. Any inventions made and all Know-How generated by
either party or its Affiliates during the term of this
Agreement, and Controlled by such party, relating to the
manufacture or use of Bulk Drug Substance, a Drug Product
Candidate or a Drug Product, or a prodrug thereof, will be
disclosed to the other party promptly after the disclosing
party recognizes the significance thereof. All patents and
technology shall be owned by the party making the invention
claimed or contained therein or, if such invention is made
jointly, shall be owned jointly, all as determined in
accordance with U.S. laws of inventorship.
8.1.2 Patent Prosecution. VERTEX shall be responsible for the
preparation, filing, prosecution and maintenance of all
patents and patent applications included in VERTEX Patents and
all patents and patent applications included in Patents
claiming inventions jointly owned with NOVARTIS. NOVARTIS
shall be responsible for the preparation, filing, prosecution
and maintenance of all patents and patent applications
included in NOVARTIS Patents. In each case the responsible
party shall consult from time to time with the other party
with respect thereto. VERTEX shall provide NOVARTIS with
periodic reports listing the jurisdictions in which the VERTEX
Patents licensed hereunder have been filed. Subject to the
next succeeding sentences, VERTEX will file patent
applications with respect to those VERTEX Patents in such
other countries as NOVARTIS shall request in writing, all such
other countries being countries in which NOVARTIS would
customarily file its own cases dealing with similar subject
matters. The party initially responsible for preparation,
filing, prosecution and maintenance of a particular Patent
(the "Initial Responsible Party") shall give thirty (30) days
advance notice (the
License, Development and Commercialization Agreement -- Confidential -- Page 36
"Discontinuance Election") to the other party of any decision
to cease preparation, filing, prosecution and maintenance of
that Patent in any jurisdiction (a "Discontinued Patent"). In
such case, the other party may elect at its sole discretion to
continue preparation, filing and prosecution or maintenance of
the Discontinued Patent at its sole expense. The party so
continuing shall own any such Patent; and the Initial
Responsible Party shall execute such documents and perform
such acts as may be reasonably necessary for the other party
to file or to continue prosecution or maintenance, including
assigning ownership of such Patent to such electing party.
Discontinuance may be on a country-by-country basis or for a
patent application or patent series in total.
Each party will consult the other party with respect to its choice of
patent counsel and will keep that party continuously informed of all matters
relating to the preparation, filing, prosecution and maintenance of Patents
covered by this Agreement. Each party shall endeavor in good faith to coordinate
its efforts with those of the other party to minimize or avoid interference with
the prosecution of the other party's patent applications.
8.1.3 Costs. Costs incurred in the preparation, prosecution and
maintenance of Patents shall be borne by each party as set
forth in Section 8.3 of the Research Agreement.
8.2 Infringement Claims by Third Parties.
8.2.1 Notice. If the manufacture, use or sale of Bulk Drug Substance
and/or Drug Product results in a claim against a party hereto
for patent infringement or for inducing or contributing to
patent infringement ("Infringement Claim"), the party first
having notice of an Infringement Claim shall promptly notify
the other in writing. The notice shall set forth the facts of
the Infringement Claim in reasonable detail.
8.2.2 Third Party Licenses. In the event that practicing the
Technology in connection with the manufacture, use or sale of
a Drug Product in any
License, Development and Commercialization Agreement -- Confidential -- Page 37
country would infringe a Third Party's patent, then VERTEX
will use reasonable efforts to obtain a license under the
Third Party's patents with a right to sublicense to NOVARTIS,
under terms reasonably acceptable to both VERTEX and NOVARTIS,
[************************************************************
*************************************************************
*************************************************************
*************************************************************
************************************************************]
8.2.3 Discontinued Sales, License or Defense of Suit. If the
required license is either unavailable or its terms are
unacceptable both to VERTEX and to NOVARTIS, then NOVARTIS may
elect in its sole discretion to discontinue sales of the Drug
Product in such country or to undertake the defense of a
patent infringement action or the prosecution of a declaratory
judgment action with respect to the Third Party patents.
[************************************************************
*************************************************************
**********************************************] Provided that
NOVARTIS is conducting the defense of the Infringement Claim
or the prosecution of such declaratory judgment actions,
[***********************************************] The costs
and expenses of all suits brought by a party under this
Section 8.2.3 shall be reimbursed to such party and then to
the other party, if it participates in such suit, pro rata,
out of any damages or other monetary awards recovered
therein in favor of VERTEX or NOVARTIS.
