Exhibit 2
[*] indicates that a confidential portion of the text of this agreement has been
omitted. The non-public information has been filed separately with the
Securities and Exchange Commission.
EXECUTION COPY
COLLABORATION AGREEMENT
This Collaboration Agreement, dated as of September 23, 2004 (the
"Effective Date"), is between XOMA (US) LLC, a Delaware limited liability
company ("XOMA"), located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and APHTON
CORPORATION, a Delaware corporation ("Aphton"), located at ▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
WHEREAS, Aphton possesses scientific and technical proprietary technology,
know-how, patents and resources relating to the development, manufacture and
commercialization of Target Antigens (as defined below);
WHEREAS, XOMA possesses scientific and technical resources relating to the
generation, development, manufacture and commercialization of products derived
from antibodies; and
WHEREAS, Aphton and XOMA wish to enter into a collaborative effort to
generate, Develop, Manufacture and Commercialize Product(s) in the Field (as
such terms are defined below) to be governed by this Agreement (the
"Collaboration");
NOW, THEREFORE, XOMA and Aphton hereby agree as follows:
1. DEFINITIONS
1.1 Definitions. The following capitalized terms shall have the following
meanings for purposes of this Agreement:
"Adverse Drug Reaction" means any untoward medical occurrence in a patient
or subject who is administered a Product, whether or not considered related to
the Product, including any undesirable sign (including abnormal laboratory
findings of clinical concern), symptom or disease temporally associated with the
use of such Product.
"Affiliate" means any corporation, association or other entity that
directly or indirectly controls, is controlled by or is under common control
with the Party in question. As used herein with respect to a corporation,
association or other entity, the term "control" means control with possession of
the power to direct, or cause the direction of, the management and policies of
such corporation, association or other entity.
"Agreement" means this document, together with all Schedules hereto.
"Allocable Overhead" has the meaning set forth in Schedule A.
"Allowable Expenses" has the meaning set forth in Schedule A.
"[*] Dispute" means any dispute related solely to (i) [*]; or (ii) the [*].
"Aphton Background Technology" means all Patent Rights, technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) that are necessary or potentially useful
for the discovery, screening, design, synthesis, delivery, development, testing,
use, manufacture, sale, import or export of any Product in the Field that exist
as of the Effective Date and are Controlled by Aphton. For the avoidance of
doubt, the Parties acknowledge that, to the extent any Aphton Background
Technology is governed by one or more agreements with one or more Third Parties,
such Aphton Background Technology is subject to the limitations and restrictions
set forth in such Third Party agreement(s).
"Aphton Collaboration Technology" means all Patent Rights, technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) that both: (a) are necessary for or
potentially useful in connection with the discovery, screening, design,
synthesis, delivery, development, testing, use, manufacture, sale, import or
export of any Product in the Field, and (b) are conceived or reduced to practice
solely by Aphton or any Third Party on Aphton's behalf in the course of the
Collaboration.
"Aphton Marketing/Development Partner" has the meaning set forth in Section
5.5(a).
"Aphton Marketing/Development Partner Revenue" has the meaning set forth in
Schedule A.
"Aphton Technology" means all Aphton Background Technology and Aphton
Collaboration Technology.
"BLA" means a Biologics License Application (as defined in the FDC Act) and
any other equivalent marketing authorization application or other license,
registration or other application seeking approval from a Regulatory Authority
to market a Product in the Field in the Territory.
"Breaching Party" has the meaning set forth in Section 14.2(b).
"Budgeted Detail Effort" means for each Party, its percentage of the
Budgeted Total Detail Effort for each year.
"Budgeted Total Detail Effort" means for each calendar year the total
number of Details as set forth in the applicable Commercialization Plan (if any)
approved by the Steering Committee.
"Business Heads" means the Chief Executive Officer of Aphton and the Chief
Executive Officer or Chief Operating Officer of XOMA.
"cGMP Requirements" means the FDA's current good manufacturing practice
requirements as promulgated under the FFDCA at 21 C.F.R. (parts 210 and 211),
and as further defined by FDA guidance documents, as amended from time to time.
"Claim" has the meaning set forth in Section 15.1(a).
"Collaboration" has the meaning set forth in the Recitals.
"Collaboration Technology" means individually or collectively Aphton
Collaboration Technology, XOMA Collaboration Technology and Joint Collaboration
Technology.
"Combination Product" has the meaning set forth in Schedule A.
"Commercialization" or "Commercialize" means any and all activities
associated with marketing, promoting, communicating (including medical
communications and publications), distributing, importing, exporting or selling
a Product in the Field as set forth in the applicable Commercialization Plan or
conducted by a Joint Marketing/Development Partner, including the conduct of any
activities (including any Post-Approval Studies) directed to obtaining pricing
and reimbursement approvals and any other Post-Approval Studies not included in
Development, by a Party, its Affiliates or licensees or sublicensees.
"Commercialization Committee" has the meaning set forth in Section 3.1(c).
"Commercialization Dispute" means any matter as to which the [*] Committee
cannot reach unanimity and any matter pertaining to a [*] as to which the
Steering Committee cannot reach unanimity.
"Commercialization Expenses" has the meaning set forth in Schedule A.
"Commercialization Plan" has the meaning set forth in Section 5.1(b).
"Commercialization Program" means the Commercialization of a Product in the
Field in accordance with this Agreement.
"Commercially Reasonable and Diligent Efforts" means those efforts
consistent with the exercise of prudent scientific and business judgment, as
applied to other pharmaceutical products of similar potential and market size by
participants in the biopharmaceutical industry having similar resources to
companies the size of Aphton or XOMA generally.
"Committee" means any of the Steering Committee, the Development Committee
and the Commercialization Committee, each as defined in this Article 1 and
described in Article 3 (together with any other committee or sub-committee
contemplated hereby or established in accordance with this Agreement).
"Confidential Information" has the meaning set forth in Section 11.1.
"Consumer Promotion" has the meaning set forth in Schedule A.
"Continuing Party" has the meaning set forth in Section 8.5(b).
"Control" or "Controlled" means with respect to any material, know-how or
other information or intellectual property right, the possession (whether by
ownership or license, other than solely by virtue of licenses granted in this
Agreement) by a Party or its Affiliates of the ability to grant to the other
Party access or a license as provided herein without violating the terms of any
agreement or other arrangement with any Third Party.
"Co-Promotion" or "Co-Promote" means the joint Commercialization of one or
more Products in the Field in the Territory by both Parties under the same
trademark.
"Cost of Goods Sold" or "COGS" has the meaning set forth in Schedule A.
"Detail" means a sales presentation by a professional sales representative
to a target physician involved in prescribing a Product in which the primary
purpose is to discuss the benefits and features of such Product.
"Detail Effort" means with respect to a Party (or its sublicensee), and for
any calendar year, the actual number of Details given by its sales force for
such calendar year.
"Development" or "Develop" means the conduct of all tests, clinical and
other studies and other activities (including test method development,
toxicology studies, statistical analysis and report writing, preclinical and
other testing, packaging and regulatory affairs, product approval and
registration activities) set forth in, or required to obtain the information set
forth in, the Development Plan, including such tests, studies (including
Post-Approval Studies) and other activities as may be required or recommended
from time to time by any Regulatory Authority to obtain, maintain or expand
Regulatory Approval of a Product in the Field but excluding any Post-Approval
Studies that are not so required or recommended by a Regulatory Authority and
also excludes any such studies which are required for purposes of obtaining or
maintaining a pricing or reimbursement approval.
"Development Committee" has the meaning set forth in Section 3.1(b).
"Development Dispute" means any matter as to which the [*] Committee cannot
reach unanimity and any matter pertaining to a [*] (and including, without
limitation, determinations under [*]) as to which the Steering Committee cannot
reach unanimity.
"Development Expenses" has the meaning set forth in Schedule A.
"Development Plans" has the meaning set forth in Section 4.2.
"Development Program" means the Development of Product(s) in the Field in
accordance with Article 4 hereof.
"Disclosing Party" has the meaning set forth in Section 11.1.
"Distribution Expenses" has the meaning set forth in Schedule A.
"[*] Dispute" means any dispute related to development decisions of a
Committee with respect to any Product relating to a [*], including [*].
"Education" has the meaning set forth in Schedule A.
"Effective Date" has the meaning set forth in the Preamble.
"Elected Percentage" has the meaning set forth in Section 5.4(b).
"EMEA" means the European Agency for the Evaluation of Medicinal Products
(or any successor thereto).
"Europe" means Norway, Switzerland and those countries that are member
states of the European Union from time to time; provided, however, that with
respect to the exercise of any rights hereunder to Opt Out of a particular
Product in Europe, the definition of Europe shall consist of Norway, Switzerland
and all those countries, but only those countries, that are member states of the
European Union at the time such Opt Out is exercised.
"Expression and Engineering Technologies" means (a) the bacterial cell
expression technology Controlled by XOMA Ireland Limited [*] and any
improvements thereon; and (b) the Human Engineering(TM) technology Controlled,
as of the Effective Date, by XOMA Technology Ltd. [*], and any improvements
thereon.
"External Reason" has the meaning set forth in Section 5.4(e).
"FDA" means the United States Food and Drug Administration (or any
successor thereto).
"FDC Act" means the United States Food, Drug and Cosmetic Act (or any
successor thereto), as amended, and the rules and regulations promulgated
thereunder.
"Field" means the treatment, prophylaxis and/or prevention of any human
disease.
"FTE" means the amount of time devoted by an individual employee to
Development Program activities or other activities chargeable by either Party
under this Agreement, converted into full-time equivalent units for each
applicable functional area (e.g., preclinical, technical development). Time
spent on Development Program activities or other activities chargeable by either
Party under this Agreement will be converted into full-time equivalent units
based on each Party's internal time reporting system and will exclude activities
that are not chargeable to the Collaboration (such as Steering Committee,
Development Committee and Commercialization Committee participation, leave,
training and administrative activities).
"FTE Costs" means the amounts (which amounts include salaries, fringe
benefits, overtime and all other costs, including overhead such as facilities
costs, of employing FTEs) determined by multiplying (a) the number of FTEs
allocated by a Party during the relevant time period, subject to any limitations
set forth in the applicable Development Plan or Commercialization Program or
otherwise established by the Development Committee, by (b) the applicable FTE
Rates.
"FTE Rate" means the agreed upon cost per FTE by functional area, to be
adjusted annually (beginning in January 2005) for inflation using the latest
available U.S. Producer Price Index for Total Manufacturing Industries,
unadjusted (PCUOMFG#) as a simple percentage. Such adjustments shall be the
responsibility of: (i) the Development Committee with respect to Development FTE
Rates; (ii) the Commercialization Committee with respect to Commercialization
FTE Rates; and (iii) the Development Committee or Commercialization Committee,
as applicable, with respect to Manufacturing FTE Rates. The initial FTE Rates
(on a per annum basis) are:
Functional Area Annual FTE Rate
--------------- ---------------
Preclinical $[*]
Clinical & Regulatory $[*]
Technical Development $[*]
Technical Transfer $[*]
Project Management $[*]
Quality $[*]
The Steering Committee shall approve common FTE Rates for any new functional
areas that come within the scope of the Collaboration.
"Future Indication" means any use of a Product for the treatment,
prophylaxis or prevention of any human illness, sickness, interruption,
cessation or disorder of a particular bodily function, system or organ except
the Initial Indication.
"Future IP" has the meaning set forth in Section 2.6. For the avoidance of
doubt, the Parties acknowledge that "Future IP" shall not include any
Collaboration Technology.
"GAAP" means United States generally accepted accounting principles, as
they exist from time to time, consistently applied.
"[*] Agreement" means the Non-Exclusive License Agreement between XOMA
Corporation and [*], effective as of [*].
"Governmental Authority" means any court, agency, authority, department,
regulatory body or other instrumentality of any government or country or of any
national, federal, state, provincial, regional, county, city or other political
subdivision of any such government or any supranational organization of which
any such country is a member.
"IND" means an application submitted to a Regulatory Authority to initiate
human clinical trials of a Product in the Initial Indication or a Future
Indication, including a United States Investigational New Drug Application (or
any successor application) and its foreign equivalents, and all subsequent
submissions, supplements and amendments thereto.
"Indemnified Group" has the meaning set forth in Section 15.1(a).
"Indication" or "Indications" means any one or more of the Initial
Indication and all Future Indications, if any.
"Initial Development Plan" has the meaning set forth in Section 4.2.
"Initial Indication" has the meaning set forth in Section 4.3.
"Joint Collaboration Technology" means all Patent Rights, technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) for which (i) one or more employees,
consultants or agents of Aphton or any other persons obligated to assign such
Collaboration Technology to Aphton are inventors under United States patent law;
and (ii) one or more employees, consultants or agents of XOMA or any other
persons obligated to assign such Collaboration Technology to XOMA are inventors
under United States patent law. Notwithstanding the foregoing, any and all
Patent Rights, technology, inventions, information, data, know-how, compounds,
materials and substances (whether or not patented or patentable) generated by or
resulting from any clinical trials of Product pursuant to this Agreement (other
than clinical trials conducted by one Party following the Opt Out by the other
Party) shall be deemed to be Joint Collaboration Technology.
"Joint Marketing/Development Partner" has the meaning set forth in Section
5.2.
"Joint Marketing/Development Partner Revenue" has the meaning set forth in
Schedule A.
"Joint Patent Rights" has the meaning set forth in Section 10.2(b).
"Launch" means the first commercial sale of a particular Product to
unaffiliated Third Parties.
"Law" or "Laws" means all laws, statutes, rules, regulations, orders,
judgments, injunctions and/or ordinances of any Governmental Authority in the
applicable country of the Territory.
"Manufacturing" or "Manufacture" means all activities set forth in the
applicable Manufacturing Plan associated with the production, processing,
filling, finishing, packaging, labeling, shipping and storage of Products in the
Field, including stability testing, formulation, manufacturing process
development, process validation, manufacturing scale-up, preclinical, clinical
and commercial manufacture and analytical development and quality assurance and
quality control activities.
"Manufacturing Development Expenses" has the meaning set forth in Schedule
A.
"Manufacturing Dispute" has the meaning set forth in Section 6.1(a).
"Manufacturing Plan" has the meaning set forth in Section 6.1(a).
"Market and Consumer Research" has the meaning set forth in Schedule A.
"Marketing Management" has the meaning set forth in Schedule A.
"Net Sales" has the meaning set forth in Schedule A.
"Non-Breaching Party" has the meaning set forth in Section 14.2(b).
"Non-Commercial Research Activities" means those research activities
engaged in prior to initiation of toxicology studies for the purpose of filing
an IND.
"Operating Profit/Loss" means the amount determined from time to time in
accordance with Section 3 of Schedule A.
"Opt Back In" has the meaning set forth in Section 8.3.
"Opt Out" has the meaning set forth in Section 8.1.
"Opt-Out Milestone" means (a) each of the milestones set forth on Schedule
8.1 and (b) any milestone specified as such in an approved Development Plan.
"Opted Out Party" has the meaning set forth in Section 8.5(b).
"Other XOMA Entities" means XOMA Ireland Limited, XOMA Technology Ltd.
and/or any other Affiliate of XOMA.
"Party" means Aphton or XOMA, as the case may be, and "Parties" means
Aphton and XOMA.
"Patent Rights" means, with respect to Aphton or XOMA, all United States
and foreign patents Controlled by Aphton or XOMA, respectively, as to which a
sublicense can be granted, at any time during the Term of this Agreement, which
would be infringed by the use, development, manufacture, sale, import or export
of a Product or which would be infringed by other activities to be performed by
the Parties in accordance with this Agreement, including all United States and
foreign patents and patent applications (including all reissues, extensions,
substitutions, confirmations, registrations, revalidations, additions,
continuations, continuations-in-part and divisions thereof). Patent Rights shall
not include the Expression and Engineering Technologies, which technologies
shall be subject to the provisions of Section 9.3(c).
"Phage Display License Agreements" shall mean the license agreements listed
on Schedule 1.1A.
"Phase I Study" means a Phase I clinical trial as prescribed by applicable
FDA regulations, or corresponding regulations of any comparable entity.
"Phase II Study" means a Phase II clinical trial as prescribed by
applicable FDA regulations, or corresponding regulations of any comparable
entity.
"Phase III Study" means a Phase III clinical trial as prescribed by
applicable FDA regulations, or corresponding regulations of any comparable
entity.
"Plans" means any Commercialization Plan, Development Plan, Manufacturing
Plan or other plan approved through the Committee process relating to the
Manufacture or the joint Development or Commercialization of any Product under
this Agreement.
"Post-Approval Study" means a clinical trial conducted after Regulatory
Approval of the applicable Product for the applicable Indication has been
obtained in the relevant country.
"Product" means any composition of matter or article of manufacture that,
in whole or in part, contains, comprises or is derived from an antibody or
antibodies, or any fragment or derivative of any such antibody or antibodies,
that bind with at least 100 micro-molar affinity to a Target Antigen.
"Product Trademark" means one or more trademarks or logos that are used for
the Commercialization of a Product in the Field in the Territory.
"Prosecuting Party" has the meaning set forth in Section 10.2(b).
"Receiving Party" has the meaning set forth in Section 11.1.
"Region" means each of (a) the USA, (b) Europe, (c) Japan and (d) the Rest
of World.
"Regulatory Approval" means any and all approvals (including, where
applicable, pricing and reimbursement approvals), licenses, registrations or
authorizations of any Regulatory Authority, necessary for the testing or sale of
a Product in the Field.
"Regulatory Authority" means any governmental authority in a country or
region that regulates the manufacture or sale of pharmaceutical products,
including the FDA and the EMEA, and any successors thereto.
"Rest of World" means the Territory other than the USA, Europe and Japan.
"Sales and Marketing Expenses" has the meaning set forth in Schedule A.
"Sales Returns and Allowances" has the meaning set forth in Schedule A.
"Selling Expenses" has the meaning set forth in Schedule A.
"Specifications" means with respect to any Product, the applicable written
specifications for such Product in effect at a particular time including, but
not limited to, specifications provided in any Regulatory Approval for such
Product.
"Steering Committee" has the meaning set forth in Section 3.1(a).
"Target Antigen(s)" means any amino acid sequence, natural or synthetic,
that comprises a gastrin ligand [*].
"Term of this Agreement" means the period from the Effective Date until
this Agreement expires or is terminated pursuant to its terms.
"Territory" means all of the countries in the world.
"Third Party" means any entity other than Aphton or XOMA and their
respective Affiliates.
"Trade Promotion" has the meaning set forth in Schedule A.
"USA" means the United States of America, including its territories and
possessions, the District of Columbia and Puerto Rico.
"Valid Claim" means any claim of an issued and unexpired Patent Right,
which claim has not been held unenforceable, unpatentable or invalid by a final
decision of a court or 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, re-examination or
express disclaimer.
"XOMA Background Technology" means all Patent Rights, technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) that are necessary or potentially useful
for the discovery, screening, design, synthesis, delivery, development, testing,
use, manufacture, sale, import or export of any Product in the Field that exist
as of the Effective Date and are Controlled by XOMA or any of its Affiliates.
XOMA Background Technology shall not include the Expression and Engineering
Technologies, [*]. For the avoidance of doubt: (a) without limiting [*], the
Parties acknowledge that, to the extent any XOMA Background Technology is
governed by one or more agreements with one or more Third Parties, such XOMA
Background Technology is subject to the limitations and restrictions set forth
in such Third Party agreement(s); and (b) the XOMA Background Technology shall
include, without limitation, the mammalian cell expression technology Controlled
as of the Effective Date by XOMA Technology Ltd [*], the Phage Display License
Agreements and the [*] Agreement.
"XOMA Collaboration Technology" means all Patent Rights, technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) that both (a) are necessary for or
potentially useful in connection with the discovery, screening, design,
synthesis, delivery, development, testing, use, manufacture, sale, import or
export of any Product in the Field, and (b) are conceived or reduced to practice
solely by XOMA or any Third Party on XOMA's behalf in the course of the
Collaboration. XOMA Collaboration Technology shall not include the Expression
and Engineering Technologies, which technologies shall be subject to the
provisions of Section 9.3(c).
"XOMA Marketing/Development Partner" has the meaning set forth in Section
5.5(b).
"XOMA Technology" means the XOMA Background Technology and the XOMA
Collaboration Technology.
1.2 Interpretation. Whenever any provision of this Agreement uses the term
"including" (or "includes"), such term shall be deemed to mean "including
without limitation" and "including but not limited to" (or "includes without
limitations" and "includes but is not limited to") regardless of whether the
words "without limitation" or "but not limited to" actually follow the term
"including" (or "includes"); "herein," "hereby," "hereunder," "hereof" and other
equivalent words shall refer to this Agreement as an entirety and not solely to
the particular portion of this Agreement in which any such word is used; all
definitions set forth herein shall be deemed applicable whether the words
defined are used herein in the singular or the plural; wherever used herein, any
pronoun or pronouns shall be deemed to include both the singular and plural and
to cover all genders; all references to days, months, quarters or years are
references to calendar days, calendar months, calendar quarters or calendar
years; and any reference to any federal, national, state, local or foreign
statute or law shall be deemed to also refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
2. COOPERATION
2.1 Scope of Cooperation. The Parties agree to cooperate under this
Agreement, and to exercise their rights to make final determinations under this
Agreement, in good faith to effectively and efficiently Develop and
Commercialize (or have one or more Third Parties Commercialize) Products in the
Territory and use Commercially Reasonable and Diligent Efforts to optimize the
commercial potential of Products. To achieve these goals, the Parties wish to
provide for: (a) the joint Development of Products in the Territory; (b) the
Manufacture of Products in the Territory by XOMA; and (c) the Commercialization
of Products by one or more of the Parties and/or by one or more Third Parties in
the Territory. For purposes thereof, the Parties shall establish various
Committees as set forth in Article 3 of this Agreement to oversee the
Development, Manufacture and Commercialization of Products, and each Party
shall, subject to the terms and conditions set forth in Article 11, provide (or
cause its Affiliates to provide) to any relevant Committee any necessary
Confidential Information and such other information as may be reasonably
required for the Parties to operate effectively and efficiently under this
Agreement; provided, however, that it is not prevented from doing so by virtue
of confidentiality or non-use obligations to one or more Third Parties.
2.2 Compliance with Law. Both Aphton and XOMA, and their respective
Affiliates, shall perform their obligations under this Agreement and any
then-applicable Plans (including, without limitation, the deployment of their
respective personnel) in accordance with applicable Law. No Party or any of its
Affiliates shall, or shall be required to, undertake any activity under or in
connection with this Agreement which violates, or which it believes, in good
faith, may violate, any applicable Law.
2.3 Diligence. Subject to the terms of this Agreement, each Party (and its
Affiliates) shall use Commercially Reasonable and Diligent Efforts to fulfill
all responsibilities assigned to it under this Agreement and any then-applicable
Plans.
2.4 Personnel and Resources. Each Party agrees to commit such personnel,
facilities, expertise and other resources as are necessary to perform its
obligations under this Agreement in accordance with its terms; provided,
however, that neither Party warrants that the Collaboration will achieve any of
the research or commercial objectives contemplated by the Parties. Each Party
agrees to use Commercially Reasonable and Diligent Efforts to assure the
complete and prompt exchange, as needed, of Aphton Background Technology and
XOMA Background Technology, Collaboration Technology, the results of all
activities pursuant to the Development Plans and, to the extent reasonably
required for the Development, Manufacture or Commercialization of any Product,
the Expression and Engineering Technologies.
2.5 Further Assurances. Upon the terms and subject to the conditions
hereof, each of the Parties will use all Commercially Reasonable and Diligent
Efforts to take, or cause to be taken, all actions necessary, proper or
advisable under applicable Laws or otherwise to consummate and make effective
the transactions contemplated by this Agreement.
2.6 Future IP. Each of the Parties agrees that, whenever such Party becomes
aware that it Controls Patent Rights, technology, inventions or know-how that
(i) did not exist as of the Effective Date or thereafter became Controlled by
such Party, in each case outside of the Collaboration and (ii) may be necessary
or useful for the Development, Manufacture or Commercialization of Products in
the Field ("Future IP"), such Party will bring such Future IP to the attention
of the other Party and will discuss in good faith whether to include such Future
IP as Aphton Background Technology or XOMA Background Technology, as applicable,
and if so, on what terms, it being understood that in no event shall such Future
IP be required to be included in either such definition unless the Parties agree
on the economic and other terms of such inclusion.
3. COLLABORATION GOVERNANCE
3.1 Committees.
(a) Formation and Membership of Steering Committee. Aphton and XOMA will
each appoint up to three (3) representatives to a steering committee (the
"Steering Committee"). The initial members of the Steering Committee will be
appointed promptly following the Effective Date by notice in writing from the
respective appointing Party to the other Party. The Steering Committee will meet
quarterly or as otherwise mutually agreed and as set forth in Section 3.2. Each
Party shall have one vote on all matters voted on by the Steering Committee,
regardless of the number of representatives of such Party on, or the total
number of members of, the Steering Committee, and all actions taken and
decisions made by the Steering Committee shall be by unanimous agreement;
provided, however, that subject to the terms of this Agreement if the Steering
Committee is unable to reach a unanimous agreement, the matter will be resolved
as set forth in Article 13. A Party may change any of its appointments to the
Steering Committee at any time upon giving written notice to the other Party.
The Steering Committee does not itself have the authority to amend this
Agreement in any manner.
(b) Formation and Membership of Development Committee. Promptly after its
formation, the Steering Committee will establish a development committee (the
"Development Committee") to oversee the Development of Products in the Field
(including, without limitation, preclinical and clinical Development). Each
Party will appoint up to three (3) representatives to be members of the
Development Committee, which appointment shall be made by notice in writing from
the respective appointing Party to the other Party. In addition, one (1)
representative from the department or group within each Party responsible for
financial matters shall be invited to participate (without the right to vote) at
any meeting of the Development Committee at which financial matters are expected
to or likely to be discussed. Each Party shall have one vote on all matters
voted on by the Development Committee, regardless of the number of
representatives of such Party on, or the total number of members of, the
Development Committee, and decisions of the Development Committee will be by
unanimous agreement; provided, however, that subject to the terms of this
Agreement if the Development Committee is unable to reach a unanimous agreement,
the matter will be referred to the Steering Committee. With respect to decisions
pertaining to the selection of a particular Product candidate for Development as
part of the Collaboration, the Parties have established the criteria set forth
on Schedule 3.1(b) regarding acceptance by both Parties of such Product
candidate. In the event a potential Product candidate meets these predetermined
criteria, and the Development Committee does not agree on accepting such
potential Product candidate, the matter shall be referred to the Steering
Committee as a Development Dispute.
(c) Formation and Membership of Commercialization Committee. At a date no
later than that which would allow the Parties sufficient time to prepare for
Commercialization, the Steering Committee will establish a commercialization
committee (the "Commercialization Committee") to oversee the Commercialization
of Products in the Field, including any Co-Promotion of Products in the Field.
Each Party will appoint up to three (3) representatives as members of the
Commercialization Committee, which appointment shall be made by notice in
writing from the respective appointing Party to the other Party. In addition,
one (1) representative from the department or group within each Party
responsible for financial matters shall be invited to participate (without the
right to vote) at any meeting of the Commercialization Committee at which
financial matters are expected to or likely to be discussed. Each Party shall
have one vote on all matters voted on by the Commercialization Committee,
regardless of the number of representatives of such Party on, or the total
number of members of, the Commercialization Committee, and decisions of the
Commercialization Committee will be by unanimous agreement; provided, however,
that subject to the terms of this Agreement it is agreed that if the
Commercialization Committee is unable to reach a unanimous agreement, the matter
will be referred to the Steering Committee.
(d) Steering Committee Responsibilities. The Steering Committee shall be
responsible for:
(i) preparing such procedures and mechanisms as may be necessary for
the operation of the Steering Committee, the Development Committee, the
Commercialization Committee, and any other committees the Steering
Committee determines to establish to assure efficiency in the
Collaboration;
(ii) approving strategy for the overall Development, Manufacturing and
Commercialization of Products in the Field in the Territory and for all
other activities conducted by the Parties hereunder;
(iii) determining whether to pursue indications for Products in
addition to the Initial Indication as part of the Collaboration as provided
in Section 4.3;
(iv) facilitating the transfer through the Development Committee of
technology between the Parties for purposes of the Development Program;
(v) at its quarterly meetings, assessing the progress of the
Development Program and Commercialization Program against the proposed
timelines;
(vi) monitoring the progress of the Development Committee and the
Commercialization Committee;
(vii) reviewing and approving the Development Plans proposed by the
Development Committee and approving the budget therefor and any
modifications thereto as recommended by the Development Committee; provided
that in the event the Steering Committee has not unanimously approved or
rejected any such modification within thirty (30) days of its submission to
the Steering Committee, the matter will be referred to the Business Heads
for resolution as provided in Section 13.1;
(viii) reviewing and approving the Manufacturing Plans proposed by
XOMA and approving the budget therefor and any modifications thereto as
recommended by XOMA; provided that in the event the Steering Committee has
not unanimously approved or rejected any such modification within thirty
(30) days of its submission to the Steering Committee, the matter will be
referred to the Business Heads for resolution as provided in Section 13.1;
(ix) reviewing and approving the Commercialization Plans proposed by
the Commercialization Committee and approving the budget therefor and any
modifications thereto as recommended by the Commercialization Committee;
provided that in the event the Steering Committee has not unanimously
approved or rejected any such modification within thirty (30) days of its
submission to the Steering Committee, the matter will be referred to the
Business Heads for resolution as provided in Section 13.1;
(x) at its quarterly meetings, assessing the implementation of
Manufacturing Plans by XOMA and reviewing XOMA's activities with respect
thereto;
(xi) assessing whether it agrees with any determination by the
Development Committee that a particular license from a Third Party is
required or beneficial for the Development or Commercialization of a
Product in the Field, as reflected in Section 4.7(b), and monitoring the
progress of any negotiations conducted in accordance with Section 4.7(b)
and approving the terms of any final agreement arising therefrom;
(xii) deciding whether a Product should be Commercialized by or
through a Joint Marketing/Development Partner as contemplated by Section
5.2(a), monitoring the progress of any negotiations conducted in accordance
with Section 5.2(b) and approving the terms of any final agreement arising
therefrom; provided that in the event the Steering Committee has not
unanimously made such determination or approved such terms within thirty
(30) days of its submission to the Steering Committee, the matter will be
referred to the Business Heads for resolution as provided in Section
13.1(a); and
(xiii) performing such other activities as are contemplated for the
Steering Committee under this Agreement.
(e) Development Committee Responsibilities. The Development Committee shall
be responsible for:
(i) proposing and overseeing the implementation of the Development
strategy for Products in the Field in the Territory as determined by the
Steering Committee;
(ii) establishing the Development Plan to be submitted to the Steering
Committee for approval;
(iii) overseeing preclinical studies of Products, including
toxicological and pharmacokinetic studies;
(iv) overseeing the filing of INDs with Regulatory Authorities
throughout the Territory by the designated Party pursuant to Section
4.5(a);
(v) approving the protocol of any clinical studies of the Products
throughout the Territory;
(vi) overseeing clinical studies of Products throughout the Territory;
(vii) overseeing the filing of BLAs with Regulatory Authorities
throughout the Territory by the designated Party pursuant to Section
4.5(a);
(viii) overseeing the activities of the Parties with respect to the
Development of Products in the Territory;
(ix) confirming the annual adjustments for inflation to the FTE Rate,
as provided in the definition thereof;
(x) assuring comparable methodologies in calculating FTE Costs;
(xi) determining whether licenses from Third Parties are required or
beneficial for the Development or Commercialization of a Product in the
Field, as reflected in Section 4.7(b), and making proposals to the Steering
Committee with respect thereto;
(xii) establishing, as appropriate, one or more advisory committees
comprised of scientific, medical and/or other appropriate experts not
affiliated with either Party, which committee(s) shall be responsible for
advising the Development Committee on scientific, medical and other matters
related to a Product or Target Antigen, including without limitation by
making recommendations as to size and design of clinical trials, which
recommendations shall be considered in good faith by the Development
Committee but shall not be binding on the Parties;
(xiii) providing all appropriate information regarding the progress of
the Development Program to the Steering Committee in advance of its
quarterly meetings or as otherwise requested by the Steering Committee; and
(xiv) performing such other activities as are contemplated for the
Development Committee under this Agreement.
(f) Commercialization Committee Responsibilities. The Commercialization
Committee shall be responsible for:
(i) proposing and implementing the Commercialization strategy for
Products in the Field in the Territory as determined by the Steering
Committee;
(ii) establishing the Commercialization Plan to be submitted to the
Steering Committee for approval;
(iii) reviewing and overseeing the activities of the Parties with
respect to the Commercialization of Products in the Territory;
(iv) providing all appropriate information regarding the progress of
the Commercialization Program to the Steering Committee in advance of its
quarterly meetings or otherwise as requested by the Steering Committee; and
(v) performing such other activities as are contemplated for the
Commercialization Committee under this Agreement.
3.2 Meetings of the Committees. The Steering Committee, the Development
Committee and the Commercialization Committee may meet by telephone, video
teleconference or in person at such times as are agreeable to the members of
each such committee. Attendance at meetings shall be at the respective expense
of the participating Parties. Aphton and XOMA shall alternate the right to
determine the location of each meeting. A quorum for the conduct of business at
each meeting shall require the attendance of at least one Aphton member and at
least one XOMA member.
3.3 Reports and Administrative Matters.
(a) Reports. Within ten (10) days after the end of each calendar quarter,
Aphton and XOMA will each provide to the other a written report (in electronic
form) summarizing in reasonable detail the material activities undertaken by it
during such quarter with respect to the Development and, if applicable,
Commercialization of the Product(s). XOMA's report shall include a written
summary in reasonable detail of the material activities undertaken by it during
such quarter with respect to the Manufacture of the Product(s). The reports
required under this Section may be consolidated with the Allowable Expenses
reports required under Section 4 of Schedule A to this Agreement.
(b) Meeting Minutes. The Party determining the location of each meeting
shall serve as secretary of that meeting. The secretary of the meeting shall
prepare and distribute to all members of the applicable committee an agenda
reasonably in advance of the date of the meeting and minutes of the meeting
within thirty (30) days following the meeting to allow adequate review and
comment. Such minutes shall provide a description in reasonable detail of the
discussions held at the meeting and a list of any actions, decisions or
determinations approved by the applicable committee. Minutes of each meeting of
the Steering Committee, the Development Committee and the Commercialization
Committee shall be approved or disapproved, and revised as necessary, at the
next meeting. Final minutes of each meeting shall be distributed to the members
of the applicable committee by the secretary of that meeting.
4. DEVELOPMENT PROGRAM
4.1 Undertaking and Scope. For so long as neither Party has Opted Out and
not Opted Back In with respect to the applicable Product and/or Region, each
Party agrees to use Commercially Reasonable and Diligent Efforts to perform its
activities detailed in the Development Plans in a professional and timely manner
with respect to each Product, Region and Indication.
4.2 Development Plans. An initial research and development plan for
Products in the Field in the Territory (the "Initial Development Plan") is
attached hereto as Schedule 4.2. The Initial Development Plan as modified or
amended from time to time by the Development Committee and approved by the
Steering Committee, as set forth in this Section 4.2, and any subsequent
Development Plan as so modified or amended and approved, shall be referred to
individually as a "Development Plan" and collectively as the "Development
Plans." No later than November 1 of each year, the Development Committee shall
review the then current Development Plan and confirm its applicability for the
following year or propose any appropriate amendments for the following year, in
each case for review and approval by the Steering Committee. Each annual
Development Plan shall be in writing and shall set forth with reasonable
specificity the research and development objectives, priorities, activities,
milestones, budgets, personnel requirements, other resources and allocations of
responsibilities between the Parties for the period covered by such annual
Development Plan in a manner consistent with the terms of this Agreement. The
Development Plans shall cover all aspects of research and development relating
to Products, including preclinical and clinical development, and shall include,
with reasonable specificity, the Development activities to be performed by each
Party (including Manufacture of clinical supply by XOMA) and Development
activities to be performed by academic collaborators or under contract service
agreements. The Development Committee may agree on modifications, and recommend
that the Steering Committee approve such modifications, to the provisions of any
Development Plan at any time.
4.3 Initial Indication and Future Indications. The Parties agree the
initial indication to be addressed by the Collaboration is [*] (the "Initial
Indication"). Any Party may propose to the Development Committee that a
particular Product be Developed in a particular Future Indication. The
Development Committee shall evaluate each such proposal and develop a detailed
proposal, which will include a Development Plan and commercial analysis for such
Future Indication. The Steering Committee shall review and evaluate each such
proposal and determine whether or not the Collaboration will pursue such Product
in such Future Indication.
4.4 Development Activities.
(a) General. Unless a Party has Opted Out and not Opted Back In with
respect to the applicable Product and/or Region, the Development of Products in
the Field will be pursued jointly by the Parties under the direction of the
Development Committee in accordance with the Development Plans. Notwithstanding
the foregoing, the Development Committee shall consider, and make
recommendations to the Steering Committee regarding, all other commercially
reasonable arrangements for the Development of Products, including proposals
from one or both of the Parties and proposals from one or more Third Parties.
All such proposals shall be considered by [*] in good faith with a view to
optimizing [*] of the applicable Product(s) and the benefit to the [*] of the
Product(s) and taking into account the [*].
(b) General Allocation of Responsibilities. The Development Plans shall
allocate Development tasks between the Parties consistent with optimizing the
Development of Products. The Parties anticipate that (i) Aphton will be
primarily responsible for investigating, recommending and delivering the Target
Antigen(s), (ii) XOMA will be primarily responsible for (A) generating Human
Engineered(TM) or other antibodies or fragments thereof to the Target Antigen(s)
and (B) developing processes for manufacture of antibodies or fragments thereof,
including formulation and analytical methods and (iii) the Parties will share
the responsibility for characterizing and testing antibodies or fragments
thereof generated by XOMA for activity against the Target Antigen(s) in
appropriate in vitro and in vivo models.
(c) Availability of Employees. Each Party shall make available its
employees engaged in the Development Program upon reasonable notice during
normal business hours and at their respective places of employment to consult
with employees of the other Party on the progress of the Development Program and
to exchange Collaboration Technology.
4.5 Regulatory Matters.
(a) Regulatory Responsibility. The preparation, filing, prosecution and
maintenance of BLAs and other regulatory filings required to be filed with any
Regulatory Authority with regard to each Product will be in the name of and the
responsibility of the Party so designated in the Development Plan covering such
Product. The costs incurred by the Parties in the preparation, filing and
submission of such regulatory filings will be deemed Development Expenses and
subject to the terms of Section 4.7(a). The Party so designated in the
Development Plan covering such Product shall oversee, monitor and coordinate all
regulatory actions, communications and filings with and submissions, including
filings and submissions of supplements and amendments thereto, to Regulatory
Authorities with respect to each Product, shall give the other Party a
reasonable opportunity for prior review of and comment on all such substantive
communications, filings and submissions and shall incorporate those of such
comments as can reasonably be incorporated into such communications, filings and
submissions. Subject to Section 4.6, XOMA shall own or control all establishment
licenses relating to Manufacturing and Aphton shall own all other Regulatory
Approvals (in each case unless transferred to a Joint Marketing/Development
Partner by XOMA or Aphton, as applicable).
(b) Regulatory Meetings and Correspondence. The Party so designated in the
Development Plan covering a particular Product shall be responsible for
interfacing, corresponding and meeting with Regulatory Authorities with respect
to the Product, and the other Party will promptly refer any contacts or
questions from Regulatory Authorities to the party so designated. Both Parties
will be entitled to attend all meetings and, if reasonably practicable,
telephone conferences with Regulatory Authorities.