[************************************************************
*************************************************************
*************************] Any remaining exemplary or punitive
damages shall then be [**************************************
License, Development and Commercialization Agreement -- Confidential -- Page 38
*****************************************] No settlement or
consent judgment or other voluntary final disposition of a
suit under this Section 8.2 may be entered into without the
joint consent of VERTEX and NOVARTIS (which consent shall not
be unreasonably withheld).
8.3 Infringement Claims Against Third Parties.
8.3.1 VERTEX and NOVARTIS each agree to take reasonable actions to
protect their respective patents and technology from
infringement and from unauthorized possession or use.
8.3.2 If any VERTEX Patents or NOVARTIS Patents are infringed or
VERTEX Know-How or NOVARTIS Know-How is misappropriated, as
the case may be, by a Third Party, the party to this Agreement
first having knowledge of such infringement or
misappropriation, or knowledge of a reasonable probability of
such infringement or misappropriation, shall promptly notify
the other in writing. The notice shall set forth the facts of
such infringement or misappropriation in reasonable detail.
The owner of the patent or technology, or VERTEX, in the case
of joint ownership between the parties hereto, shall have the
primary right, but not the obligation, to institute,
prosecute, and control with its own counsel any action or
proceeding with respect to infringement or misappropriation of
such patent or technology and the other party shall have the
right, at its own expense, to be represented in such action by
its own counsel. If the party having the primary right or
responsibility to institute, prosecute, and control such
action or prosecution fails to do so within a period of one
hundred twenty (120) days after receiving notice of the
infringement, the other party shall have the right to bring
and control any such action by counsel of its own choice, and
the other shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.
If one party brings any such action or proceeding, the second
party may be joined as a party plaintiff and, in case of
joining, the second party agrees to
License, Development and Commercialization Agreement -- Confidential -- Page 39
give the first party reasonable assistance and authority to
file and to prosecute such suit. The costs and expenses of all
suits brought by a party under this Section 8.3.2 shall be
reimbursed to such party and to the other party, if it
participates in such suit, pro rata, out of any damages or
other monetary awards recovered therein in favor of VERTEX or
NOVARTIS. [**************************************************
*************************************************************
*************************************************************
*****************************************************] No
settlement or consent judgment or other voluntary final
disposition of a suit under this Section 8.3 may be entered
into without the joint consent of VERTEX and NOVARTIS (which
consent shall not be unreasonably withheld).
8.4 Notice of Certification. VERTEX and NOVARTIS each shall immediately
give notice to the other of any certification filed under the U.S. "Drug Price
Competition and Patent Term Restoration Act of 1984" claiming that a VERTEX
Patent or a NOVARTIS Patent is invalid or that any infringement will not arise
from the manufacture, use or sale of any product by a third party. If VERTEX
decides not to bring infringement proceedings against the entity making such a
certification, VERTEX shall give notice to NOVARTIS of its decision not to bring
suit within twenty-one (21) days after receipt of notice of such certification.
NOVARTIS may then, but is not required to, bring suit against the party that
filed the certification. Any suit by NOVARTIS or VERTEX shall either be in the
name of NOVARTIS or in the name of VERTEX, or jointly by NOVARTIS and VERTEX, as
may be required by law. For this purpose, the party not bringing suit shall
execute such legal papers necessary for the prosecution of such suit as may be
reasonably requested by the party bringing suit.
8.5 Patent Term Extensions. The parties shall cooperate in good faith with
each other in gaining patent term extension wherever applicable to VERTEX
Patents and NOVARTIS Patents covering Drug Product Candidates or Drug Products.
NOVARTIS and VERTEX shall mutually determine which patents shall be extended.
All filings for such extension shall be made by the party who owns
License, Development and Commercialization Agreement -- Confidential -- Page 40
the patent, provided, however, that in the event that the party who owns the
patent elects not to file for an extension, such party shall (i) inform the
other party of its intention not to file and (ii) grant the other party the
right to file for such extension.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties of VERTEX. Vertex represents and
warrants to NOVARTIS as follows:
9.1.1 Authorization. This Agreement has been duly executed and
delivered by VERTEX and constitutes the valid and binding
obligation of VERTEX, enforceable against VERTEX in accordance
with its terms except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles. The
execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
VERTEX, its officers and directors.