(c) Reporting Adverse Drug Reactions. The Parties will develop and agree
upon safety data exchange procedures governing the collection, investigation,
reporting, and exchange of information concerning Adverse Drug Reactions,
product quality and product complaints involving Adverse Drug Reactions,
sufficient to permit each Party to comply with its legal obligations, including
to the extent applicable, those obligations contained in ICH guidelines E2A, E2B
and E2C and the FDC Act. The safety data exchange procedures will be promptly
updated if required by changes in legal requirements or by agreement between the
Parties. The Party so designated in the applicable Development Plan will be
responsible for reporting all Adverse Drug Reactions to the appropriate
Regulatory Authorities in the Territory in accordance with applicable laws and
regulations.
4.6 Effect of Opt Out. Notwithstanding anything herein to the contrary, but
subject to the provisions of Section 8.5, (i) neither Party shall have the
rights or responsibilities set forth in Articles 4, 5 and 7 with respect to any
Product in a particular Region as to which such Party has Opted Out and not
Opted Back In, and (ii) in the case of any Product in a particular Region as to
which Aphton has Opted Out and not Opted Back In, XOMA shall own the related
Regulatory Approvals; provided that, with respect to both clause (i) and clause
(ii), both Parties shall in any event retain their obligations pursuant to the
first two sentences of Section 4.5(c), Section 5.8 and the first sentence of
Section 5.10, regardless of any such Opt Out.
4.7 Funding of the Development Program.
(a) Development Expenses. Subject to the provisions of Article 8, Aphton
shall bear seventy percent (70%), and XOMA shall bear thirty percent (30%), of
all Operating Profits/Losses incurred during the Development of the Products, in
accordance with Schedule A and the reporting and reconciliation mechanisms set
forth therein.
(b) Third Party Licenses. The costs associated with obtaining, as well as
those payable under, any licenses from Third Parties that the Development
Committee determines are required or beneficial for the Development or
Commercialization of a Product shall be [*]. Subject to Sections 9.3(a) and (b),
either Party may propose that the Development Committee determine whether a
Third Party license is required or beneficial for the Development or
Commercialization of a Product in the Field. In the event the Development
Committee determines that such Third Party license is required or beneficial and
the Steering Committee agrees, the Development Committee shall determine which
Party shall be responsible for obtaining such license, subject to Sections
9.3(a) and (b). The Party so selected by the Development Committee shall [*] but
the [*] shall be as [*]. In making any such determination provided for in this
Section 4.7(b) as to the need for or benefit of any such Third Party license,
due consideration shall be given to the advisability of seeking an opinion of
counsel and the efforts required to design around the patents at issue.
5. COMMERCIALIZATION OF PRODUCTS
5.1 Commercialization.
(a) Except as to a particular Product or Region as to which one of the
Parties has Opted Out, or unless otherwise agreed, the Parties will collaborate
regarding the Commercialization of Products throughout the Territory. The
Commercialization Committee shall consider, and make recommendations to the
Steering Committee regarding, all commercially reasonable arrangements for the
Commercialization of Products, including proposals from one or both of the
Parties and proposals from one or more Third Parties. All such proposals shall
be considered by [*] in good faith with a view to optimizing [*] of the
applicable Product(s) and the benefit to the [*] of the Product(s) and taking
into account the [*]. Nothing in this Section 5.1(a) shall affect XOMA's
manufacturing rights and obligations hereunder, it being understood that matters
otherwise arising in the context of this Section 5.1(a) that relate to
manufacturing shall be subject to and governed by Section 6.1 hereof and related
provisions.
(b) The Commercialization Committee shall agree to and oversee the
implementation of a commercialization plan for one or more Products in the Field
in the Territory which shall describe the specific Commercialization activities
(if any) to be undertaken by the Parties with respect to the Commercialization
of such Product(s), shall include a general description of any personnel,
facilities and other resources of each Party to be used in the implementation
thereof and shall set forth a unanimously agreed budget for such activities
(each, as may be modified or amended and approved from time to time in
accordance with this Agreement, a "Commercialization Plan").
5.2 Commercialization through One or More Joint Marketing/Development
Partners. In the event the Steering Committee determines that a particular
Product should be Commercialized entirely by or through one or more Third
Parties (each, a "Joint Marketing/Development Partner") throughout the Territory
or in one or more particular Regions:
(a) So long as Aphton has not Opted Out of such Product throughout the
Territory or in such Region(s) or has Opted Out of such Product throughout the
Territory or in such Region(s) but has Opted Back In with respect thereto,
Aphton may license or sublicense all of its and XOMA's rights under this
Agreement (including rights under any Aphton Background Technology, XOMA
Background Technology and Collaboration Technology) to one or more Joint
Marketing/Development Partners to use, develop, make, have made, sell, have
sold, offer for sale, import or export such Product in the Field throughout the
Territory or in such Region(s), as applicable, subject, in each case, to all
applicable provisions of this Agreement; provided that, notwithstanding the
foregoing, the consent of XOMA to such license or sublicense shall be required,
which consent shall: (i) be [*] in the case of any such license or sublicense to
a Third Party [*] relating to the Product(s) to be covered by such license or
sublicense; (ii) be [*] in the case of [*]; and (iii) [*] in all other
circumstances. In the event that, and to the extent that, [*] then XOMA shall
have the rights set forth in Section 7.2 with respect to the applicable
Product(s) and Region(s). Nothing in this Section 5.2 shall affect XOMA's
manufacturing rights and obligations hereunder, it being understood that matters
otherwise arising in the context of this Section 5.2 that relate to
manufacturing shall be subject to and governed by Section 6.1 hereof and related
provisions.
(b) negotiations with potential Joint Marketing/Development Partners shall
be led by Aphton; provided that XOMA shall have the right to be present at all
such negotiations, to consult with Aphton regarding any such negotiations and to
have its views in connection therewith given reasonable consideration by Aphton
in good faith; and
(c) each Party shall take, or cause to be taken, all actions reasonably
necessary to consummate and make effective any such agreement with a Third
Party, including, without limitation, by granting to, or procuring for, such
Third Party licenses to all applicable XOMA Technology, Aphton Technology, and
Joint Collaboration Technology, and to the extent reasonably required for such
Commercialization, all applicable Expression and Engineering Technology.
5.3 Marketing and Marketing Plans. Except to the extent that the Steering
Committee determines that a Product should be Commercialized entirely by or
through one or more Joint Marketing/Development Partners, the Commercialization
Committee shall coordinate and implement the marketing and detailing strategies
and tactics, sales force training programs, sales forecasts and post-approval
clinical studies for each Product for each calendar year in the Territory. If
either Party Opts Out with respect to a Product in a particular Region, the
other Party may commercialize the Product (including without limitation the
activities described in the previous sentence) in such Region in its discretion,
subject to communication with the Commercialization Committee.
5.4 Co-Promotion Election.
(a) Unless, not later than [*] prior to the first anticipated filing of a
BLA or completion of an initial analysis of the data from the clinical study
forming the basis of such BLA, which ever occurs later and in each case with
respect to a particular Product (other than a Product as to which XOMA has Opted
Out and not Opted Back In) in the USA, the Steering Committee determines that
such Product should be Commercialized in the USA entirely by or through one or
more Joint Marketing/Development Partners, and provided that XOMA, at the time
of such election, has in place an existing and established sales force in the
USA which is already engaged in detailing one or more other XOMA products, which
has experience in selling oncology products and which is of sufficient size to
perform the Elected Percentage of Details, or which can be reasonably expected
to be increased to such a size within a time frame consistent with the
Commercialization Plan for such Product, XOMA may elect by written notice to
Aphton to participate in the Co-Promotion of such Product in the Field in the
USA in accordance with the terms of this Agreement. Such election shall be made
by XOMA not less than [*] prior to the corresponding anticipated filing of a BLA
or within [*] of the completion of the initial analysis of such clinical study
data, which ever occurs later, for the applicable Product. In the event that
XOMA exercises such right of election: (i) the Parties shall enter into a
separate agreement relating to the Co-Promotion of such Product in the USA
covering such matters as product returns, customer orders and exchange of
marketing information and such other matters as are customarily found in similar
agreements; (ii) the Parties' reimbursable Selling Expense in respect of each
Detail shall not exceed the amount thereof approved by the Steering Committee;
and (iii) XOMA shall report its Selling Expense incurred in connection with
performing its Budgeted Detail Effort to Aphton on a quarterly basis within ten
(10) days after the end of each calendar quarter, and such XOMA Selling Expense
shall be included in the calculation of such quarter's Sales and Marketing
Expenses.
(b) If XOMA makes the written election referred to in Section 5.4(a), XOMA
shall, at the time of such election, indicate the percentage (which percentage
shall not be less than [*] percent ([*]%) nor greater than thirty percent (30%)
and shall be subject to adjustment as provided in Sections 5.4(c) and (d)) of
the number of Details called for by the Commercialization Program to be carried
out in the USA in respect of the Product that XOMA will provide (each, an
"Elected Percentage").
(c) In the event that XOMA has exercised its right to Co-Promote the
Product in the USA, then at any time when the Elected Percentage is less than
thirty percent (30%), in the event that the Steering Committee decides to
increase the Budgeted Total Detail Effort in the USA for any calendar year and
such increase calls for the hiring of additional sales representatives, then
within thirty (30) days after establishment of the Budgeted Total Detail Effort
for the next succeeding calendar year, XOMA, by written notice and within its
sole discretion, may elect to increase its Elected Percentage in respect of such
Product (provided that the Elected Percentage in respect of such Product shall
never be greater than thirty percent (30%) of the Budgeted Total Detail Effort),
in which case the Budgeted Detail Effort of XOMA shall be increased in
accordance with such election and thereafter the Elected Percentage in respect
of such Product shall be such revised Elected Percentage. In the event that XOMA
elects to change its Elected Percentage in accordance with the previous
sentence, XOMA shall hire such sales representative(s) as are required to
perform such new Elected Percentage of the Budgeted Total Detail Effort.
(d) In the event that XOMA has exercised its right to Co-Promote the
Product in the USA, then at any time when the Elected Percentage is less than
thirty percent (30%), in the event that Aphton terminates the employment of not
less than [*] percent ([*]%) of its then-existing sales force for the Product,
then it shall provide notice to XOMA of such termination or proposed
termination, and within thirty (30) days of receipt of such notice, XOMA, by
written notice and within its sole discretion, may elect to increase its Elected
Percentage in respect of such Product (provided that the Elected Percentage
shall never be greater than thirty percent (30%) of the Budgeted Total Detail
Effort), in which case the Budgeted Detail Effort of XOMA shall be increased in
accordance with such election and thereafter the Elected Percentage in respect
of such Product shall be such revised Elected Percentage. In the event that XOMA
elects to change its Elected Percentage in accordance with the previous
sentence, Aphton shall have the option, in its sole discretion to: (i) decrease
the Budgeted Detail Effort of Aphton to the amount necessary to maintain the
Budgeted Total Detail Effort, (ii) increase the Budgeted Total Detail Effort, or
(iii) a combination of (i) and (ii).
(e) In the event that (i) Net Sales for a Product in the USA in each of two
(2) consecutive years are lower than Net Sales of such Product in the USA in
each immediately preceding year for a non-External Reason (as defined below) or
(ii) Net Sales for a Product in the USA in each of six (6) consecutive quarters
are lower than Net Sales of such Product in the USA in each immediately
preceding quarter for a non-External Reason, then XOMA shall again have the
right to elect to Co-Promote such Product in the USA as provided in this Section
5.4, notwithstanding any previous failure to elect to do so or waiver thereof by
XOMA and without regard to the provisions of this Section 5.4 referring to the
absence of a determination by the Steering Committee within six (6) months prior
to the first anticipated filing of a BLA or completion of an initial analysis of
the data from the clinical study forming the basis of such BLA, which ever
occurs later, by delivery of written notice to Aphton. As used herein, "External
Reason" means a cause outside of Aphton's (or its sublicensee's) reasonable
control that would be expected negatively to impact sales volumes, such as an
adverse labeling change or other adverse regulatory action, expiration of
significant patents or marketing exclusivity, negative change in relevant third
party reimbursement terms, significant supply constraints or general changes in
medical practice significantly disfavoring the Product. Failure of XOMA to elect
to Co-Promote as described in this Section 5.4(e) within thirty (30) days
following receipt by XOMA of the final Net Sales figures for such Product in
such two (2) year or six (6) quarter period, as the case may be, shall act as a
waiver of XOMA's rights under this Section 5.4(e) as to such two (2) year or six
(6) quarter period, and in the event of any such waiver, XOMA shall not be
permitted to exercise its right to elect to Co-Promote as provided in this
Section 5.4(e) following any of the succeeding two (2) quarters (including the
quarter in which the waiver occurred).
5.5 Aphton Marketing/Development Partners and XOMA Marketing/Development
Partners.
(a) Except to the extent that the Steering Committee determines that a
Product should be Commercialized entirely by or through one or more Joint
Marketing/Development Partners as to any Product in a Region as to which Aphton
has not Opted Out or has Opted Out and Opted Back In, Aphton may, in its
discretion, license or sublicense all or any portion of its rights under this
Agreement (including its rights under any Aphton Background Technology, XOMA
Background Technology and Collaboration Technology) on a Product-by-Product and
Region-by-Region basis to one or more Third Parties (each, an "Aphton
Marketing/Development Partner") to use, develop, make, have made, sell, have
sold, offer for sale, import or export Products in the Field, without in any way
substantively affecting the rights and obligations of XOMA hereunder; provided,
however, that: (i) notwithstanding the foregoing, the consent of XOMA to such
Aphton Marketing/Development Partner shall be required, which consent shall: (A)
be [*] in the case of [*], and (B) [*] in all other circumstances; and (ii) in
the event that, and to the extent that, [*], then XOMA shall have the rights set
forth in Section 7.2 with respect to the applicable Product(s) and Region(s).
(b) As to any Product in each Region as to which Aphton has Opted Out, XOMA
may, in its discretion, license or sublicense all or any portion of its rights
under this Agreement (including its rights under any Aphton Background
Technology, XOMA Background Technology and Collaboration Technology) on a
Product-by-Product and Region-by-Region basis to one or more Third Parties
(each, a "XOMA Marketing/Development Partner") to use, develop, make, have made,
sell, have sold, offer for sale, import or export such Product in the Field,
subject to all applicable provisions of this Agreement (including the provisions
of Articles 3 and 7); provided, however, that, notwithstanding the foregoing,
the consent of Aphton to the identity of such XOMA Marketing/Development Partner
shall be required (except in the case of any such license or sublicense that
relates to a Product as to which Aphton has Opted Out of all Regions), which
consent shall not be unreasonably withheld.
(c) Nothing in this Section 5.5 shall affect XOMA's manufacturing rights
and obligations hereunder, it being understood that matters otherwise arising in
the context of this Section 5.5 that relate to manufacturing shall be subject to
and governed by Section 6.1 hereof and related provisions.
5.6 Delegation. Notwithstanding Section 5.5, each Party may use its
respective employees or the employees of one or more of its respective
Affiliates, or Third Party contract service organizations or distributors in the
course of Co-Promoting Products under this Agreement; provided, however, that,
in the event either Party chooses to delegate services or functions in
accordance with the foregoing to a Third Party or Third Parties, that Party
shall first offer the provision of such services or function to the other Party,
who shall have fifteen (15) business days to agree to accept such offer. If the
other Party elects not to accept such offer or fails to do so within such
fifteen (15) day period, the Party making the offer shall be free to delegate
such services or function to a Third Party or Third Parties selected by the
delegating Party.
5.7 Labeling and Promotion. Unless otherwise agreed with a Third Party
pursuant to Section 5.2 above: (a) each Product will be marketed in each country
with one label and will bear one or more Product Trademarks; (b) all advertising
and promotional material in respect of each Product in each country (including
any Product labeling or packaging inserts to the extent permitted by law or
required by any Regulatory Authority and approved by the Commercialization
Committee) will include: (i) XOMA's name and address to indicate its role as
manufacturer (and co-promoter, if applicable), and (ii) Aphton's name and
address to indicate its role with respect to the Commercialization of the
Product (if any), with the size and placement of each such name and address to
be determined by the Commercialization Committee.
5.8 Notice of Adverse Reactions. Each Party shall advise the other as
promptly as reasonably practical by telefax or overnight delivery service
addressed to the attention of its Vice President, Regulatory Affairs (or
equivalent), of any Adverse Drug Reaction that has been brought to that Party's
attention.
5.9 Regulatory and Other Inquiries. Upon being contacted by any Regulatory
Authority for any regulatory purpose pertaining to this Agreement or to a
Product, each Party shall promptly notify and consult with the other, and the
Party that prepared the relevant portion(s) of the regulatory filing to which
such contact relates (or, in the event the contact does not relate to a
particular portion of a regulatory filing, the owner (or proposed owner) of the
relevant Regulatory Approval (or proposed Regulatory Approval), determined in
accordance with Section 4.5) shall prepare a response as it deems appropriate,
and such Party shall (a) have principal responsibility for responding to all
inquiries to either Party, as the case may be, regarding such portion of such
regulatory filing (or, in the event the contact does not relate to a particular
portion of a regulatory filing, such Regulatory Approval or proposed Regulatory
Approval), (b) give the other Party a reasonable opportunity for prior review of
and comment on all such responses, (c) consider in good faith the incorporation
of such comments and (d) incorporate into such responses those of such comments
as are reasonable and not inconsistent with the overall response initially
prepared by such Party.
5.10 Product Recall. In the event that either Party determines that an
event, incident or circumstance has occurred that may result in the need for a
recall or other removal of any Product, or any lot or lots thereof, from the
market in any country, it shall advise and consult with the other Party with
respect thereto. Aphton shall make the final determination to recall or
otherwise remove the Product or any lot or lots thereof from the market, except
as to a recall related only to a Product in a Region as to which Aphton has
Opted Out and not Opted Back In, in which case XOMA shall be entitled to make
any such determination. The costs and expenses of such recall or removal in each
country, including expenses and other costs or obligations to Third Parties, the
cost and expense of notifying customers and costs and expenses associated with
shipment of the recalled Product from a customer to either Aphton or XOMA shall
be included in Commercialization Expenses; except as to any Product in a Region
as to which one Party has Opted Out and not Opted Back In, in which case the
other Party shall bear such costs.
6. MANUFACTURE AND SUPPLY OF PRODUCTS
6.1 Designation of XOMA as Manufacturing Party.
(a) Generally. Unless otherwise agreed by unanimous consent of the Steering
Committee (which, for the avoidance of doubt, shall not be subject to a casting
vote by either Party), XOMA shall Manufacture and supply (itself or through one
or more Third Parties pursuant to Section 6.1(b) below) all quantities of
Product necessary to satisfy demand. XOMA shall be responsible for implementing
all aspects of Manufacturing under the direction and oversight of the Steering
Committee, as set forth in Section 3.1(d), and in accordance with a
manufacturing plan for the applicable Product(s) in the Field in the Territory
proposed by XOMA and subject to review and approval by the Steering Committee,
which manufacturing plan shall describe the specific Manufacturing activities to
be undertaken by XOMA, shall include a general description of the personnel and
other resources of XOMA to be used in the implementation thereof and shall set
forth a unanimously agreed budget for such activities (each, as may be modified
or amended and approved from time to time in accordance with this Agreement, a
"Manufacturing Plan"). Any disputes under this Article 6 (other than as
expressly stated in this Section 6.1 as requiring unanimous consent) (a
"Manufacturing Dispute") will be resolved as set forth in Section 13.1.
(b) Manufacture by Third Parties. In the event that the Steering Committee
agrees, as set forth in the first sentence of Section 6.1(a), that any one or
more Manufacturing activities should be undertaken by an identified Third Party,
negotiations with such Third Party shall be led by [*]; provided that [*] shall
have the right to be [*], to [*] and to have its views in connection [*]. The
Parties each agree to license their respective Background Technology and
Collaboration Technology to any such Third Party as reasonably necessary for
such Third Party to manufacture the Product. XOMA will transfer or cause to be
transferred all reasonably necessary technology to additional manufacturers
designated by it and XOMA's agreed and budgeted costs (and actual expenses of
XOMA in excess thereof in amounts which are not significant in the
circumstances) in connection therewith shall be: (i) shared by the Parties [*],
and (ii) shared between the Parties seventy percent (70%) for Aphton and thirty
percent (30%) for XOMA [*].
(c) Third Party Licenses. Notwithstanding anything herein to the contrary
but subject to the requirement of unanimously agreed budgets set forth in
Section 13.1(b), [*] shall be responsible for the licensing of technologies
and/or patents owned or controlled by Third Parties that are required or
beneficial for the Manufacturing of Products. For the avoidance of doubt, no
such technologies and/or patents shall be used by [*] in the Development or
Manufacturing of any Product unless [*] has agreed and consented to the
financial implications of such use.
6.2 Supply Price. For purposes of calculating each Party's share of
Operating Profits/Losses, all Product Manufactured by XOMA (or by a Third Party
under Section 6.1) shall be supplied at a price equal to [*], as reviewed by the
Steering Committee and subject to verification as provided in Section 7.3. [*]
for Product to be used prior to Regulatory Approval shall be included in
Development Expenses in the quarter in which vialed Product is delivered to
Aphton or to agreed alternative delivery sites. [*] for Product to be used
following Regulatory Approval shall be payable by Aphton upon delivery of vialed
Product to Aphton or to agreed alternative delivery sites and shall be included
in Allowable Expenses for the calendar quarter in which such Product is either
sold by Aphton (or its applicable sublicensee(s)) to a Third Party or written
off by Aphton (or its applicable sublicensee(s)) in a manner consistent with
GAAP.
6.3 Supply.
(a) Product Supply. For the Term of this Agreement, XOMA shall supply
exclusively (subject to Section 6.1) all requirements of Product in accordance
with this Section 6.3 and shall provide an adequate and timely supply of all
properly forecast requirements of the Product for use in the Territory.
(b) Orders; Forecasts for Clinical Requirements. The Party primarily
responsible for running a particular clinical trial will be responsible for
generating periodic nine month forecasts of the anticipated requirements for the
Product that is the subject of such trial and updates of such forecasts not less
than quarterly thereafter, such forecasts and updates to be provided to XOMA in
its capacity as manufacturer hereunder. Not less than six (6) months prior to
the required delivery of a specified quantity of Product for such purposes, the
Development Committee shall meet and agree on a demand order for Product so
required; provided that if the total amount of any demand order for delivery in
any three month period exceeds one hundred percent (100%) of the most recent
forecast for such period, XOMA shall use Commercially Reasonable and Diligent
Efforts, but shall have no obligation, to deliver the quantities in excess of
one hundred percent (100%)) of the estimate for such period. XOMA shall ship
Product to the facility or facilities designated by the Party with
responsibility for distribution of clinical requirements of the Product at the
times set forth in the relevant demand order.
(c) Orders; Forecasts for Commercial Requirements. The Parties will confer
in order to keep XOMA, in its capacity as manufacturer hereunder, informed of
the intended filing of any BLA relating to a Product at least nine (9) months
prior to such filing. In addition, the Parties will discuss in good faith, based
on the relevant Product's shelf life, the manufacturing lead time for such
Product and anticipated demand for the first twelve (12) months following
Regulatory Approval, the forecasts for such twelve month period in order to
develop a reasonable schedule of firm orders for such period. Not less than
three (3) months prior to the anticipated filing of a BLA for a particular
Product, Aphton and XOMA shall agree upon (i) a firm order for the amount of
such Product to be delivered during the calendar quarter immediately following
the quarter in which such BLA is to be filed and (ii) a quarter-by-quarter
demand forecast for the following three (3) quarters. Unless otherwise agreed
with one or more Third Parties pursuant to Section 5.2, no later than forty-five
(45) days prior to the beginning of each subsequent quarter, Aphton shall
provide XOMA with Aphton's firm order for the amount of Product to be delivered
during such quarter and its revised quarter-by-quarter forecast for the amount
of Product it will desire for delivery in each of the three (3) quarters
immediately thereafter; provided that (i) if the total of Aphton's firm orders
for delivery in any quarter is less than one hundred percent (100%) of its most
recent quarterly estimate for such quarter, Aphton shall be required to purchase
at least ninety percent (90%) of the estimate for such quarter, (ii) if the
total of Aphton's firm order for delivery in any quarter exceeds one hundred
percent (100%) of its most recent quarterly estimate for such quarter, XOMA
shall use Commercially Reasonable and Diligent Efforts, but shall have no
obligation, to deliver quantities in excess of one hundred percent (100%) of the
estimate for such quarter, and (iii) in any such revised forecast, the estimate
therein for the first and second quarters immediately following the quarter for
which a firm order is then provided shall not vary by more than fifteen percent
(15%) and twenty percent (20%), respectively, from the most recent estimate for
such quarter. XOMA shall ship Product to a facility or facilities designated by
Aphton within each such quarter after the receipt of such purchase order from
Aphton. Title to the Product shall pass to Aphton upon shipment to Aphton or its
designee at such facility. In the event that all of Aphton's Commercialization
activities with respect to a particular Product become the responsibility of a
Third Party in accordance with the terms hereof, then the foregoing obligations
of Aphton in this Section 6.3(c) shall become obligations of such Third Party
with respect to such Product; provided that in no event shall Aphton be relieved
of any responsibility therefor unless XOMA is a party to an agreement with such
Third Party with respect to the Commercialization of the applicable Product (in
which case Aphton shall be relieved of all responsibility therefor).
(d) Certain Covenants. XOMA covenants that, during the Term of this
Agreement, it will (i) use Commercially Reasonable and Diligent Efforts to avoid
shortfalls of supply based on the forecasts provided to it in accordance with
this Section 6.3, shall promptly notify Aphton in the event it becomes aware of
any probable shortfall and shall use Commercially Reasonable and Diligent
Efforts to remedy any shortfall of supply as soon as practicable; (ii) be
responsible for manufacturing, filling, packaging and warehousing of the Product
in conformity with applicable cGMP Requirements and the Specifications, and in
accordance, in all material respects, with all other applicable Law; (iii)
maintain or cause to be maintained all records necessary and appropriate to
demonstrate compliance with applicable cGMP Requirements; and (iv) ▇▇▇▇▇ ▇▇▇▇▇▇
the right, on reasonable advance notice and during normal business hours during
the Term of this Agreement, to have its personnel or representatives with
quality control or quality assurance responsibilities inspect and audit the
facilities and operations of XOMA directly related to the manufacture and supply
of the Product in order to confirm compliance with the covenants contained in
this Section 6.3(d); provided that the foregoing inspection and audit right of
Aphton shall be limited to one (1) such visit per calendar year and two (2) such
personnel or representatives per visit; provided, further, that such personnel
or representatives shall be subject to XOMA's prior approval (such approval not
to be unreasonably withheld) .
7. FINANCIAL PROVISIONS
7.1 Operating Profit/Loss for Products. Subject to the provisions of
Section 8.5, beginning with the Effective Date and throughout the Term of this
Agreement, all Operating Profits/Losses shall be shared by the Parties as
follows: (a) seventy percent (70%) for Aphton; and (b) thirty percent (30%) for
XOMA as provided in Schedule A.
7.2 [*]. Notwithstanding anything in this Agreement to the contrary, in the
event that, and to the extent that, Aphton determines that it intends to [*]:
(a) [*]; or
(b) [*],
Aphton shall, not less than forty-five (45) days prior to the effective
date of [*], notify XOMA of such election along with the [*]. Within thirty (30)
days of receipt of such notice, XOMA may elect, in its discretion and on a
Product-by-Product and Region-by-Region basis, to [*] related to a particular
Product in a particular Region into [*] of each such Product in each such
Region, with such election becoming effective immediately upon the entry by
Aphton into such [*] in accordance with Section 5.2 or 5.5(a). In the event [*],
the dispute shall be submitted to the mediation and arbitration procedures of
Section 13.2. Within ten (10) days after the end of each calendar quarter,
Aphton shall submit a written report to XOMA of [*] of any Product in any Region
as to which XOMA has exercised its rights under this Section 7.2. Aphton shall
maintain records and grant access thereto as provided in Section 7.3 with
respect to any payments due under this Section 7.2. Payments of the amounts
required hereby shall be made within thirty (30) days of the end of the
applicable calendar quarter, and the provisions of Sections 7.4 and 7.5 shall
apply thereto. In the event that no definitive agreement has been executed with
any such [*], as the case may be, within twelve (12) months following Aphton's
notice to XOMA relating thereto, no prior notice thereof by Aphton shall be
effective, no election by XOMA relating thereto shall be effective and no such
definitive agreement may be entered into without a new notice thereof being
provided by Aphton to XOMA in compliance with this Section 7.2 whereupon the
provisions of this Section 7.2 shall continue to apply in full.
7.3 Records. The Parties shall each keep accurate books and accounts of
record in connection with the Development, Manufacture and Commercialization of
Product in a manner consistent with GAAP and in sufficient detail to permit
accurate determination of all figures necessary for verification of compensation
hereunder. Aphton and XOMA shall maintain such records for a period of three (3)
years after the end of the year in which they were generated. At such Party's
expense, a Party, through an independent Third Party certified public
accountant, shall have the right to access the books and records of the other
Party for the sole purpose of verifying such statements; such access shall be
conducted after reasonable prior written notice to the Party, during ordinary
business hours and not more frequently than once during each calendar year. In
the event that there has been an underreporting or overreporting of items
reviewed by such accountants which aggregates five percent (5%) or greater of
the total Operating Profit or Loss over the full period reviewed by such
accountants, then the cost of such accountants shall be borne by the Party who
was responsible for such underreporting or overreporting. Any underpaid or
overpaid amounts shall be paid within fifteen (15) business days after notice of
the underreporting or overreporting unless disputed by the audited Party, in
which case the disputed amount shall be paid within fifteen (15) business days
of such notice into an interest-bearing escrow account pending resolution of the
dispute pursuant to Section 13.2. Upon the release of any such disputed amounts
to either Party after resolution pursuant to Section 13.2, any interest accrued
on such disputed amounts shall be simultaneously released to such Party.
7.4 Currency of Payment. All payments to be made under this Agreement shall
be made in United States dollars in the United States to a bank account
designated by the Party to be paid. Any determination(s) hereunder requiring the
conversion of currency shall be made by the paying Party in the same manner as
made by such Party in connection with the preparation of its
externally-published financial statements (or those of its parent company),
consistent with GAAP.
7.5 Taxes Withheld. Any income or other tax that either Party is required
to withhold and pay on behalf of the other Party, its Affiliates, licensees or
sublicensees with respect to the Development, Manufacturing or Commercialization
of a Product or other amounts payable under this Agreement shall be deducted
from and offset against amounts owed to the other Party hereunder prior to
remittance; provided, however, that in regard to any tax so deducted, each Party
shall give or cause to be given to the other Party such assistance as may
reasonably be necessary to enable such other Party to claim any available
withholding exemptions or rate reductions and/or credits in respect of any
withholding, and in each case shall furnish such other Party proper evidence of
the taxes paid on its behalf.
8. OPT OUT/OPT IN RIGHTS
8.1 Right to Opt Out. Either Party may decline to participate in ("Opt Out"
of) any further Development and Commercialization of a particular Product (on a
Product-by-Product basis) in a particular Region (on a Region-by-Region basis)
at any time in its sole discretion; provided, however, that with respect to any
Product in Development, the foregoing Opt Out right can only be exercised within
thirty (30) days following the achievement of an Opt-Out Milestone for such
Product. With respect to the first Product being Developed in the USA, if either
Party Opts Out pursuant to this Section 8.1 prior to the initiation of a Phase I
Study with respect to such Product, the Parties agree to negotiate in good faith
a contract for the services that the Party that Opted Out would have provided to
the other Party pursuant to the Development Program through the completion of
such Phase I Study if such Party had not Opted Out. The Party that has Opted Out
shall use commercially reasonable efforts to procure such services from Third
Parties as soon as practicable following such Opt Out, whereupon the Party that
Opted Out shall have no further obligations pursuant to the immediately
preceding sentence.
8.2 Exercise of Opt Out Rights. A Party may exercise its Opt Out rights
under Section 8.1 by notice in writing to the other Party, which notice must
specify the Product and Region(s) for which such Party wishes to Opt Out and
shall be effective immediately, in the case of Products in Development, or six
(6) months after its receipt by the other Party, in the case of Products in
Commercialization.
8.3 Right to Opt Back In. Pursuant to Section 8.4 the Parties may also
elect to again participate in ("Opt Back In" to) the Development and
Commercialization of a particular Product in a particular Region after having
Opted Out pursuant to Sections 8.1 and 8.2. The exercise of any such rights to
Opt Back In shall be subject to the other provisions of this Agreement,
including the obligation to share Operating Profits/Losses, Development Expenses
and Commercialization Expenses, and such exercise shall not entitle a Party to
any rights greater than those it would have had if it had not Opted Out.
Notwithstanding anything herein to the contrary, any exercise of rights to Opt
Back In is expressly conditioned on the absence of any agreement(s) between the
Party that has not Opted Out with respect to the relevant Product and any Joint
Marketing/Development Partner, Aphton Marketing/Development Partner or XOMA
Marketing/Development Partner contractually having significant participation in
the development and/or commercialization of such Product, other than agreements
relating to the provision of goods or services not typically provided by
collaborators, and any exercise of rights to Opt Back In shall be subject to the
rights of any Third Party under any agreement with respect to manufacture,
development or commercialization of the relevant Product between the Party that
has not Opted Out and such Third Party.
8.4 Exercise of Rights to Opt Back In. For each Product in a particular
Region which either Party has Opted Out of pursuant to Sections 8.1 and 8.2,
such Party shall have the right to Opt Back In to such Product in such Region
upon completion of the first successful Phase II Study for such Product under
the following terms and conditions (it being understood that the Parties shall
agree on the criteria for success of such Phase II Study for this purpose prior
to commencement thereof):
(a) Notice, Delivery of Reports and Time to Exercise. Following completion
of the first successful Phase II Study for such Product, the Party that has not
Opted Out shall provide the Party that has Opted Out with written notice of such
completion and enclose a copy of a summary analysis performed in accordance with
the pre-specified statistical analysis plan filed with the FDA. The Party that
has Opted Out may exercise its right to Opt Back In by providing, within
forty-five (45) days of receipt of such notice and report, written notice to the
Party that has not Opted Out. During this forty-five (45) day period, the Party
that has not Opted Out shall provide the Party that has Opted Out with all
updates to the report and all additional material information, data and reports.
In addition, upon request the Party that has not Opted Out shall make the raw
data as well as its personnel, agents and/or contractors available in response
to reasonable inquiries by the Party that has Opted Out.
(b) Fee. For each Product in each Region that the Party that has Opted Out
Opts Back In to pursuant to Section 8.3, such Party shall owe the Party that has
not Opted Out an amount equal to (i) if the Party that has Opted Out is Aphton,
[*] of the amounts incurred by XOMA solely for that particular Product in that
Region through completion of the Phase II Study that would have been borne by
Aphton under this Agreement pursuant to Section 7.1 had Aphton not Opted Out and
(ii) if the Party that has Opted Out is XOMA, [*] of the amounts incurred by
Aphton solely for that particular Product in that particular Region through
completion of the Phase II Study that would have been borne by XOMA under this
Agreement pursuant to Section 7.1 had XOMA not Opted Out. Fees owed pursuant to
this Section 8.4(b) shall be payable within thirty (30) days of exercise of the
right to Opt Back In.
(c) Waiver. The Party that has Opted Out will waive its right to Opt Back
In under Section 8.3 and this Section 8.4 with respect to a particular Product
in a particular Region if it fails to timely provide the written notice of such
intent or timely tender the fee for such Product and/or Region, each as provided
herein.
8.5 Certain Effects of Opting Out.
(a) Generally. Subject to the right of a Party to Opt Back In, the
development and commercialization of any Product for any Region(s) as to which a
Party has Opted Out shall no longer be carried out jointly by the Parties or as
part of the Collaboration, and subject to the right of the Party that has Opted
Out to Opt Back In: (i) the Party that has Opted Out shall have no rights to
develop or commercialize, or to participate in Operating Profits from the
commercialization of, any Product for any Region(s) as to which such Party has
Opted Out; and (ii) the Party that has not Opted Out shall be free to develop
and commercialize such Product in the Region(s) as to which the Party that has
Opted Out has Opted Out, either alone or with one or more Third Parties. For the
avoidance of doubt, the development and commercialization of any Product for a
Region as to which a Party has Opted Out shall not be subject to the oversight
or direction of the Committees and shall not be the subject of any Development
Plans or Commercialization Plans. Notwithstanding the foregoing, the activities
of the Party that has not Opted Out shall nonetheless be covered by the
provisions of Articles 9 and 10.
(b) Royalty. In the event either Party Opts Out of a particular Product in
a particular Region and does not Opt Back In as provided herein (the "Opted Out
Party"), the other Party (the "Continuing Party") shall pay the Opted Out Party
a royalty in an amount [*] of Net Sales of such Product in such Region. In the
event [*], the dispute shall be submitted to the mediation and arbitration
procedures of Section 13.2. Appropriate provision shall be made so that the
Continuing Party shall have the benefit of, but also all responsibility for
(including without limitation with respect to the payment of royalties and other
amounts due under), any Third Party licenses relating to such Product in such
Region. Within ten (10) days after the end of each calendar quarter, the
Continuing Party shall submit a written report to the Opted Out Party of Net
Sales (including gross sales and applicable Sales Returns and Allowances) of any
Product in any Region as to which the Opted Out Party has Opted Out and not
Opted Back In. The Continuing Party shall maintain records and grant access
thereto as provided in Section 7.3 with respect to any payments due under this
Section 8.5(b). Payments of the amounts required hereby shall be made within
thirty (30) days of the end of the applicable calendar quarter, and the
provisions of Sections 7.4 and 7.5 shall apply thereto.
(c) Good Faith as to Other Regions. In the event either Party Opts Out of a
Product in a particular Region and does not Opt Back In as provided herein, the
other Party shall act in good faith and exercise reasonable judgment in the
development and commercialization of Products in such Region so as not to
jeopardize the Development or Commercialization of Products in the other
Region(s) in which Products are being jointly Developed and/or Commercialized
hereunder. Without limiting the foregoing, not less than three (3) months prior
to commencing any clinical trial with respect to a Product in a Region in which
a Party has Opted Out, the Party that has not Opted Out shall provide to the
Party that has Opted Out a copy of a synopsis of the protocol for such clinical
trial and shall reasonably consider any comments with respect to such clinical
trial which are provided by the Party that has Opted Out within thirty (30) days
of its receipt of such synopsis.
(d) XOMA Manufacturing Obligation.
(i) Subject to the other provisions of this Agreement regarding expiration
and termination, in the event XOMA Opts Out as to a particular Product in a
particular Region but has not Opted Out as to such Product in at least one other
Region and is manufacturing such Product pursuant to Article 6, at Aphton's
election, the manufacture and supply provisions of Article 6 shall nonetheless
apply to such Product in such Region:
(I) for so long as the Product continues to be manufactured by XOMA
for at least one other Region, but only in the event that it would not be
commercially feasible for the manufacture of the Product for such Region to
be transferred to a Third Party manufacturer and it would not be unduly
onerous for XOMA to continue the manufacture of the Product for such
Region, taking into account in both cases factors such as capacity
constraints, the volume of Product required for the Region which XOMA has
Opted Out of and the costs to Aphton in procuring the manufacture of such
Product by a Third Party manufacturer for such Region; and
(II) in all other cases, for a period of (A) in the event XOMA Opts
Out prior to [*] for such Product in the Field, [*] following such Opt Out,
and (B) in the event such Opt Out occurs after [*] for such Product in the
Field, [*] following such Opt Out;
provided, however, that in each case the supply price for Product for that
Region shall be equal to XOMA's COGS plus [*]; and provided, further, that in
each case XOMA's obligation under this Section 8.5(d)(i) shall be limited to [*]
of XOMA's anticipated available capacity for such period.