9.1.2 No Third Party Rights. Except as previously disclosed in
writing to NOVARTIS on or before the date set forth on the
first page hereof, (a) VERTEX owns or possesses adequate
licenses or other rights to use all VERTEX Technology, and to
grant the licenses herein; and (b) the granting of the
licenses to NOVARTIS hereunder does not violate any right
known to VERTEX of any Third Party.
9.1.3 No Third Party Patents. Except as disclosed in writing by
VERTEX to NOVARTIS or its agents, to VERTEX's knowledge and
based on its current understanding of the Drug Product
Candidate(s) and its use, the development, manufacture, use or
sale of any Bulk Drug Substance, Drug Product Candidates or
Drug Products pursuant to this Agreement will not infringe or
conflict with any Third Party right or patent, and VERTEX is
License, Development and Commercialization Agreement -- Confidential -- Page 41
not aware of any issued patent or pending patent application
that, if issued, would be infringed by the development,
manufacture, use or sale of any Bulk Drug Substance, Drug
Product Candidates or Drug Products pursuant to this
Agreement.
9.1.4 Maintenance of Patents and Licenses. Subject to the provisions
of Section 8.1.2 with respect to Discontinued Patents, VERTEX
will take all reasonable steps to obtain any consent required
for and to maintain in effect, including by means of
extension, any license, sublicense, patent or patent
application applicable to the Field for which it has granted
rights to NOVARTIS hereunder.
9.2 Representations and Warranties of NOVARTIS. NOVARTIS represents and
warrants to VERTEX as follows:
9.2.1 Authorization. This Agreement has been duly executed and
delivered by NOVARTIS and constitutes the valid and binding
obligation of NOVARTIS, enforceable against NOVARTIS in
accordance with its terms, except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to
creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of NOVARTIS, its officers and directors.
9.2.2 No Third Party Rights. Except as previously disclosed in
writing to VERTEX on or before the date set forth on the first
page hereof, (a) NOVARTIS owns or possesses adequate licenses
or other rights to use all NOVARTIS Technology, and to grant
the licenses herein; and (b) the granting of the licenses to
VERTEX hereunder does not violate any right known to NOVARTIS
of any Third Party.
License, Development and Commercialization Agreement -- Confidential -- Page 42
9.2.3 No Third Party Patents. Except as disclosed in writing by
NOVARTIS to VERTEX or its agents, to NOVARTIS' knowledge and
based on its current understanding of the Drug Product
Candidate(s) and its use, the manufacture, use or sale of any
Bulk Drug Substance, Drug Product Candidates or Drug Products
pursuant to this Agreement will not infringe or conflict with
any Third Party right or patent, and NOVARTIS is not aware of
any issued patent or pending patent application that, if
issued, would be infringed by the development, manufacture,
use or sale of any Bulk Drug Substance, Drug Product
Candidates or Drug Products pursuant to this Agreement.
9.2.4 Maintenance of Patents and Licenses. Subject to the provisions
of Section 7.2.2 with respect to Discontinued Patents,
NOVARTIS will take all reasonable steps to obtain any consent
required for and to maintain in effect, including by means of
extension, any license, sublicense, patent or patent
application applicable to the Field for which it has granted
rights to VERTEX hereunder.
ARTICLE X
CONFIDENTIALITY
10.1 Undertaking. During the term of this Agreement, each party shall keep
confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Technology and NOVARTIS Technology.
10.1.1 Each party shall take any and all lawful measures to prevent
the unauthorized use and disclosure of such information, and
to prevent unauthorized persons or entities from obtaining or
using such information.
License, Development and Commercialization Agreement -- Confidential -- Page 43
10.1.2 Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or
facilitate the unauthorized use or disclosure of such
information. Each party may disclose such information to its
officers, employees and agents, to authorized licensees and
sublicensees, and to subcontractors in connection with the
development or manufacture of Bulk Drug Substance, Drug
Product Candidates or Drug Products, to the extent necessary
to enable such parties to perform their obligations hereunder
or under the applicable license, sublicense or subcontract, as
the case may be; provided, that such officers, employees,
agents, licensees, sublicensees and subcontractors have
entered into appropriate confidentiality agreements for
secrecy and non-use of such information which by their terms
shall be enforceable by injunctive relief at the instance of
the disclosing party.
10.1.3 Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and
agents and any such sublicensees and subcontractors.
10.2 Exceptions. Notwithstanding the foregoing, the provisions of Section
10.1 hereof shall not apply to knowledge, information, documents or materials
which the receiving party can conclusively establish:
10.2.1 have entered the public domain without such party's breach of
any obligation owed to the disclosing party;
10.2.2 are permitted to be disclosed by the prior written consent of
the disclosing party;
10.2.3 have become known to the receiving party from a source other
than the disclosing party, other than by breach of an
obligation of confidentiality owed to the disclosing party;
10.2.4 are disclosed by the disclosing party to a Third Party without
restrictions on its disclosure;
License, Development and Commercialization Agreement -- Confidential -- Page 44
10.2.5 are independently developed by the receiving party without
breach of this Agreement; or
10.2.6 are required to be disclosed by the receiving party to comply
with applicable laws or regulations, to defend or prosecute
litigation or to comply with governmental regulations,
provided that the receiving party provides prior written
notice of such disclosure to the disclosing party and takes
reasonable and lawful actions to avoid or minimize the degree
of such disclosure.
10.3 Publicity. The parties will agree upon the timing and content of any
initial press release or other public communications relating to this Agreement
and the transactions contemplated herein.
10.3.1 Except to the extent already disclosed in that initial press
release or other public communication, no public announcement
concerning the existence or the terms of this Agreement or
concerning the transactions described herein shall be made,
either directly or indirectly, by VERTEX or NOVARTIS, except
as may be legally required by applicable laws, regulations, or
judicial order, without first obtaining the approval of the
other party and agreement upon the nature, text, and timing of
such announcement, which approval and agreement shall not be
unreasonably withheld.
10.3.2 The party desiring to make any such public announcement shall
provide the other party with a written copy of the proposed
announcement in sufficient time prior to public release to
allow such other party to comment upon such announcement,
prior to public release.
10.4 Survival. The provisions of this Article X shall survive the
termination of this Agreement and shall extend for a period of five (5) years
thereafter.
License, Development and Commercialization Agreement -- Confidential -- Page 45
ARTICLE XI
PUBLICATION
Each of NOVARTIS and VERTEX reserves the right to publish or publicly
present the results (the "Results") of the Development Program, subject to the
following terms and conditions. The party proposing to publish or publicly
present the Results (the "publishing party") will submit a draft of any proposed
manuscript or speech to the other party (the "non-publishing party") for
comments at least thirty (30) days prior to submission for publication or oral
presentation. The non-publishing party shall notify the publishing party in
writing within fifteen (15) days of receipt of such draft whether such draft
contains (i) information of the non-publishing party which it considers to be
confidential under the provisions of Article IX hereof, (ii) information that if
published would have an adverse effect on a patent application covering the
subject matter of this Agreement which the non-publishing party intends to file,
or (iii) information which the non-publishing party reasonably believes would be
likely to have a material adverse impact on the development or commercialization
of a Drug Product Candidate or Drug Product. In any such notification, the
non-publishing party shall indicate with specificity its suggestions regarding
the manner and degree to which the publishing party may disclose such
information. In the case of item (ii) above, the non-publishing party may
request a delay and the publishing party shall delay such publication, for a
period not exceeding ninety (90) days, to permit the timely preparation and
filing of a patent application or an application for a certificate of invention
on the information involved. In the case of item (i) above, no party may publish
confidential information of the other party without its consent in violation of
Article IX of this Agreement. In the case of item (iii) above, if the publishing
party shall disagree with the non-publishing party's assessment of the impact of
the publication, then the issue shall be referred to the Joint Steering
Committee for resolution. If the Joint Steering Committee is unable to reach
agreement on the matter within thirty (30) days after such referral, the matter
shall be referred by the Joint Steering Committee to the Chief Executive Officer
of NOVARTIS and the Chief Executive Officer of VERTEX who shall attempt in good
faith to reach a fair and equitable resolution of this disagreement. If the
disagreement is not resolved in this manner within two (2) weeks of referral by
the Joint Steering Committee as aforesaid, then the decision of the
License, Development and Commercialization Agreement -- Confidential -- Page 46
publishing party as to publication of any information generated by it, subject
always to the confidentiality provisions of Article X hereof, shall be final,
provided that such decision shall be exercised with reasonable regard for the
interests of the non-publishing party. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal. The parties will use their best
efforts to gain the right to review proposed publications relating to the
subject matter of the Development Program by consultants or contractors.
This Article XI shall terminate with the termination of this Agreement,
but the provisions of Article X hereof shall continue to govern the disclosure
by one party, whether by publication or otherwise, of Confidential Information
of the other, during the period set forth in Section 10.4.
ARTICLE XII
DISPUTE RESOLUTION
12.1 Governing Law, and Jurisdiction. This Agreement shall be governed and
construed in accordance with the internal laws of the State of New York.