(ii) Subject to the other provisions of this Agreement regarding expiration
and termination, in the event XOMA Opts Out as to a particular Product
throughout the Territory and, at the time of such Opt-Out is manufacturing such
Product pursuant to Article 6, at Aphton's election, the manufacture and supply
provisions of Article 6 shall nonetheless apply to such Product for a period of
(A) in the event XOMA Opts Out prior to [*] for such Product in the Field, [*]
following such Opt Out, and (B) in the event such Opt Out occurs after [*] for
such Product in the Field, [*] following such Opt Out; provided, however, that
the supply price for such Product shall be equal to XOMA's COGS plus [*]; and
provided, further, that XOMA's obligation under this Section 8.5(d)(ii) shall be
limited to [*] of XOMA's anticipated available capacity for such period at the
time of such Opt Out.
(e) Technology Transfer and Transitional Services. In the event either
Party Opts Out of a Product, or Opts Out of a Product in a particular Region,
the provisions of Section 14.5(a)(ii) and (iv) and 14.5(b)(ii) and (iii), as
applicable, shall apply with respect to the continued manufacture, development
and/or commercialization of the Opted Out Product or the Opted Out Region.
8.6 Limited Compensation. In the event that a Party does not Opt Back In to
a Product in a particular Region, such Party's sole compensation with respect to
such Product in such Region is set forth in Section 8.5(b), except to the extent
Section 8.5(d) applies.
8.7 Compliance with Privacy Laws. As of the Effective Date, the Parties
shall use Commercially Reasonable and Diligent Efforts to obtain all necessary
consents required for disclosure of the data and reports which they are required
to provide pursuant to this Article 8. For purposes of this Article 8,
Commercially Reasonable and Diligent Efforts shall include seeking contractual
obligations from clinical research sites obligating the sites to seek subjects'
consent to disclosure of private data to the Parties, their licensees and
collaborators. In the event that any such consent cannot be obtained, the Party
having the right to Opt Back In shall be provided with data and documentation
which is redacted to make disclosure lawful. With respect to any particular
Product in a particular Region, the Continuing Party will reimburse all of the
Opted Out Party's reasonable costs associated with compliance with this Section
8.7.
9. LICENSES AND COVENANTS
9.1 Grants.
(a) XOMA Grant. Subject to the other terms and conditions of this
Agreement, XOMA hereby grants to Aphton each of the following licenses:
(i) a fully paid up license, with the right to grant sublicenses as
provided in Section 9.2, under the XOMA Background Technology, the XOMA
Collaboration Technology and XOMA's rights in the Joint Collaboration
Technology to use, offer to sell, sell or import Products in the Field
throughout the Territory during the Term of this Agreement. Such license
shall be non-exclusive with respect to Non-Commercial Research Activities
and shall otherwise be co-exclusive (with XOMA) with respect to using,
offering for sale, selling and importing Products in the Field;
(ii) a royalty-bearing license, with the right to grant sublicenses as
provided in Section 9.2, under the XOMA Background Technology, the XOMA
Collaboration Technology and XOMA's rights in the Joint Collaboration
Technology to make, have made, use, offer to sell, sell or import any
Product as to which XOMA has Opted Out and not Opted Back In in the Field
in each Region as to which XOMA has so Opted Out and not Opted Back In
during the Term of this Agreement, it being agreed that Aphton shall bear
all costs under any Third Party agreements associated with such license
with respect to such Product in such Region (or reasonably allocable
thereto) and that such license is expressly subject to the limitations and
restrictions of any such Third Party agreements. Such license shall be
non-exclusive with respect to Non-Commercial Research Activities and shall
otherwise be exclusive (even as to XOMA) with respect to making, having
made, using, offering for sale, selling and importing any such Product in
the Field in any such Region; provided, that to the extent Aphton uses any
such technology in conjunction with one or more Third Parties, such license
shall include a prohibition against the exercise by Aphton of any "have
made" rights with [*];
(iii) a fully paid up, perpetual, fully sublicensable, non-exclusive
license under the XOMA Collaboration Technology to discover, use, develop,
make, have made, sell, offer for sale, import and export any product
directed against a Target Antigen, other than a Product; and
(iv) a fully paid up, fully sublicensable license to all of XOMA's
rights in any and all inventions or technology solely directed to the
Products that Aphton has not Opted Out of or has Opted Out of and Opted
Back In to or Target Antigens (except with respect to Products that Aphton
has not Opted Out of or has Opted Out of and Opted Back In to) that
constitute XOMA Collaboration Technology or XOMA's rights in Joint
Collaboration Technology, it being agreed that such license is expressly
subject to the limitations and restrictions of any Third Party agreements
associated therewith and, with respect to any activities that do not
benefit the Collaboration, Aphton shall bear all costs under any such Third
Party agreements. Such license shall be co-exclusive (with XOMA) with
respect to all Collaboration activities and shall be exclusive (even as to
XOMA) as to all activities that do not benefit the Collaboration.
(b) ▇▇▇▇▇▇ ▇▇▇▇▇. Subject to the other terms and conditions of this
Agreement, Aphton hereby grants to XOMA each of the following licenses:
(i) a fully paid-up license, with the right to grant sublicenses as
provided in Section 9.2, under the Aphton Background Technology, the Aphton
Collaboration Technology and Aphton's rights in the Joint Collaboration
Technology to make, have made, use, offer to sell, sell or import Products
in the Field throughout the Territory during the Term of this Agreement.
Such license shall be non-exclusive with respect to Non-Commercial Research
Activities and shall otherwise be co-exclusive (with Aphton and any Third
Party manufacturer designated in accordance with Section 6.1) with respect
to making, having made, using, offering for sale, selling and importing
Products in the Field;
(ii) a royalty-bearing license, with the right to grant sublicenses as
provided in Section 9.2, under the Aphton Background Technology, the Aphton
Collaboration Technology and Aphton's rights in the Joint Collaboration
Technology to make, have made, use, offer to sell, sell or import any
Product as to which Aphton has Opted Out and not Opted Back In in the Field
in each Region as to which Aphton has so Opted Out and not Opted Back In
during the Term of this Agreement, it being agreed that XOMA shall bear all
costs under any Third Party agreements associated with such license with
respect to such Product in such Region (or reasonably allocable thereto)
and that such license is expressly subject to the limitations and
restrictions of any such Third Party agreements. Such license shall be
non-exclusive with respect to Non-Commercial Research Activities and shall
otherwise be exclusive (even as to Aphton) with respect to making, having
made, using, offering for sale, selling and importing any such Product in
the Field in any such Region; and
(iii) to the extent Aphton has Opted Out of one or more Products in
one or more Regions, a fully paid up, fully sublicensable, sublicense to
the rights licensed to Aphton pursuant to Section 9.1(a)(iv) with respect
to such Product(s) in such Region(s), which sublicense shall be exclusive
(even as to Aphton) with respect to such Product(s) in such Region(s).
9.2 Sublicenses. Neither Party may sublicense the rights granted to it in
Section 9.1 without the prior written consent of the other; provided that each
of Aphton and XOMA may sublicense its rights to XOMA Technology, Aphton
Technology or Joint Collaboration Technology, as the case may be, (a) to a Joint
Marketing/Development Partner, Aphton Marketing/Development Partner or XOMA
Marketing/Development Partner, as the case may be, granted a license or
sublicense in accordance with Section 5.2, 5.5(a) or 5.5(b), respectively, in
connection with the commercialization of a Product; (b) to any Third Party with
respect to the discovery, use, development, making, having made, selling,
offering for sale, import or export of any Product as to which the other Party
has Opted Out and not Opted Back In at the time the sublicense is granted; and
(c) to the extent that such rights survive termination or expiration of this
Agreement, to any Third Party with respect to the discovery, use, development,
making, having made, selling, offering for sale, import or export of a Product
following such expiration or termination of this Agreement; and provided,
further, that Aphton may freely sublicense the rights granted to it under the
XOMA Collaboration Technology with respect to any product directed against a
Target Antigen, other than a Product.
9.3 Certain Covenants.
(a) During the Term of this Agreement, XOMA shall take such steps as are
commercially reasonable to maintain its rights under the [*] Agreement to the
extent necessary for the discharge of its obligations under this Agreement. At
the appropriate time in the course of Development of a Product, but in no event
later than initiation of the first Phase I Study relating to such Product, XOMA
will provide notice to [*] that it desires a license under the [*] Agreement to
such Product and shall use Commercially Reasonable and Diligent Efforts to
obtain such license in accordance with the provisions of the [*] Agreement.
(b) During the Term of this Agreement, XOMA shall take such steps as are
commercially reasonable to maintain its rights under such of the Phage Display
License Agreements as are applicable to any Product which has been Developed or
Commercialized under this Agreement. Upon receipt by XOMA of a written request
from Aphton at an appropriate time in the course of Development of a particular
Product, but in no event later than initiation of the first Phase I Study
relating to such Product, XOMA shall use Commercially Reasonable and Diligent
Efforts to obtain a license under any Phage Display License Agreement covering
such Product to permit the development, manufacture and commercialization of
such Product as contemplated in this Agreement.
(c) XOMA covenants that it will grant to Aphton, within thirty (30) days
after receipt by XOMA of a written request from Aphton (which request shall not
be made prior to the decision to initiate toxicology testing hereunder of a
Product hereunder), a license to such of the Expression and Engineering
Technologies as are reasonably necessary to make, have made, use, sell, offer
for sale or import Product(s) containing, comprising or derived from an antibody
or antibodies identified (and, with respect to the Human Engineered(TM)
technology only, Human Engineered(TM)) in the course of the Collaboration to the
extent required by Aphton or its permitted licensees or sublicensees with
respect to the development, manufacture and/or commercialization of such Product
in the Field in the Territory pursuant to this Agreement (including as
contemplated in Section 14.5(a)); provided, however, that with respect to
activities which are only to be carried out by Aphton with respect to a
particular Product in a Region as to which XOMA has Opted Out and not Opted Back
In or following termination of this Agreement as set forth in Section 14.5(a),
such grant may be conditioned upon the occurrence of such Opt Out (and only with
respect to such Product and Region) or termination, as applicable. Such license
shall be non-exclusive, [*] and shall include (A) to the extent Aphton uses any
such technology in conjunction with one or more Third Parties, a covenant not to
▇▇▇ under the licensed patents for the benefit of Third Party collaborators of
Aphton for purposes of developing, commercializing and, if applicable,
manufacturing such Product; provided that each such covenant not to ▇▇▇ shall
apply only to a Product or potential Product with respect to which Aphton has
expended significant development effort, (B) a prohibition against the exercise
by Aphton of any "have made" rights with [*], (C) provisions to the effect that
(i) such license shall be personal to Aphton and not assignable or sublicensable
(but shall include a covenant not to ▇▇▇ as set forth in sub-section (A) above)
and (ii) the license shall grant only the right to use the Expression and
Engineering Technologies with respect to the particular molecule or molecules
that are subject to the license and not the right to practice the methods of the
Expression and Engineering Technologies (or any portion thereof) more generally
and (D) such other provisions as are customary for licenses of this type;
provided that all such other provisions shall not be inconsistent with the terms
of this Agreement. Except as expressly provided herein, such licenses shall
terminate upon expiration or termination of this Agreement.
10. INTELLECTUAL PROPERTY
10.1 Ownership of Technology. Subject to the terms hereof, including the
licenses and other rights granted hereunder, all Technology shall be owned as
follows:
(a) Background Technology. All Aphton Background Technology shall continue
to be owned or Controlled by Aphton, and all XOMA Background Technology shall
continue to be owned or Controlled by XOMA.
(b) Aphton Collaboration Technology and XOMA Collaboration Technology.
Aphton shall own the entire right, title and interest in and to all Aphton
Collaboration Technology (including all Patent Rights and other intellectual
property rights thereto), and XOMA shall own the entire right, title and
interest in and to all XOMA Collaboration Technology (including all Patent
Rights and other intellectual property rights thereto). Subject to the rights
granted each Party under this Agreement (including the licenses granted pursuant
to Section 9.1), (i) Aphton and its Affiliates may use and practice the Aphton
Collaboration Technology, and (ii) XOMA and its Affiliates may use and practice
the XOMA Collaboration Technology, in each case without the consent of the other
and without an obligation to notify the other Party of such intended use or to
pay royalties or other compensation to the other by reason of such use;
provided, however, that neither Party shall use such Collaboration Technology
with respect to any Product directed against a Target Antigen other than as
expressly permitted in this Agreement.
(c) Joint Collaboration Technology.
(i) The Parties shall jointly own all Joint Collaboration Technology
and, subject to the rights granted each Party under this Agreement
(including the licenses granted pursuant to Section 9.1), each Party may
make, use, sell, keep or license its interest in Joint Collaboration
Technology, and otherwise undertake all activities a sole owner might
undertake with respect to such Joint Collaboration Technology, without the
further consent of and without accounting to the other Party, throughout
the world; provided, however, that, during the Term of this Agreement,
neither Party shall use such Joint Collaboration Technology with respect to
any Product directed against a Target Antigen other than as expressly
permitted in this Agreement.
(ii) [*].
(iii) [*].
(d) Notice. The Parties shall each disclose all Collaboration
Technology to the Development Committee at the first meeting of the
Development Committee following the invention thereof.
10.2 Prosecution of Patents.
(a) Background and Solely Owned Collaboration Technology. Subject to the
provisions of Section 10.2(b) and (c) below, each Party shall have the sole
right with respect to its Background Technology and Collaboration Technology
owned solely by it to: (i) decide whether patent applications should be filed on
such Background and Collaboration Technology, (ii) decide when and in which
countries such patent application should be filed or maintained, (iii) control
the prosecution and procurement of any such patent application and patents
resulting from such patent applications, including their issuance, reissuance,
reexamination and their defense in any interference, revocation and/or
opposition proceedings, and (iv) select any counsel or other party necessary to
prepare, file, prosecute and maintain such patent applications and such patents
and advise or represent it in connection with such patent applications and such
patents. Each Party shall pay all costs and expenses incurred by it under this
Section 10.2(a) with respect to Collaboration Technology owned by it. Each Party
agrees to share with the other Party all substantive communications relating to
the prosecution of Background and/or Collaboration Technology owned solely by
it; provided that, if necessary, the other Party has executed an appropriate
common interest or similar agreement. Unless so directed by the Steering
Committee pursuant to Section 10.2(c), a Party that decides not to file any
patent applications, or not to prosecute or maintain any patents, referred to in
this Section 10.2(a) shall notify the other Party with sufficient time for such
other Party to so prosecute or maintain and shall take all action and execute
all documents reasonably necessary for the other Party to undertake such
prosecution and maintenance at its own expense; provided, however, that such
Party shall not be obligated to assign title to any such patents or patent
applications to the other Party.
(b) Joint Collaboration Technology. The Steering Committee shall determine
which Party shall be responsible for filing patent applications in respect of
Joint Collaboration Technology, using counsel selected by it with the consent of
the other Party (which consent shall not be unreasonably withheld). With respect
to the prosecution of such patent applications for Joint Collaboration
Technology, the Party prosecuting such Joint Collaboration Technology (the
"Prosecuting Party"), shall have the further right to take such actions as are
necessary or appropriate to procure and maintain patents with respect thereto,
subject to any direction by the Steering Committee pursuant to Section 10.2(c);
provided that all such patent applications and patents shall be owned jointly
("Joint Patent Rights"). The Prosecuting Party's costs in preparing, filing,
prosecuting and maintaining Joint Patent Rights shall be shared between the
Parties as follows: (i) [*] in the event that the applicable Joint Patent Rights
have scientifically and economically meaningful uses outside of this Agreement;
and (ii) otherwise, [*]. In the event the Steering Committee cannot make the
determination called for in the first sentence of this Section 10.2(b), the
question of which Party shall be responsible for such filings and other
activities shall be submitted to the dispute resolution procedures of Sections
13.1(a) and 13.2. Subject to Section 10.2(c), in the event that it is the Party
selected by the Steering Committee to be responsible for filing of one or more
patent applications regarding any composition of matter and/or method of use
claims within the Collaboration Technology which claims would cover or claim
human, Human Engineered(TM) or humanized monoclonal antibodies directed to
Target Antigens, the Prosecuting Party shall, [*], use Commercially Reasonable
and Diligent Efforts to secure one or more such claims. With respect to all
Joint Collaboration technology, the non-Prosecuting Party shall be consulted,
and due consideration given to any concerns it may raise, with respect to all
significant prosecution matters involving the Joint Patent Rights. Unless so
directed by the Steering Committee pursuant to Section 10.2(c), if the
Prosecuting Party for a Joint Patent Right decides to abandon prosecution or
maintenance of such Joint Patent Right, it shall so notify the other Party and
the other Party shall have the right to take over the prosecution and
maintenance of such Joint Patent Right at its own expense and discretion, in
which case the original Prosecuting Party shall assign all of its rights and
interest therein to the other Party. Either Party may avoid sharing the costs
associated with any Joint Collaboration Technology by assigning all of its
rights and interests therein to the other Party without further consideration.
Costs incurred prior to such assignment shall be shared as set forth above.
(c) Notwithstanding the provisions of Sections 10.2(a) and (b) above, the
Steering Committee shall be responsible for the overall strategic management of
patents and patent applications: (i) that form part of either Party's Background
Technology, only to the extent that they include claims which are solely
directed to one or more Products; and (ii) that form part of the Collaboration
Technology, to the extent that they cover any Product, and, in each case, shall
[*].
10.3 Enforcement of Patent Rights.
(a) Mutual Notification. If at any time during the Term of this Agreement,
either Party becomes aware of any product that it believes (i) is being sold or
used in the Territory for treatment of the same indications or potential
indications as any Product or potential Product, and (ii) infringes a Patent
Right owned by XOMA and/or Aphton which Patent Right is believed also to protect
the use, development, manufacture, sale, import or export of such Product (or
potential Product), the Party having such knowledge shall promptly inform the
other Party of such infringement. The Parties shall thereafter consult and
attempt to determine a course of action to terminate any such infringement.
(b) Enforcement of Aphton Background Patent Rights. Subject to Section
10.3(d) below, [*] shall have the sole right, [*] and in its sole discretion, to
initiate, prosecute and control the enforcement of rights (including Patent
Rights) within the [*] Background Technology against infringement or misuse, or
the defense of any declaratory judgment action for non-infringement relating
thereto in any Territory and to defend any Patent Right within the Aphton
Background Technology.
(c) Enforcement of XOMA Background Patent Rights. Subject to Section
10.3(d) below, [*] shall have the sole right, [*] and in its sole discretion, to
initiate, prosecute and control the enforcement of rights (including Patent
Rights) within the [*] Background Technology against infringement or misuse, or
the defense of any declaratory judgment action for non-infringement relating
thereto in any Territory and to defend any Patent Right within the XOMA
Background Technology.
(d) Enforcement of Background Patent Rights in Certain Circumstances.
Notwithstanding Sections 10.3(b) and (c) above, in the event either Party or its
Affiliates in the exercise of its discretion elects not to enforce or defend
Patent Rights within the Aphton Background Technology or the XOMA Background
Technology, as applicable, in a particular circumstance with respect to the
potential infringement thereof by a product which is being sold or used in the
Territory for treatment of the same indications or potential indications as any
Product or potential Product, the other Party may request that the Steering
Committee determine whether such Patent Rights should be enforced or defended in
such circumstance; provided, however, that with respect to any Product or Region
as to which the Party Controlling such Background Technology has Opted Out and
has not Opted Back In, [*]. In the event the Steering Committee determines that
such Patent Rights should be so enforced, the Steering Committee shall determine
which Party shall be responsible for the enforcement or defense thereof in such
circumstance. The Party so selected by the Steering Committee shall control such
enforcement or defense, using counsel selected by it with the consent of the
other Party (which consent shall not be unreasonably withheld), and the costs
thereof shall be [*]; provided, however, that with respect to any Product or
Region as to which a Party has Opted Out and has not Opted Back In, the costs
thereof shall be [*].
(e) Enforcement of Collaboration Patent Rights.
(i) In the event of an infringement of any Patent Rights that form
part of the Collaboration Technology, the Parties shall discuss in good
faith whether they wish to jointly enforce such Patent Rights. In the event
the Parties agree to jointly enforce such Patent Rights, [*]shall control
such enforcement or defense, using counsel selected by it with the consent
of [*] (which consent shall not be unreasonably withheld), and the costs
thereof shall be [*].
(ii) In the event that the Parties do not agree to jointly enforce any
such Patent Rights that form part of the Collaboration Technology, [*]
shall (unless such Patent Rights relate only to a particular Product in a
particular Region as to which Aphton has Opted Out and not Opted Back In)
have the first right, at its own cost and expense and in its sole
discretion, to initiate, prosecute and control such legal action, or to
control the defense of any declaratory judgment action for non-infringement
relating thereto, including the right to settle any such action.
(iii) If [*] does not commence any such action to enforce any such
Patent Rights that form part of the Collaboration Technology within ninety
(90) days after notice of such infringement, then [*] will (unless such
Patent Rights relate only to a particular Product in a particular Region as
to which [*] has Opted Out and not Opted Back In) have the right, at its
own cost and expense and in its sole discretion, to either initiate and
prosecute such action or to control the defense of such declaratory
judgment action.
(f) Cooperation. In connection with any action brought by either Party for
patent infringement of any Patent Rights that form part of the Collaboration
Technology or, in connection with any proceedings brought pursuant to Section
10.3(d) above, the Background Technology, the Parties will reasonably cooperate
and will provide each other with any information or assistance that either Party
may reasonably request. Each Party shall keep the other Party informed of
developments in any action, including the status of any settlement negotiations
and the terms of any offer related thereto. The Party controlling such action,
as provided in Section 10.3(d) or (e), shall [*], and [*]. Each Party may be
separately represented by counsel of its choice, at its own cost and expense
unless counsel selected by the Party controlling the litigation would have a
conflict of interest with respect to its representation of both Parties (in
which case the costs of separate representation shall be shared as set forth
above). However, no settlement, compromise or other disposition of any such
proceeding that concerns the validity of any Joint Patent Rights or Patent
Rights of the other Party shall be [*].
(g) Recovery of Costs and Damages in Infringement Actions. Any recovery
obtained as a result of infringement actions, whether by judgment, award, decree
or settlement: (i) shall be [*] with respect to any action brought pursuant to
Section 10.3(d) or 10.3(e)(i); (ii) shall be [*] with respect to any action
brought pursuant to Section 10.3(d) with respect to any Product or Region as to
which the other Party has Opted Out and has not Opted Back In; (iii) shall be
[*] respect to any action brought pursuant to Section 10.3(b) or 10.3(e)(ii);
and (iv) shall be [*] with respect to any action brought pursuant to Section
10.3(c) or 10.3(e)(iii).
(h) Right to Abandon. If the Party controlling the enforcement or defense
of any Patent Right in accordance with this Section 10.3 decides to abandon such
enforcement or defense of such Patent Right, it shall so notify the other Party
and the other Party shall have the right to take over the enforcement or defense
of such Patent Right at its own expense and discretion, in which case the
original enforcing or defending Party shall assign all of its rights and
interest in such enforcement or defense to the other Party and shall waive any
right to recovery with respect thereto under Section 10.3(g). Either Party may
avoid sharing the costs associated with any enforcement or defense of a Patent
Right governed by this Section 10.3 by assigning all of its rights and interests
therein to the other Party without further consideration. Costs incurred prior
to such assignment shall be borne as otherwise set forth in this Section 10.3.
10.4 Allegations of Infringement by Third Parties.
(a) Mutual Notification. In the event that either Party receives notice
that the use, development, manufacture, sale, import or export of a Product, or
any other action by either of them under this Agreement, during the Term of this
Agreement is alleged to be a violation of the patent or other intellectual
property rights of a Third Party, it shall immediately notify the other Party.
The Steering Committee shall promptly determine an appropriate response and
course of action.
(b) XOMA Background Technology. With respect to any alleged infringement
arising through the use of any XOMA Background Technology, [*] will have the
right to control any defense, using counsel selected by it with the consent of
[*] (which consent shall not be unreasonably withheld); provided, however, that
if such allegations relate only to a particular Product in a particular Region
as to which [*] has Opted Out and not Opted Back In, [*] will have the right to
control any defense, using counsel selected by it with the consent of [*] (which
consent shall not be unreasonably withheld). The costs thereof (including any
damages, costs or expenses resulting from any action) shall be [*] and any
recovery obtained as a result of infringement actions, whether by judgment,
award, decree or settlement shall be [*] (in each case unless such allegations
relate only to a particular Product in a particular Region as to which [*] has
Opted Out and not Opted Back In, in which case [*].
(c) Aphton Background Technology. With respect to any alleged infringement
arising through the use of any Aphton Background Technology, [*] will have the
right to control any defense, using counsel selected by it with the consent of
[*] (which consent shall not be unreasonably withheld); provided, however, that
if such allegations relate only to a particular Product in a particular Region
as to which [*] has Opted Out and not Opted Back In, [*] will have the right to
control any defense, using counsel selected by it with the consent of [*] (which
consent shall not be unreasonably withheld). The costs thereof (including any
damages, costs or expenses resulting from any action) shall be [*] and any
recovery obtained as a result of infringement actions, whether by judgment,
award, decree or settlement shall be [*] (in each case unless such allegations
relate only to a particular Product in a particular Region as to which [*] has
Opted Out and not Opted Back In, in which case [*].
(d) Collaboration Technology. With respect to any alleged infringement
arising through the use of any Collaboration Technology, [*] will have the right
to control any defense, using counsel selected by it with the consent of [*]
(which consent shall not be unreasonably withheld); provided, however, that if
such allegations relate only to a particular Product in a particular Region as
to which [*] has Opted Out and not Opted Back In, [*] will have the right to
control any defense, using counsel selected by it with the consent of [*] (which
consent shall not be unreasonably withheld). The costs thereof (including any
damages, costs or expenses resulting from any action) and any recovery obtained
as a result thereof (whether by judgment, award, decree or settlement) shall be
[*] (unless such allegations relate only to a particular Product in a particular
Region as to which one Party has Opted Out and not Opted Back In, in which case
all such costs shall be [*] and any such recovery shall be [*]).
(e) Cooperation. In connection with any action pursuant to this Section
10.4, the Parties will reasonably cooperate and will provide each other with any
information or assistance that either Party may reasonably request. Each Party
shall keep the other Party informed of developments in any action, including the
status of any settlement negotiations and the terms of any offer related
thereto. The Party controlling such action shall [*]. Each Party may be
separately represented by counsel of its choice, at its own cost and expense
unless counsel selected by the Party controlling the litigation would have a
conflict of interest with respect to its representation of both Parties (in
which case the costs of separate representation shall be treated as set forth
above). However, no settlement, compromise or other disposition of any such
proceeding that concerns the validity of any Joint Patent Rights or Patent
Rights of the other Party shall be [*].
10.5 Trademarks and Trade Dress.
(a) Product Trademarks. The Commercialization Committee, with the approval
of the Steering Committee, shall have the right to select, and shall register
and maintain, at its expense, such Product Trademark(s) as shall be used for the
promotion, marketing and sale of the Product(s) in the Territory. Aphton shall
own such Product Trademark(s) and all goodwill associated therewith, and all use
of any Product Trademark(s) pursuant to this Agreement shall at all times inure
to the benefit of Aphton. Aphton hereby grants to XOMA (i) a fully paid-up,
co-exclusive license (with Aphton) to use the Product Trademark(s) in the
Territory for the Commercialization activities provided for in this Agreement
and (ii) a fully paid-up, exclusive license to use the Product Trademark(s) in
connection with the commercialization of any Product as to which Aphton has
Opted Out and not Opted Back In in each Region as to which Aphton has Opted Out
and not Opted Back In. XOMA acknowledges and agrees that its use of any Product
Trademark shall not create rights in or to such Product Trademark or the
goodwill pertaining thereto, whether by virtue of any use of such Product
Trademark pursuant to this Agreement, or otherwise. This license shall survive
any termination or expiration of this Agreement as necessary to permit the use
of the Product Trademarks by XOMA in connection with any Product that continues
to be licensed as provided in Section 14.5(b).
(b) Product Trademark Use. XOMA recognizes that the Product Trademark(s)
represent a valuable asset of Aphton, and that substantial recognition and
goodwill are associated with such name, logo and trademarks. XOMA shall use the
Product Trademark(s) only in the form, manner and logotype approved in writing
by Aphton.
(c) Product Trademark Enforcement. If either Party has knowledge of any
suspected infringement of the Product Trademark(s) by Third Parties, the Party
having such knowledge shall promptly inform the other Party of such
infringement. The Parties shall thereafter consult and cooperate fully to
determine a course of action, including the commencement of legal action by [*]
to terminate any such infringement. In connection with any such action, [*] will
cooperate fully and will provide [*] with any information or assistance that
Aphton may reasonably request. [*] may settle, compromise or otherwise dispose
of any such proceeding that concerns the validity of any Product Trademark at
its discretion, all costs of which will be considered [*] and all awards in
connection therewith will be [*].
(d) Product Trade Dress. Except as otherwise agreed with one or more Third
Parties pursuant to Section 5.2 or 5.5(a), Aphton shall be solely responsible
for package design and trade dress used for Products in the Field in the
Territory, except for Products as to which Aphton has Opted Out and not Opted
Back In, in which case XOMA shall be solely responsible therefor.
10.6 Improvements to Certain Excluded Technology. Notwithstanding anything
in this Agreement to the contrary, all additions, developments, modifications,
enhancements, adaptations and improvements developed hereunder which relate to
the Expression and Engineering Technologies generally and are not specific to
the Product(s) or Target Antigens ("Improvements"), including any new patents or
patent applications included therein, whether from work by or on behalf of
Aphton or XOMA, shall be owned by the Other XOMA Entities and/or XOMA and not by
Aphton, any of its Affiliates or any Third Party.
11. CONFIDENTIALITY
11.1 Confidentiality. Except as specifically permitted hereunder, each
Party hereby agrees to hold in confidence and not use for any purpose other than
the purposes of this Agreement, all (a) data, samples, technical and economic
information (including the economic terms hereof), commercialization, clinical
and research strategies, know-how and other information provided by one Party
(the "Disclosing Party") to the other (the "Receiving Party") during the Term of
this Agreement and (b) all data, results and information developed pursuant to
the Collaboration and owned solely by the other Party (collectively, the
"Confidential Information"), except that the term "Confidential Information"
shall not include:
(a) information that is or becomes part of the public domain through no
fault of the Receiving Party or its Affiliates;
(b) information that is obtained after the date hereof by the Receiving
Party or one of its Affiliates from any Third Party that is lawfully in
possession of such Confidential Information and not in violation of any
contractual or legal obligation to the Disclosing Party with respect to such
Confidential Information;
(c) information that is known to the Receiving Party prior to disclosure by
the Disclosing Party, as evidenced by the Receiving Party's written records;
(d) information that is necessary or advantageous to be disclosed to any
Regulatory Authorities or pursuant to any regulatory filings, provided that in
such case the Receiving Party notifies the Disclosing Party reasonably in
advance of such disclosure and cooperates with the Disclosing Party to minimize
the scope and content of such disclosure;
(e) information that is, in the opinion of legal counsel to the Receiving
Party required to be disclosed pursuant to any relevant law, rule or regulation
or under order of a court of competent jurisdiction; provided that in such case
the Receiving Party notifies the Disclosing Party reasonably in advance of such
disclosure and cooperates with the Disclosing Party to minimize the scope and
content of such disclosure; and
(f) information that either Party determines is reasonably necessary to be
disclosed to any other Third Party involved in the use, development,
manufacture, sale, importation or exportation of a Product.
Notwithstanding the foregoing: (i) any information meeting the criteria of
clause (d), (e) or (f) of this Section 11.1 shall nonetheless retain its status
as Confidential Information in the hands of the Receiving Party with respect to
any Third Parties other than those described in the applicable clause (d), (e)
or (f); and (ii) XOMA may disclose to Chiron Corporation the definition of
Target Antigen(s) pursuant to the confidentiality provisions of the existing
Agreement dated February 27, 2004, between XOMA and Chiron Corporation or, if
applicable, of a subsequent more definitive agreement between such parties
replacing the existing agreement.
11.2 Survival. The obligations of this Article 11 shall survive for the
longer of (i) the last to expire Valid Claim and (ii) five (5) years following
the expiration or termination of this Agreement except to the extent required by
any longer obligations of confidentiality to a Third Party that are disclosed to
the Receiving Party prior to termination of this Agreement.
11.3 Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby shall be
reviewed in advance by and subject to the approval of both Parties; except that
such review and approvals shall not be required for any announcement that
discloses the existence of this Agreement without disclosing any of its
non-public material terms. The parties hereby agree to the release of a press
release in the form attached hereto as Schedule 11.3 upon full execution of this
Agreement and that the consummation of this Agreement, as well as such terms as
are expressly described in such press release, shall be deemed to be in the
public domain.
11.4 Publication. The Parties shall cooperate in appropriate publication of
the results of research and development work performed pursuant to this
Agreement, but subject to the predominating interest to obtain patent protection
for any patentable subject matter and to maximize the commercial potential of
any Products. Prior to any public disclosure of any such results, the Party
proposing disclosure shall send the other Party a copy of the information to be
disclosed, and shall allow the other Party sixty (60) days from the date of
receipt in which to review the proposed disclosure. If notification is not
received during the sixty (60) day period, the Party proposing disclosure shall
be free to proceed with the disclosure. If due to a business reason or a belief
by the other Party that the disclosure contains subject matter for which a
patentable invention should be sought, then prior to the expiration of the sixty
(60) day period, the other Party shall so notify the disclosing Party, who shall
then delay public disclosure of the information for an additional period of up
to ninety (90) days to permit the preparation and filing of a patent application
on the subject matter to be disclosed or other action to be taken. The Party
proposing disclosure shall thereafter be free to publish or disclose the
information, subject to any deletions or modifications requested by the other
Party. The determination of authorship for any paper shall be in accordance with
accepted scientific practice and shall acknowledge the contribution of the other
Party to the subject matter thereof. Nothing in this Section 11.4 will be
construed to allow either Party to disclose the Confidential Information of the
other Party in any publication or other disclosure without the express written
consent of such other Party.
12. REPRESENTATIONS AND WARRANTIES
12.1 Legal Authority. Each Party represents and warrants to the other that
it has the legal power, authority and right to enter into this Agreement and to
perform its respective obligations set forth herein.
12.2 No Conflicts. Each Party represents and warrants that as of the date
of this Agreement it is not a party to any agreement or arrangement with any
Third Party or under any obligation or restriction, including pursuant to its
organizational documents, which in any way limits or conflicts with its ability
to fulfill any of its obligations under this Agreement.
12.3 XOMA Specific Representations. XOMA represents and warrants to Aphton
that:
(a) to its knowledge after reasonable inquiry, the utilization of the
Expression and Engineering Technologies contemplated to be undertaken by XOMA
pursuant to this Agreement do not and are not likely to infringe upon the
intellectual property rights of any Third Party, provided, however, that such
representation and warranty does not extend to (i) any intellectual property
rights pertaining or relating to any Target Antigen or any method claims
relating thereto or (ii) any activities conducted or to be conducted (A) by
Aphton or (B) based on any recommendation or request by Aphton or using
materials or technologies produced or provided by Aphton;
(b) at the time of delivery, all units of the Product will: (i) be in
compliance with cGMP Requirements, (ii) be within the Specifications, (iii) be
free from defects in materials and workmanship, (iv) not be adulterated or
misbranded within the meaning of the FDC Act and (v) not be an article which may
not, under the FDC Act, be introduced into interstate commerce;
(c) it has disclosed to Aphton all agreements and other arrangements
between XOMA and/or any Affiliate thereof, on the one hand, and any Third Party,
on the other hand, providing for the payment of a royalty or fee the scope of
which includes or could include a Product or a Target Antigen or a process for
the manufacture of a Product;
(d) as of the Effective Date, the [*] Agreement is in full force and
effect;
(e) it has proprietary rights to all material patents and/or patent
applications included in the XOMA Background Technology and it knows of no
reason as to why the issued or allowed claims of such patents and patent
applications are not valid or enforceable and that, to its best knowledge after
reasonable inquiry, there are no actual or threatened claims by any Third Party
against XOMA's ownership of, or proprietary rights to, such patents or patent
applications;
(f) Other XOMA Entities own and/or Control all the patents and have
proprietary rights to all material patents and/or patent applications included
in the Expression and Engineering Technologies and it knows of no reason as to
why the issued or allowed claims of such patents and patent applications are not
valid or enforceable and that, to its best knowledge after reasonable inquiry,
there are no actual or threatened claims by any Third Party against ownership of
any Other XOMA Entity, or proprietary rights of any Other XOMA Entity to, such
patents or patent applications; and
(g) it has been assigned or licensed (with the right to grant sublicenses
as contemplated hereunder) all rights in the XOMA Background Technology and the
Expression and Engineering Technology in so far as they relate to any Products
or potential Products; and
(h) it Controls and will continue to Control all rights under the XOMA
Background Technology and the Expression and Engineering Technologies reasonably
necessary for it to discharge its obligations under this Agreement, including,
without limitation: (i) the licenses granted by it pursuant to Section 9.1(a)
and to be granted by it pursuant to Section 9.3(c); and (ii) those activities
specified in the Development Plan.
12.4 Aphton Specific Representations. Aphton represents and warrants to
XOMA that:
(a) the antibodies proposed to be provided by Aphton to XOMA under this
Agreement were created by one or more persons each of whom was under an
obligation to assign, and has validly assigned to Aphton, and Aphton continues
to hold, all rights therein;
(b) it has disclosed to XOMA all agreements or other arrangements between
Aphton and any Third Party providing for the payment of a royalty or fee the
scope of which includes or could include a Product or a Target Antigen and/or as
to which Aphton has granted an exclusive or non-exclusive license to any Target
Antigen or any Product relating thereto; and
(c) it owns and/or Controls all the patents and has proprietary rights to
all material patents and/or patent applications included in the Aphton
Background Technology and that, to its best knowledge after reasonable inquiry,
there are no actual or threatened claims by any Third Party against Aphton's
ownership of, or proprietary rights to, such patents or patent applications.