12.2 Dispute Resolution Process. Except as otherwise explicitly provided
herein, in the event of any controversy or claim arising out of or relating to
any provision of this Agreement, or the collaborative effort contemplated
hereby, the parties shall, and either party may, initially refer such dispute to
the Joint Steering Committee, and failing resolution of the controversy or claim
within thirty (30) days after such referral, the matter shall be referred to the
Chief Executive Officer of VERTEX and the Chief Executive Officer of NOVARTIS
who shall, as soon as practicable, attempt in good faith to resolve the
controversy or claim. If such controversy or claim is not resolved within sixty
(60) days of the date of initial referral of the matter to the JSC, either party
shall be free to initiate proceedings in any court having requisite
jurisdiction.
License, Development and Commercialization Agreement -- Confidential -- Page 47
ARTICLE XIII
TERM AND TERMINATION
13.1 Term. The term of this Agreement shall extend with respect to a Drug
Product in a particular country until the later of: (a) the last to expire of
any VERTEX Patents containing a Valid Patent Claim covering the Drug Product or
its use or manufacture in that country; or (b) if there is no such Valid Patent
Claim under a VERTEX Patent in a particular country, ten (10) years from the
earlier of the date Regulatory Approval is received in that country for sale of
the Drug Product, or the date of First Commercial Sale of the Drug Product in
that country.
13.2 Termination For Cause. In addition to rights of termination which may
be granted to either party under other provisions of this Agreement, either
party may terminate this Agreement (i) upon sixty (60) days prior written notice
to the other party upon the material breach by such other party of any of its
obligations under this Agreement, provided that such termination shall become
effective only if the breaching party shall fail to remedy or cure the breach
within such sixty (60) day period; or (ii) upon termination by such party of the
Research Agreement for cause in accordance with Section 9.2 or 9.3 of the
Research Agreement.
13.3 Termination for Bankruptcy. If at any time during the term of this
Agreement, an Event of Bankruptcy (as defined below) relating to either party
(the "Bankrupt Party") occurs, the other party (the "Other Party") shall have,
in addition to all other legal and equitable rights and remedies available
hereunder, the option to terminate this Agreement upon 30 days' written notice
to the Bankrupt Party. It is agreed and understood that if the Other Party does
not elect to terminate this Agreement upon the occurrence of an Event of
Bankruptcy, except as may otherwise be agreed with the trustee or receiver
appointed to manage the affairs of the Bankrupt Party, the Other Party shall
continue to make all payments required of it under this Agreement as if the
Event of Bankruptcy had not occurred, and the Bankrupt Party shall not have the
right to terminate any license granted herein. As used above, the term "Event of
Bankruptcy" shall mean (a) dissolution, termination of existence, liquidation or
business failure of either party; (b) the appointment of a custodian or receiver
for either party who has not been terminated or dismissed within 90 days; (c)
the institution by either party of any proceeding under national, federal or
state bankruptcy, reorganization, receivership or other similar laws affecting
the rights of
License, Development and Commercialization Agreement -- Confidential -- Page 48
creditors generally or the making by either party of a composition or any
assignment or trust mortgage for the benefit of creditors or under any national,
federal or state bankruptcy, reorganization, receivership or other similar law
affecting the rights of creditors generally, which proceeding is not dismissed
within 90 days of filing.
13.4 Termination by NOVARTIS. NOVARTIS may terminate this Agreement at any
time with respect to one or more Drug Product Candidates or Drug Products, upon
six (6) months' prior written notice to VERTEX if either scientific or economic
circumstances, in NOVARTIS' sole judgment, do not warrant further development.
In such event NOVARTIS, at the request of VERTEX, shall assign or otherwise
transfer to VERTEX all of its regulatory filings with respect to the Drug
Product Candidate or Drug Product as to which NOVARTIS has terminated this
Agreement.
13.5 Effect of Termination.
(a) Termination of this Agreement for any reason, or
expiration of this Agreement, will not affect: (i)
obligations, including the payment of any royalties and
any supply price payments, which have accrued as of the
date of termination or expiration, and (ii) rights and
obligations which, from the context thereof, are
intended to survive termination or expiration of this
Agreement.
(b) For each country, at the end of the Agreement term as
provided in Section 13.1 hereof in respect of a Drug
Product, NOVARTIS shall have a perpetual, nonexclusive,
transferable, paid-up, royalty-free license under VERTEX
Technology, in each case which is in existence at the
end of such Agreement term, to use, make, have made and
sell that Drug Product in that country and to make or
have made Drug Product for use and sale in that country.
License, Development and Commercialization Agreement -- Confidential -- Page 49
ARTICLE XIV
INDEMNIFICATION
14.1 Indemnification by VERTEX. VERTEX will indemnify and hold NOVARTIS
and its Affiliates, and their employees, officers and directors harmless against
any loss, damages, action, suit, claim, demand, liability, expense, bodily
injury, death or property damage (a "Loss"), that may be brought, instituted or
arise against or be incurred by such persons to the extent such Loss is based on
or arises out of:
14.1.1 the development, manufacture, use, sale, storage or handling
of a Drug Product Candidate or a Drug Product by VERTEX or its
Affiliates or their representatives, agents or subcontractors
under this Agreement, or any actual or alleged violation of
law resulting therefrom (with the exception of Losses based on
infringement or misappropriation of intellectual property
rights); or
14.1.2 the breach by VERTEX of any of its covenants, representations
or warranties set forth in this Agreement; and
14.1.3 provided however, that the foregoing indemnification shall not
apply to any Loss to the extent such Loss is caused by the
negligent or willful misconduct of NOVARTIS or its Affiliates.
14.2 Indemnification by NOVARTIS. NOVARTIS will indemnify and hold VERTEX,
and its Affiliates, and their employees, officers and directors harmless against
any Loss that may be brought, instituted or arise against or be incurred by such
persons to the extent such Loss is based on or arises out of:
14.2.1 the development, manufacture, use, sale, storage or handling
of a Drug Product Candidate or a Drug Product by NOVARTIS or
its Affiliates or their representatives, agents or
subcontractors under this Agreement, or any actual or alleged
violation of law resulting therefrom (with the
License, Development and Commercialization Agreement -- Confidential -- Page 50
exception of Losses based on infringement or misappropriation
of intellectual property rights); or
14.2.2 the breach by NOVARTIS of any of its covenants,
representations or warranties set forth in this Agreement; and
14.2.3 provided that the foregoing indemnification shall not apply to
any Loss to the extent such Loss is caused by the negligent or
willful misconduct of VERTEX or its Affiliates.
14.3 Claims Procedures. Each Party entitled to be indemnified by the other
Party (an "Indemnified Party") pursuant to Section 14.1 or 14.2 hereof shall
give notice to the other Party (an "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any threatened or asserted claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided:
That counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party's expense
(unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Indemnifying Party; or (ii) the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in the defense of such action, in
each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and
14.3.1 The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement to the extent that the
failure to give notice did not result in harm to the
Indemnifying Party.
14.3.2 No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each
Indemnified Party which approval
License, Development and Commercialization Agreement -- Confidential -- Page 51
shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which (i) would result
in injunctive or other relief being imposed against the
Indemnified Party; or (ii) does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
14.3.3 Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and shall be
reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
14.4 Compliance. The parties shall comply fully with all applicable laws
and regulations in connection with their respective activities under this
Agreement.
14.5 Insurance. Each party shall use all commercially reasonable efforts
to maintain insurance, including product liability insurance, with respect to
its activities hereunder.
14.5.1 Such insurance shall be in such amounts and subject to such
deductibles as the parties may agree based upon standards
prevailing in the industry at the time.
14.5.2 Either party may satisfy its obligations under this Section
through self-insurance to the same extent.
14.5.3 At such time as a Drug Product is being manufactured by a
party for commercial sale, that party shall name the other
party as an additional insured on any such policies.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Notice of Pharmaceutical Side-Effects. During the term of this
Agreement, each of the parties will notify appropriate authorities in accordance
with applicable law, and the other
License, Development and Commercialization Agreement -- Confidential -- Page 52
party, promptly after receipt of information with respect to any serious adverse
reaction, as defined by the World Health Organization, directly or indirectly
attributable to the use or application of a Development Candidate, Bulk Drug
Substance, a Drug Product Candidate or a Drug Product.
15.2 Waiver. No provision of the Agreement may be waived except in writing
by both parties hereto. No failure or delay by either party hereto in exercising
any right or remedy hereunder or under applicable law will operate as a waiver
thereof, or a waiver of a particular right or waiver of any right or remedy on
any subsequent occasion.