13. DISPUTE RESOLUTION
13.1 Disputes.
(a) Generally. The Parties recognize that disputes as to certain matters
may from time to time arise under this Agreement. It is the objective of the
Parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation. To accomplish
this objective, the Parties agree to follow the procedures set forth in this
Article 13 if and when a dispute arises under this Agreement. Disputes among the
Parties will be resolved as follows: with regard to any Development Dispute,
Commercialization Dispute or Manufacturing Dispute, the Steering Committee, upon
written notice by any Party, shall seek to resolve the dispute by discussions in
good faith, and, at the request of either Party a face-to-face meeting of the
members of the Steering Committee. If the Steering Committee is unable to
resolve such dispute or any other Steering Committee Dispute within twenty-one
(21) days of being requested to do so or the Steering Committee agrees in
advance of twenty-one (21) days that it is unable to resolve a dispute among its
members, the dispute will be referred to the Business Heads. If after twenty-one
(21) days from such referral a dispute remains unresolved, then
(i) for [*], Aphton shall be entitled to make the final determination;
provided that all such determinations by Aphton shall be consistent with
the unanimously agreed budget forming part of the then-applicable [*],
including, without limitation, with respect to the impact of any such
decision upon the Parties' obligations to make payments with respect to any
Third Party intellectual property;
(ii) for [*], XOMA shall be entitled to make the final determination;
provided that all such determinations by XOMA shall be consistent with the
unanimously agreed budget forming part of the then-applicable [*], as
applicable, including, without limitation, with respect to the impact of
any such decision upon the Parties' obligations to make payments with
respect to any Third Party intellectual property;
(iii) for [*], Aphton shall be entitled to make the final
determination; provided that all such determinations by Aphton shall be
consistent with the unanimously agreed budget forming part of the
then-applicable [*], including, without limitation, with respect to the
impact of any such decision upon the Parties' obligations to make payments
with respect to any Third Party intellectual property;
(iv) for [*], XOMA shall be entitled to make the final determination;
provided that all such determinations by XOMA shall be consistent with the
unanimously agreed budget forming part of the then-applicable [*],
including, without limitation, with respect to the impact of any such
decision upon the Parties' obligations to make payments with respect to any
Third Party intellectual property and provided, further, that without
limiting Sections 2.1 and 13.1(c) and in view of [*], all such
determinations shall be commercially reasonable and in the interests of
optimizing the commercial benefit to the Parties of the Development and
Commercialization of the Product(s); and
(v) for [*] and for all other matters as to which the Steering
Committee is unable to reach agreement, the Parties agree to refer the
matter to mediation pursuant to Section 13.2(a). If after thirty (30) days
from referral to such mediation (as extended with the mutual consent of the
Parties, not to be unreasonably withheld), a dispute (except any dispute
relating to intellectual property described in Section 13.4) cannot be
resolved by mediation, then the Parties agree to submit to arbitration
pursuant to Section 13.2(b).
For the avoidance of doubt, and notwithstanding any provision of this Agreement
to the contrary, any dispute relating to, arising out of or based upon matters
of contractual construction and interpretation of the provisions of this
Agreement, including whether a specific standard articulated in this Agreement
has been met in a particular circumstance, shall be covered by clause (v) above.
(b) Budgets to Be Unanimously Agreed. Notwithstanding any other provision
of this Agreement, all budgets for Development, Manufacturing and
Commercialization activities shall be subject to the unanimous consent of the
Parties. In the event unanimous consent cannot be attained, the provisions of
Sections 13.2 and 13.5 shall apply. Unless otherwise agreed in writing, neither
Party shall be liable for any expenditure made by the other under any
Development, Manufacturing or Commercialization budget unless and until such
budget has been unanimously agreed to by the Parties or determined as set forth
in Section 13.2 or 13.5.
(c) Final Determinations. Any final determination by either Party made
pursuant to clauses (i) through (iv) of Section 13.1(a) shall (1) be accompanied
by a written explanation thereof setting forth in reasonable detail such Party's
basis for making such determination, together with any supporting materials
necessary for a reasonably complete understanding of such determination, (2)
follow such Party's good faith review of the other Party's position and (3) be
commercially reasonable and in the interests of optimizing the commercial
benefit to the Parties of the Development and Commercialization of the Products.
In no event shall the provisions of this Section 13.1 be considered a waiver by
either Party of any of its or the other Party's contractual rights and
obligations under this Agreement.
(d) Interpretation. All references in this Agreement to determinations or
decisions by any Committee hereunder shall be deemed to include determinations
or decisions made pursuant to the dispute resolution procedures set forth in
this Article 13, including determinations or decisions by the applicable Party
pursuant to Section 13.1(a)(i)-(iv).
13.2 Mediation and Arbitration.
(a) Mediation. If a dispute arises between the Parties under this Agreement
for which mediation is required pursuant to Section 7.2, 8.5(b) or 13.1, the
Parties agree to try in good faith to resolve such dispute in an expeditious
manner by mediation administered by the CPR Institute for Dispute Resolution or
its successor organization ("CPR") in accordance with its Mediation Procedure.
The mediation proceeding shall be conducted at the location of the Party not
originally requesting the resolution of the dispute. The Parties agree that they
shall share equally the cost of the mediation filing and hearing fees and the
cost of the mediator. Each Party must bear its own attorney's fees and
associated costs and expenses. For the avoidance of doubt, nothing in connection
with such mediation shall be binding on either Party, except for the provisions
regarding sharing of costs set forth in this Section 13.2(a).
(b) Arbitration.
(i) If a dispute cannot be resolved pursuant to Section 13.2(a) within the
thirty (30) day time period provided in Section 13.1(a)(v), then, upon fourteen
(14) days' written notice, either Party may initiate arbitration by giving
notice to that effect to the other Party and by filing the notice with the CPR
in accordance with its Rules for Non-Administered Arbitration. Such dispute
shall then be settled by arbitration in New York in accordance with the Rules
for Non-Administered Arbitration of the CPR or other rules agreed to by the
Parties, by a panel of three neutral arbitrators, who shall be selected by the
Parties using the procedures for arbitrator selection of the CPR. Discovery
shall be limited to that which the panel determines is appropriate in the
circumstances, taking into account the needs of the Parties and the desirability
of making discovery expeditious and cost-effective. The Parties acknowledge that
the primary purpose of this Section 13.2 is to promote dispute resolution in a
fair and expeditious manner. (ii) The Parties acknowledge that this Agreement
evidences a transaction involving interstate commerce. Insofar as it applies,
the United States Arbitration Act shall govern the interpretation of,
enforcement of, and proceedings pursuant to the arbitration clause in this
Agreement. Except insofar as the United States Arbitration Act applies to such
matters, the agreement to arbitrate set forth in this Section 13.2(b) shall be
construed, and the legal relations among the Parties shall be determined in
accordance with, the substantive laws of New York.
(iii) The panel shall render its decision and award, including a statement
of reasons upon which such award is based, within thirty (30) days after the
arbitration hearing. The decision of the panel shall be determined by majority
vote among the arbitrators, shall be in writing and shall be binding upon the
Parties, final and non-appealable. Judgment upon the award rendered by the panel
may be entered in any court having jurisdiction thereof in accordance with
Section 13.3.
(iv) Except as required under the United States Arbitration Act and as set
forth in Section 13.4, no action at law or in equity based upon any dispute that
is subject to arbitration under this Section 13.2(b) shall be instituted.
(v) The Parties agree that they shall share equally the cost of the
arbitration filing and hearing fees and the cost of the arbitrator incurred in
accordance with this Section 13.2(b). Each Party must bear its own attorney's
fees and associated costs and expenses incurred in accordance with this Section
13.2(b).
13.3 Jurisdiction. For the purposes of this Article 13, the Parties agree
to accept the jurisdiction of the federal courts located in the Southern
District of New York for the purposes of enforcing the agreements reflected in
this Article 13 or any arbitration award under this Article 13.
13.4 Disputes Regarding Patents and Other Intellectual Property. Any
dispute relating to the determination of ownership, validity or infringement by
the other Party of a Party's patents shall be submitted exclusively to the
federal courts located in the Southern District of New York, and the Parties
hereby consent to the jurisdiction and venue of such court.
13.5 Performance. Pending resolution of any matter under this Article 13,
the Parties will continue to perform their obligations under this Agreement in
accordance with the terms hereof. To facilitate such continued performance, the
Business Heads shall negotiate in good faith in an effort to agree to
appropriate interim budgets to allow the continued Development, Manufacture and
Commercialization of the Product pursuant to this Agreement pending resolution
of any dispute with respect to any budget.
14. TERM AND TERMINATION
14.1 Term. This Agreement shall commence as of the Effective Date. Unless
sooner terminated as provided herein and except as provided below, the
provisions of this Agreement shall continue in effect until, and such provisions
shall expire upon, the date on which all development has been discontinued with
permanent intent (for this purpose including, without limitation, any
development by Aphton, XOMA, an Aphton Marketing/Development Partner, a XOMA
Marketing/Development Partner or a Joint Marketing/Development Partner of a
Product for Regions for which a Party has Opted Out) and all Products Developed
hereunder are no longer being commercialized by Aphton, XOMA, an Aphton
Marketing/Development Partner, a XOMA Marketing/Development Partner or a Joint
Marketing/Development Partner in any country of the Territory (for this purpose
including, without limitation, any commercialization of a Product for Regions
for which a Party has Opted Out).
14.2 Termination Rights.
(a) Without Cause. Either Party may terminate this Agreement without cause
following six (6) months' written notice to the other Party. The terminating
Party shall honor all of its financial and other obligations during such six (6)
month term.
(b) Either Party for Breach. Upon any material breach of this Agreement by
a Party (the "Breaching Party"), the other Party (the "Non-Breaching Party") may
terminate this Agreement by providing thirty (30) days' written notice to the
Breaching Party in the case of a breach of a payment obligation and sixty (60)
days' written notice to the Breaching Party in the case of any other material
breach. Such notice shall describe the alleged breach with sufficient
particularity to allow the Breaching Party to remedy or otherwise respond, and
shall expressly state the intent to terminate under this Section 14.2(b). The
termination shall become effective at the end of the notice period unless the
Breaching Party cures such breach during such notice period. Notwithstanding the
foregoing, (i) if such breach, by its nature, is incurable, the Non-Breaching
Party may terminate this Agreement immediately upon written notice to the
Breaching Party and (ii) if such breach (other than a payment breach), by its
nature, is curable, but not within the forgoing cure period, then such cure
period shall be extended if the Breaching Party provides a written plan for
curing such breach to the Non-Breaching Party and uses commercially reasonable
efforts to cure such breach in accordance with such written plan; provided that
no such extension shall exceed ninety (90) days without the consent of the
Non-Breaching Party.
(c) Either Party for Bankruptcy. If voluntary or involuntary proceedings by
or against a Party are instituted in bankruptcy under any insolvency law, or a
receiver or custodian is appointed for such Party, or proceedings are instituted
by or against such Party for corporate reorganization or the dissolution of such
Party, which proceedings, if involuntary, shall not have been dismissed within
sixty (60) days after the date of filing, or if such Party makes an assignment
for the benefit of creditors, or substantially all of the assets of such Party
are seized or attached and not released within sixty (60) days thereafter, the
other Party may immediately terminate this Agreement effective upon notice of
such termination.
(d) Deemed Termination. In the event that a Party Opts Out of all Products
then in active Development or Commercialization in all Regions throughout the
Territory, such Party shall be deemed to have terminated this Agreement pursuant
to Section 14.2(a) above.
14.3 Pre-Termination Rights. Termination or expiration of this Agreement
for any reason shall be without prejudice to any rights that shall have accrued
to the benefit of either Party prior to such termination or expiration. Such
termination or expiration shall not relieve either Party from obligations that
are expressly indicated to survive termination or expiration of this Agreement.
14.4 Remedies. In the event of any breach of any provision of this
Agreement, in addition to the termination rights set forth herein, each Party
shall have all other rights and remedies at law or equity to enforce this
Agreement.
14.5 Post-Termination Rights.
(a) In the event of termination by Aphton under Section 14.2(b) or (c) or
by XOMA under Section 14.2(a), XOMA will:
(i) in the event of a termination pursuant to Section 14.2(a) or (b),
at Aphton's request continue to honor all of its obligations hereunder for
the six (6) month period following notice of termination by XOMA under
Section 14.2(a) or the six (6) month period following written notice of
termination by Aphton under Section 14.2(b), including cost obligations;
(ii) if such termination occurs prior to the initiation of a Phase I
Study with respect to the first Product to be Developed in the USA, at
Aphton's request, negotiate in good faith a contract for the provision by
XOMA of such of the services as Aphton may request as would have been
provided by XOMA pursuant to the Development Program through the completion
of such Phase I Study if such termination had not occurred;
(iii) at Aphton's request, continue to honor its obligations hereunder
with respect to the Manufacture and supply of Product on the terms and
conditions set forth in Article 6 for a period of (A) in the event such
termination occurs prior to [*] for a Product in the Field, [*] following
the effective date of such termination, and (B) in the event such
termination occurs after [*] for a Product in the Field, [*] following the
effective date of such termination and, during such period, at Aphton's
request, shall negotiate in good faith a manufacturing agreement with
Aphton, on commercial terms similar to those being made available by XOMA
to Third Parties for manufacturing at that time, for the manufacture and
supply of Product sufficient to satisfy reasonably anticipated demand
(clinical and/or commercial) for a further period to be determined; and
(iv) at Aphton's request, (A) provide technology transfer and other
assistance reasonably necessary to establish Aphton, Aphton's Affiliates or
any Third Party as a manufacturer of Product; (B) the rights and licenses
granted to Aphton pursuant to Sections 9.1(a)(ii) through (iv) shall
continue in full force and effect and Aphton shall have a sublicensable
license under the XOMA Technology, and under XOMA's rights in any Joint
Technology, to make, have made, use, sell, offer for sale or import
Product(s) containing, comprising or derived from an antibody or antibodies
identified in the course of the Collaboration prior to such termination in
the Field in the Territory and Aphton shall pay to XOMA a royalty in an
amount [*] of Net Sales of such Product in the Territory (it being agreed
that such royalty shall not apply to any Product(s) and Region(s) for which
a royalty has previously been agreed pursuant to Section 8.5(b) and it
being further agreed that in the event [*], then the dispute shall be
submitted to the mediation and arbitration procedures of Section 13.2),
which license shall be non-exclusive with respect to Non-Commercial
Research Activities and shall otherwise be exclusive (even as to XOMA and
the Other XOMA Entities) with respect to making, having made, using,
offering for sale, selling and importing any such Product in the Field, and
shall be subject to the payment by Aphton of any consideration payable to
Third Parties under any license agreement which forms part of the XOMA
Technology or other similar contractual obligations to Third Parties as
well as any other limitations or restrictions in such Third Party
agreements or contractual obligations; and (C) the rights and licenses
granted to Aphton pursuant to Section 9.3(c) shall continue in full force
and effect and Aphton shall have a license to such of the Expression and
Engineering Technologies as are reasonably necessary to make, have made,
use, sell, offer for sale or import Product(s) containing, comprising or
derived from an antibody or antibodies identified in the course of the
Collaboration prior to such termination in the Field in the Territory,
which license shall be non-exclusive, shall be subject to the payment by
Aphton of any consideration payable to Third Parties under any license
agreement which forms part of the XOMA Technology or other similar
contractual obligations to Third Parties as well as any other limitations
or restrictions in such Third Party agreements or contractual obligations
and shall include (I) to the extent Aphton uses any such technology in
conjunction with one or more Third Parties, a covenant not to ▇▇▇ under the
licensed patents for the benefit of any Third Party collaborator of Aphton
for purposes of developing, commercializing and, if applicable,
manufacturing such Products; provided, that each such covenant not to ▇▇▇
shall apply only to Products or potential Products with respect to which
Aphton has expended significant development effort, (II) a prohibition
against the exercise by Aphton of any "have made" rights with [*], (III)
provisions to the effect that (i) such license shall be personal to Aphton
and not assignable or sublicensable (but shall include a covenant not to
▇▇▇ as set forth in sub-section (I) above) and (ii) the license shall grant
only the right to use the Expression and Engineering Technologies with
respect to the particular molecule or molecules that are subject to the
license and not the right to practice the methods of the Expression and
Engineering Technologies (or any portion thereof) more generally, and (IV)
such other provisions as are customary for licenses of this type; provided
that all such other provisions shall not be inconsistent with the terms of
this Agreement. Within ten (10) days after the end of each calendar
quarter, Aphton shall submit a written report to XOMA of Net Sales
(including gross sales and applicable Sales Returns and Allowances) of any
Product and shall maintain records and grant access thereto as provided in
Section 7.3 with respect to any payments due under this Section
14.5(a)(iv). Payments of the amounts required hereby shall be made within
thirty (30) days of the end of the applicable calendar quarter, and the
provisions of Sections 7.4 and 7.5 shall apply thereto.
Aphton shall use commercially reasonable efforts to procure from one or more
Third Parties the services referred to in clause (ii) above and/or the
manufacture and supply of Product, as applicable, as soon as practicable
following any such termination. The [*] period, as the case may be, referred to
in clause (iii) above shall be reduced to the extent XOMA provides Aphton an
inventory of the Product in question, taking into account the estimated shelf
life of such Product, sufficient to satisfy the reasonably anticipated demand
(pursuant to any existing forecast or reasonably agreed forecasts if one does
not exist) that could be manufactured during such [*] or [*] period, as the case
may be. For the avoidance of doubt, in the event of termination by Aphton under
Section 14.2(b), Aphton will have recourse to seek damages under law or equity,
without application of Article 13.
(b) In the event of termination by XOMA under Section 14.2(b) or (c) or by
Aphton under Section 14.2(a), Aphton will:
(i) in the event of a termination pursuant to Section 14.2(a) or (b),
at XOMA's request continue to honor all of its obligations hereunder for
the six (6) month period following notice of termination by Aphton under
Section 14.2(a) or the six (6) month period following written notice of
termination by XOMA under Section 14.2(b), including cost obligations;
(ii) if such termination occurs prior to the initiation of a Phase I
Study with respect to the first Product to be Developed in the USA, at
XOMA's request, negotiate in good faith a contract for the provision by
Aphton of such of the services as XOMA may request as would have been
provided to XOMA by Aphton pursuant to the Development Program through the
completion of such Phase I Study if such termination had not occurred; and
(iii) at XOMA's request, (A) provide technology transfer and other
assistance to XOMA or its designee as is reasonably necessary for the
development, manufacture and/or commercialization of any Product in the
Field, and (B) the rights and licenses granted to XOMA pursuant to Sections
9.1(b)(ii) and (iii) shall continue in full force and effect and XOMA shall
have a sublicensable license under the Aphton Technology, and under
Aphton's rights in any Joint Technology, to make, have made, use, sell,
offer for sale or import Product(s) containing, comprising or derived from
an antibody or antibodies identified in the course of the Collaboration
prior to such termination in the Field in the Territory and XOMA shall pay
to Aphton a royalty in an amount [*] of Net Sales of such Product in the
Territory (it being agreed that such royalty shall not apply to any
Product(s) and Region(s) for which a royalty has previously been agreed
pursuant to Section 8.5(b) and it being further agreed that in the event
[*], then the dispute shall be submitted to the mediation and arbitration
procedure of Section 13.2), which license shall be non-exclusive with
respect to Non-Commercial Research Activities and shall otherwise be
exclusive (even as to Aphton) with respect to making, having made, using,
offering for sale, selling and importing any such Product in the Field, and
shall be subject to the payment by XOMA of any consideration payable to
Third Parties under any license agreement which forms part of the Aphton
Technology or other similar contractual obligations to Third Parties as
well as any other limitations or restrictions in such Third Party
agreements or contractual obligations. Within ten (10) days after the end
of each calendar quarter, XOMA shall submit a written report to Aphton of
Net Sales (including gross sales and applicable Sales Returns and
Allowances) of any Product and shall maintain records and grant access
thereto as provided in Section 7.3 with respect to any payments due under
this Section 14.5(b)(iii). Payments of the amounts required hereby shall be
made within thirty (30) days of the end of the applicable calendar quarter,
and the provisions of Sections 7.4 and 7.5 shall apply thereto.
XOMA shall use commercially reasonable efforts to procure from one or more Third
Parties the services referred to in clause (ii) above as soon as practicable
following such termination. For the avoidance of doubt, in the event of
termination by XOMA under Section 14.2(b), XOMA will have recourse to seek
damages under law or equity, without application of Article 13.
14.6 Competing Products. During the term of this Agreement, neither Party
nor any of its Affiliates shall develop, manufacture or commercialize any
Products in the Field with respect to Target Antigens other than the Products
being pursued by the Parties collaboratively under this Agreement. In the event
XOMA terminates this Agreement pursuant to Section 14.2(a) or (d), neither XOMA
nor the Other XOMA Entities shall participate in the commercialization or
manufacture of any Product related to the Target Antigen(s) (as in effect at the
time of such termination) for a period of [*] from the date of such termination
(or, if such termination occurs after Launch of a Product, [*] from such date).