15.3 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 term of this Agreement,
other than an obligation to make a payment, when such failure or delay is caused
by or results from fire, floods, embargoes, government regulations, prohibitions
or interventions, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
15.4 Registration of License. NOVARTIS may, at its expense, register the
license granted under this Agreement in any country where the use, sale or
manufacture of a Drug Product in such country would be covered by a Valid Patent
Claim. Upon request by NOVARTIS, VERTEX agrees promptly to execute any "short
form" licenses submitted to it by NOVARTIS in order to effect the foregoing
registration in such country, but such licenses shall in no way alter or affect
the obligations of the parties hereunder.
15.5 Severability. It is the intention of the parties to comply with all
applicable laws domestic or foreign in connection with the performance of its
obligations hereunder. In the event that any provision of this Agreement, or any
part hereof, is found invalid or unenforceable, the remainder of this Agreement
will be binding on the parties hereto, and will be construed as if the invalid
or unenforceable provision or part thereof had been deleted, and the Agreement
shall be deemed modified to the extent necessary to render the surviving
provisions enforceable to the fullest extent permitted by law.
License, Development and Commercialization Agreement -- Confidential -- Page 53
15.6 Government Acts. In the event that any act, regulation, directive, or
law of a government, including its departments, agencies or courts, should make
impossible or prohibit, restrain, modify or limit any material act or obligation
of NOVARTIS or VERTEX under this Agreement, the party, if any, not so affected
shall have the right, at its option, to suspend or terminate this Agreement as
to such country, if good faith negotiations between the parties to make such
modifications to this Agreement as may be necessary to fairly address the impact
thereof, are not successful after a reasonable period of time in producing
mutually acceptable modifications to this Agreement.
15.7 Government Approvals. NOVARTIS will use reasonable efforts to obtain
any government approval required to enable this Agreement to become effective,
or to enable any payment hereunder to be made, or any other obligation hereunder
to be observed or performed. Each party will keep the other informed of progress
in obtaining any such approvals.
15.8 Assignment. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of the other
party; provided, however, that either party may assign this Agreement, without
the consent of the other party, (i) to any of its Affiliates, if the assigning
party guarantees the full performance of its Affiliates' obligations hereunder,
or (ii) in connection with the transfer or sale of all or substantially all of
its assets or business or in the event of its merger or consolidation with
another company. Any purported assignment in contravention of this Section 15.8
shall, at the option of the nonassigning party, be null and void and of no
effect. No assignment shall release either party from responsibility for the
performance of any accrued obligation of such party hereunder. This Agreement
shall be binding upon and enforceable against the successor to or any permitted
assignee from either of the parties hereto.
15.9 Affiliates. Each party may perform its obligations hereunder
personally or through one or more Affiliates, although each party shall
nonetheless be solely responsible for the performance of its Affiliates. Neither
party shall permit any of its Affiliates to commit any act (including any act of
omission) which such party is prohibited hereunder from committing
License, Development and Commercialization Agreement -- Confidential -- Page 54
directly. The use of subcontractors by either party shall not increase the
financial obligations of the other party hereunder in any respect.
15.10 Counterparts. This Agreement may be executed in duplicate both of
which shall be deemed to be originals, and both of which shall constitute one
and the same Agreement.
15.11 No Agency. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership or similar relationship between
NOVARTIS and VERTEX. Notwithstanding any of the provisions of this Agreement,
neither party shall at any time enter into, incur, or hold itself out to third
parties as having authority to enter into or incur, on behalf of the other
party, any commitment, expense, or liability whatsoever, and all contracts,
expenses and liabilities undertaken or incurred by one party in connection with
or relating to the development, manufacture or sale of Bulk Drug Substance, Drug
Product Candidates or Drug Products shall be undertaken, incurred or paid
exclusively by that party, and not as an agent or representative of the other
party.
15.12 Notice. All communications between the parties with respect to any
of the provisions of this Agreement will be sent to the addresses set out below,
or to other addresses as designated by one party to the other by notice pursuant
hereto, by prepaid certified, air mail (which shall be deemed received by the
other party on the seventh business day following deposit in the mails), or by
cable, telex, facsimile transmission, or other electronic means of communication
(which shall be deemed received when transmitted), with confirmation by letter
given by the close of business on or before the next following business day:
License, Development and Commercialization Agreement -- Confidential -- Page 55
If to NOVARTIS, at:
NOVARTIS PHARMA AG
Business Development and Licensing
P.O. Box ________
▇▇-▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
with a copy to: Legal Services, at the address referenced above
and
if to VERTEX, at:
Vertex Pharmaceutical Incorporated
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Chief Business Officer
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15.13 Headings. The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions to which they
refer.
15.14 Authority. The undersigned represent that they are authorized to
sign this Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Agreement will violate any other agreement that such
party may have with any other person or company. Each party has relied on that
representation in entering into this Agreement.
15.15 Entire Agreement. This Agreement, including the Schedules appended
hereto, contains the entire understanding of the parties relating to the matters
referred to herein, except
License, Development and Commercialization Agreement -- Confidential -- Page 56
as matters referenced herein are also addressed in the Research Agreement, and
may only be amended by a written document, duly executed on behalf of the
respective parties.
15.16 Inflation Adjustment. All payments required to be made to VERTEX
hereunder (except any royalty payments required to be made under the provisions
of Sections 6.3 and 7.4.3 hereof, and any product supply payments required to be
made under Section 7.4.1 hereof) shall be adjusted at the beginning of each
calendar year to reflect the impact of inflation since the Effective Date of the
Research Agreement, as measured by the biotech worker inflation rate defined and
reported in the ▇▇▇▇▇▇▇ Survey (▇▇▇▇▇▇▇/AON Consulting Inc., San Francisco, CA),
or other mutually acceptable index. Notwithstanding the foregoing, no adjustment
shall be required in any calendar year in which the appropriate inflation
adjustment, if applied, would result in a change of less than [****************
*****************].
15.17 Invoice Requirement. Any amounts payable to VERTEX hereunder (except
any royalty payments required to be made under the provisions of Sections 6.3
and 7.4.1 hereof) shall be made within thirty days after receipt by NOVARTIS, or
its nominee designated for that purpose in advance by NOVARTIS in writing to
VERTEX, of an invoice covering such payment, which invoice shall conform to the
extent reasonably practicable to the form of invoice contained in Exhibit B to
the Research Agreement.
15.18 Hardship. If as a result of unforeseen events or developments
relating to the subject matter of this Agreement, the performance of this
Agreement shall cause inequitable economic hardship for one party which runs
counter to the objectives of this Agreement and which the other party cannot
reasonably and in good faith expect the first party to bear unrelieved, the
parties will meet and seek in good faith to find equitable means of amending
this Agreement to reestablish a fair and reasonable economic balance under this
Agreement between the parties hereto.
License, Development and Commercialization Agreement -- Confidential -- Page 57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
VERTEX PHARMACEUTICALS INCORPORATED
By: ____________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and Chief Executive Officer
NOVARTIS PHARMA AG
By: ___________________________________________
Title: ___________________________________________
By: ___________________________________________
Title: ___________________________________________
License, Development and Commercialization Agreement -- Confidential -- Page 58
Schedule 1.12
List of Drug Product Candidates
--------------------------------------------------------------------------------
To be supplied
License, Development and Commercialization Agreement -- Confidential
Schedule 1.25
List of Major Markets
--------------------------------------------------------------------------------
[*******************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*******************************************************************************]
License, Development and Commercialization Agreement -- Confidential
Schedule 1.29
NOVARTIS Patents
--------------------------------------------------------------------------------
License, Development and Commercialization Agreement -- Confidential
Schedule 1.44
VERTEX Patents
--------------------------------------------------------------------------------
License, Development and Commercialization Agreement -- Confidential
Schedule 4.6
Terms of Supply
--------------------------------------------------------------------------------
To be agreed
5511253-49/364798v8
License, Development and Commercialization Agreement -- Confidential
EXHIBIT B
Form of Invoice
--------------------------------------------------------------------------------
[COMPANY Letterhead]
[Date]
Novartis Pharma AG
Zentraler Faktureneingang
Attn: ▇▇. ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇,
Re: [COMPANY] License Agreement for [PRODUCT]
This is an invoice requesting payment in connection the above-captioned
Agreement between [COMPANY] and Novartis Pharma AG.
Novartis Contract Code No: [will be assigned within Novartis
following execution]
Novartis Cost Centre: 630926 / 393120
SPECIFICATION: [PLEASE SPECIFY THE EVENT FOR WHICH
THE INVOICE IS DUE, AND ADD ANY
COPIES OF INVOICES FROM THIRD
PARTIES IN CASE REIMBURSEMENT FOR
THIRD PARTY WORK IS AGREED TO]
Amount and Currency: [self-explanatory]
Bank address and Account No: [insert the name and address of the
bank to which the payment should be
sent and the account number to which
it should be credited]
Sincerely yours,
[COMPANY]