For the avoidance of doubt, [*].
15. GENERAL PROVISIONS
15.1 Certain Claims.
(a) Each Party agrees to indemnify and hold harmless the other Party and
its Affiliates and their respective employees, agents, officers, directors and
permitted assigns (such Party's "Indemnified Group") from and against any
claims, judgments, expenses (including reasonable attorneys' fees), damages and
awards (collectively, a "Claim") arising out of or resulting from (i) its
negligence or misconduct in regard to any Product and (ii) a breach of any of
its representations or warranties hereunder, except to the extent that such
Claim arises out of or results from the negligence or misconduct of a Party
seeking to be indemnified and held harmless or the negligence or misconduct of a
member of such Party's Indemnified Group. An indemnified Party shall promptly
give notice to the indemnifying Party of any information from which it should
reasonably conclude an incident has occurred that could give rise to a Claim,
and in the event a Claim is made or a suit is brought, all indemnified parties
shall assist the indemnifying Party and cooperate in the gathering of
information with respect to the time, place, and circumstances and in obtaining
the names and addresses of any injured parties and available witnesses. The
failure to give the notice referred to in the preceding sentence shall not
relieve a Party of its indemnification obligations, except to the extent such
failure prejudices the ability of the indemnifying Party to defend against such
claim. No indemnified Party shall, except at its own cost, voluntarily make any
payment or incur any expense in connection with any such Claim or suit without
the prior written consent of the indemnifying Party. Each indemnified Party
shall permit the indemnifying Party to assume the defense and settlement of any
Claim. The obligations set forth in this Section 15.1(a) shall survive the
expiration or termination of this Agreement.
(b) In the event of any Claim which is not the subject of the indemnities
set forth in paragraph (a) above, including Claims related to products
liability, arising out of or resulting from the Development, Commercialization,
Manufacture, sale or clinical use of a Product but not arising out of or
resulting from either Party's negligence or misconduct, such Claim shall be [*]
(unless such Claim relates only to a particular Product in a particular Region
as to which one Party has Opted Out and not Opted Back In, in which case all
such costs shall be [*]). Each Party shall promptly give notice to the other
Party of any information from which it reasonably concludes an incident has
occurred that could give rise to a Claim covered by this Section 15.1(b), and in
the event such a Claim is made or a suit is brought, each Party shall assist the
other Party and shall cooperate in the gathering of information with respect to
the time, place, and circumstances, in obtaining the names and addresses of any
injured parties and available witnesses and with all reasonable requests of its
and the other Party's insurer or insurers. The failure to give the notice
referred to in the preceding sentence shall not relieve a Party of its cost
sharing obligations, except to the extent such failure prejudices the ability of
the Party to defend against such claim. Absent a conflict of interest between
the Parties, each Party shall be entitled to utilize its own counsel in
connection with any such Claim at its own cost and expense; in the event of such
a conflict, each Party shall be entitled to utilize its own counsel and the fees
and expenses of each such counsel shall be shared as provided above. [*] shall,
and [*] shall permit [*] to, assume the defense and settlement of any such Claim
(unless such Claim relates only to a particular Product in a particular Region
as to which [*] has Opted Out and not Opted Back In, in which case [*] shall
assume such defense); provided that [*] retains the right, at its own expense,
to be represented by its own counsel in connection with any such Claim. The
obligations set forth in this Section 15.1(b) shall survive the expiration or
termination of this Agreement. (c) The Parties acknowledge that drug
development, manufacturing and commercialization is risky and success is
uncertain. Neither Party shall be liable to the other for consequential,
punitive or other indirect damages for whatever reason in connection with
performance or non-performance of its obligations and activities under this
Agreement.
15.2 Assignment. This Agreement may not be assigned by either Party without
the prior written consent of the other Party, except in the case of an
assignment to a party which acquires all or substantially all of the business of
the assigning Party, whether by merger, sale of assets or otherwise. This
Agreement shall be binding upon and inure to the benefit of the assignor's
successors, legal representatives and assigns. In no event will any assignment
relieve the assigning Party of its obligations hereunder. No assignment shall
take effect until the assignee notifies the non-assigning Party of such
assignment and the assignee agrees to be bound by all the terms, conditions and
obligations of this Agreement.
15.3 Non-Waiver. The waiver by either of the Parties of any breach of any
provision hereof by the other Party shall not be construed to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself.
15.4 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws in effect in the State of New York, other than those
provisions governing conflicts of law. Both Parties hereby submit to the
exclusive personal jurisdiction of the state and federal courts sitting in New
York State.
15.5 Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement by one Party to the other are, for all purposes of Section 365(n) of
Title XI of the United States Code ("Title XI"), licenses of rights to
"intellectual property" as defined in Title XI. During the Term of this
Agreement each Party shall create and maintain current copies to the extent
practicable of all such intellectual property. If a bankruptcy proceeding is
commenced by or against one Party under Title XI, the other Party shall be
entitled to a copy of any and all such intellectual property and all embodiments
of such intellectual property, and the same, if not in the possession of such
other Party, shall be promptly delivered to it (a) upon such Party's written
request following the commencement of such bankruptcy proceeding, unless the
Party subject to such bankruptcy proceeding, or its trustee or receiver, elects
within thirty (30) days to continue to perform all of its obligations under this
Agreement, or (b) if not delivered as provided under clause (a) above, upon such
other Party's request following the rejection of this Agreement by or on behalf
of the Party subject to such bankruptcy proceeding. If a Party has taken
possession of all applicable embodiments of the intellectual property of the
other Party pursuant to this Section 15.5 and the trustee in bankruptcy of the
other Party does not reject this Agreement, the Party in possession of such
intellectual property shall return such embodiments upon request. If a Party
seeks or involuntarily is placed under Title XI and the trustee rejects this
Agreement as contemplated under 11 U.S.C. 365(n)(1), the other Party hereby
elects, pursuant to Section 365(n) of Title XI, to retain all rights granted to
it under this Agreement to the extent permitted by law.
15.6 Partial Invalidity. If and to the extent that any court or tribunal of
competent jurisdiction holds any of the terms or provisions of this Agreement,
or the application thereof to any circumstances, to be invalid or unenforceable
in a final nonappealable order, the Parties shall use commercially reasonable
efforts to reform the portions of this Agreement declared invalid to realize the
intent of the Parties as fully as practicable, and the remainder of this
Agreement and the application of such invalid term or provision to circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each of the remaining terms and provisions of this
Agreement shall remain valid and enforceable to the fullest extent of the law.
15.7 Notice. Any notice to be given to a Party under this Agreement shall
be in writing and shall be (i) personally delivered, (ii) delivered by an
internationally recognized overnight courier or (iii) delivered by certified
mail, postage prepaid, return receipt requested, to the Party at the address set
forth below for such Party:
To Aphton: To XOMA:
Aphton Corporation XOMA (US) LLC
▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Attention: Legal Department
Chief Executive Officer
With a copy (which shall With a copy (which shall not
not constitute notice) to: constitute notice) to:
White & Case LLP ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
1155 Avenue of the Americas ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or to such other address as to which the Party has given notice thereof. Such
notices shall be deemed given upon receipt.
15.8 Headings. The headings appearing herein have been inserted solely for
the convenience of the Parties hereto and shall not affect the construction,
meaning or interpretation of this Agreement or any of its terms and conditions.
15.9 No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
Neither Party warrants that any particular clinical or other studies will be
conducted, or the success of those studies if conducted.
15.10 Force Majeure. No failure or omission by the Parties hereto in the
performance of any obligation of this Agreement (other than a payment
obligation) shall be deemed a breach of this Agreement, nor shall it create any
liability, if the same shall arise from any cause or causes beyond the
reasonable control of the affected Party, including, but not limited to, the
following, which for purposes of this Agreement shall be regarded as beyond the
control of the Party in question: acts of nature; acts or omissions of any
government; any rules, regulations, or orders issued by any governmental
authority or by any officer, department, agency or instrumentality thereof;
fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot;
invasion; strikes; and lockouts or the like; provided that the Party so affected
shall use commercially reasonable efforts to avoid or remove such causes or
nonperformance and shall continue performance hereunder with the utmost dispatch
whenever such causes are removed.
15.11 Survival. Termination or expiration of the Agreement for any reason
shall be without prejudice to any rights which shall have accrued to the benefit
of either party prior to such termination or expiration, including damages
arising from any breach hereunder. In addition, Sections 7.3, 8.5(b), 8.6,
9.1(a)(iii), 10.1, 10.5, 10.6, 14.3, 14.4, 14.5 and 14.6 and Articles 1, 11, 12
and 15 shall survive any such termination or expiration.
15.12 Entire Agreement. This Agreement constitutes the entire understanding
between the Parties with respect to the subject matter contained herein and
supersedes any and all prior agreements, understandings and arrangements whether
oral or written between the Parties relating to the subject matter hereof.
15.13 Amendments. No amendment, change, modification or alteration of the
terms and conditions of this Agreement shall be binding upon either Party unless
in writing and signed by the Parties.
15.14 Independent Contractors. It is understood that both Parties hereto
are independent contractors and engage in the operation of their own respective
businesses, and neither Party hereto is to be considered the agent or partner of
the other Party for any purpose whatsoever. Neither Party has any authority to
enter into any contracts or assume any obligations for the other Party or make
any warranties or representations on behalf of the other Party.
15.15 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall constitute
one and the same instrument.
15.16 Conflicts. In the event that there is a conflict between the text of
this Agreement and any Schedule hereto, the text of this Agreement shall
control.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
XOMA (US) LLC APHTON CORPORATION
By: By:
---------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
Title: Senior Vice President and Title: President and Chief
Chief Operating Officer Executive Officer
SCHEDULE A
DETERMINATION OF OPERATING PROFIT/LOSS
1. Definitions. For the purpose of this Schedule A and where otherwise used
in this Agreement, the following terms shall have the meanings set forth below:
1.1 "Allocable Overhead" means costs incurred by a Party or for its account
with respect to the Product that are attributable to a Party's facilities and
occupancy costs, and its supervisory, information systems and purchasing
functions and that are allocated to company departments based on space occupied
or headcount or other activity-based method. Allocable Overhead shall not
include any costs attributable to general corporate activities, including, by
way of example, executive management, investor relations, business development,
legal affairs and finance.
1.2 "Allowable Expenses" means the sum of the following (without any item
being accounted for more than once):
(a) Commercialization Expenses;
(b) Cost of Goods Sold;
(c) Development Expenses;
(d) Distribution Expenses; and
(e) Sales and Marketing Expenses.
1.3 "Aphton Marketing/Development Partner Revenue" means all license fees,
royalties, milestone payments and other income or items of value (including
without limitation any premium received on an equity investment in Aphton, by
such Aphton Marketing/Development Partner) received by Aphton or from an Aphton
Marketing/Development Partner in respect of a Product, less any amounts
specifically incurred in connection with acquiring such income (e.g. attorneys'
fees to establish underlying agreements with an Aphton Marketing/Development
Partner or any potential Aphton Marketing/Development Partner) and less any
reasonable amounts of indemnity actually paid by Aphton under any agreements
with an Aphton Marketing/Development Partner.
1.4 "Commercialization Expenses" means all actual costs and expenses
(including labor) that are attributable to Commercialization activities with
respect to the Product incurred in accordance with the applicable
Commercialization Plan, including Allocable Overhead. Commercialization Expenses
shall include: (i) costs and expenses related to Post-Approval Studies related
to Product, (ii) infrastructure required to support and maintain patient/safety
surveillance as required by applicable Regulatory Authorities attributable to
Product, including medical staff support and pharmacovigilence systems and
procedures, (iii) out-of-pocket costs and expenses of maintaining Regulatory
Approvals in the Territory, (iv) royalty and other amounts paid by a Party to
Third Parties in connection with the use of Third Party technology related to
the use or sale of Product, (v) the costs of product recalls, product liability
claims, awards and damages which are not subject to the indemnities set forth in
Section 15.1, and Product liability insurance premiums, and (vi) costs and
expenses incurred in connection with pricing and reimbursement matters, managed
care and formulary management, and governmental affairs activities directly
relating to a Product.
1.5 "Cost of Goods Sold" or "COGS" means, to the extent that Product is
sourced from XOMA, the unit cost of manufacture of Product (i.e., direct
material and direct labor costs, plus manufacturing overhead fairly allocated to
Product, all calculated in accordance with generally accepted accounting
principles, consistently applied). Direct material costs means the actual costs
incurred in manufacturing or purchasing materials, including freight-in costs,
sales and excise taxes imposed thereon and customs duty and charges levied by
government authorities, and all costs of packaging components. Direct labor
costs means the actual cost of employees engaged in direct manufacturing
activities and quality control and quality assurance activities who are directly
employed in manufacturing and packaging Product. Overhead attributable to
Product will include a reasonable allocation of indirect labor (not previously
included in direct labor costs), a reasonable allocation of administrative
costs, and a reasonable allocation of facilities costs, all in accordance with
generally accepted accounting principles, consistently applied. Overhead will
not include corporate administrative overhead or plant start-up costs or costs
associated with excess capacity. All allocations will be based on the assumption
that XOMA's plant and equipment are utilized to their reasonable full capacity,
and all costings and allocations shall be consistent with the methods used for
such costings and allocations for XOMA's internal purposes. More specifically,
the components of Cost of Goods Sold shall comprise: (a) direct labor
(fermentation, purification personnel); (b) direct materials; (c) facility costs
(rent, property taxes, depreciation of leaseholds, utilities, spare parts,
maintenance contracts); (d) manufacturing equipment depreciation; (e)
allocations for information technology, document control, quality engineering,
purchasing, warehouse management, microbiology (with such allocations to be
based on estimated service levels, headcount or square footage occupancy
depending on the category); (f) indirect labor (manufacturing supervision); (g)
manufacturing department overhead (uniforms, materials used in plant
maintenance); (h) quality assurance/quality control; and (i) such other similar
costs as may be reasonably included in such definition.
To the extent that Product is sourced from a Third Party manufacturer, the
actual price paid by a Party to the Third Party for the manufacture, supply and
packaging of the Product shall be the Cost of Goods Sold.
1.6 "Development Expenses" means the reasonable internal and external costs
set forth in the Development Plans incurred by either Party in the Development
of a Product in accordance with each such Development Plan, including:
(a) all directly related out-of-pocket costs and expenses incurred,
including payments to investigators, contract research organizations, and
consultants, for preclinical studies, pharmacodynamic or pharmacokinetic
studies, molecular biology, toxicology studies, data management,
statistical design, programming and analysis, clinical studies, clinical
trial management, document preparation and review, subject recruitment and
reimbursement, insurance, contract negotiation, travel and BLA (including
chemistry and manufacturing controls) preparation;
(b) fees incurred in connection with filings with Regulatory
Authorities (including pharmacoeconomic studies and any other clinical
studies reasonably necessary for Regulatory Approval by relevant Regulatory
Authorities to sell such Product in each country);
(c) Manufacturing Development Expenses;
(d) costs incurred under any Third Party licenses entered into prior
to the Effective Date and disclosed to the other Party prior to the
Effective Date or in accordance with Section 4.7(b);
(e) the costs and expenses of clinical supplies, lab supplies, animals
and other direct charges for such efforts as set forth in the Development
Plan, including: (i) the Cost of Goods Sold of such supplies; (ii) costs
and expenses incurred to purchase and/or package comparator or combination
drugs or devices; and (iii) costs and expenses of disposal of clinical
samples;
(f) the costs of internal scientific, medical, technical, and or
managerial personnel engaged in such efforts (to the extent not accounted
for in other provisions of this definition, e.g., in Cost of Goods Sold
under clause (e)), which costs shall be determined based on the FTE Costs,
unless another basis is otherwise agreed upon by the Parties in writing;
and
(g) any other costs explicitly included in the budgets for the
Development Plans.
1.7 "Distribution Expenses" means a Party's reasonable costs and expenses
(including labor) related to storage and distribution of Product, including (i)
handling and transportation to fulfill orders, (ii) customer services, including
order entry, billing and adjustments, inquiry and credit and collection, (iii)
cost of facilities and labor utilized for the storage and/or distribution of the
Product and/or (iv) amounts paid to Third Parties in respect of storage and/or
distribution of Product, in an aggregate amount not to exceed three percent (3%)
of Net Sales.
1.8 "Joint Marketing/Development Partner Revenue" means all license fees,
royalties, milestone payments and other income or items of value (including
without limitation any premium received on an equity investment in Aphton or
XOMA, as the case may be, by such Joint Marketing/Development Partner) received
by Aphton or XOMA from a Joint Marketing/Development Partner in respect of a
Product, less any amounts specifically incurred in connection with acquiring
such income (e.g. attorneys' fees to establish underlying agreements with a
Joint Marketing/Development Partner or any potential Joint Marketing/Development
Partner) and less any reasonable amounts of indemnity actually paid by Aphton or
XOMA under any agreements with a Joint Marketing/Development Partner.
1.9 "Manufacturing Development Expenses" means, with respect to the
Development of a Product as set forth in the applicable Manufacturing Plan, the
reasonable internal costs of XOMA and the actual costs billed to XOMA or the
Collaboration by Third Parties, each in accordance with the budget set forth in
the applicable Manufacturing Plan, incurred in process development, process
validation, process improvement, formulation development, manufacturing scale-up
and recovery costs, the development of standard operating procedures, batch
records, and quality assurance and quality control methods and procedures, and
the production of qualification lots, all costs incurred in obtaining and
maintaining approval specifically for the manufacture of such Product for
commercial sale, and the costs for preparing, submitting, reviewing or
developing data or information for the purpose of a drug master file or for
submission to a Regulatory Authority to obtain or retain such approvals.
1.10 "Net Sales" means the gross amount invoiced for sales of a Product
sold by Aphton or its Affiliates, XOMA or its Affiliates, Aphton
Marketing/Development Partners, Joint Marketing/Development Partners or XOMA
Marketing/Development Partners, as the case may be, to Third Parties less
reasonable Sales Returns and Allowances. In the case of any sale of a Product
between or among Aphton, its Affiliates, Aphton Marketing/Development Partners,
Joint Marketing/Development Partners or XOMA Marketing/Development Partners, as
the case may be, Net Sales shall be calculated only on the value charged or
invoiced on the first arm's length sale thereof to a Third Party.
In the event a Product is sold as part of a Combination Product (as defined
below), the Net Sales from the Combination Product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net Sales
of the Combination Product, during the applicable reporting period, by the
fraction, A/(A+B), where A is the weighted average sale price of the Product
when sold separately in finished form in the country in which the Combination
Product is sold and B is the weighted average sale price of the other product(s)
included in the Combination Product when sold separately in finished form in the
country in which the Combination Product is sold, in each case during the
applicable royalty reporting period. In the event that such average sale price
cannot be determined for both the Product and all other product(s) included in
the Combination Product, Net Sales shall be mutually agreed by the Parties in
good faith based on the relative value contributed by each component. As used
above, the term "Combination Product" means any product that comprises the
Product and other active compounds and/or active ingredients and/or delivery
devices that are not themselves the Product.
In the case of pharmacy incentive programs, hospital performance incentive
program chargebacks and/or similar programs or discounts on "bundles" of
products, Aphton may discount, with notice to XOMA, the bona fide list price of
a Product by the average percentage discount of all Aphton products in a
particular "bundle," calculated as follows:
Average percentage discount = A X 100
on a particular "bundle" B
where A equals the total discounted price of a particular "bundle" of products,
and B equals the sum of the undiscounted bona fide list prices of each unit of
every product in such "bundle." Aphton shall provide XOMA documentation,
reasonably acceptable to XOMA, establishing such average discount with respect
to each "bundle." If a Product is not sold separately and no bona fide list
price exists for such Product, the parties shall negotiate in good faith an
imputed bona fide list price for such Product.
1.11 "Sales and Marketing Expenses" means all reasonable costs and expenses
(including labor) that are attributable to the distribution, sale, promotion and
marketing of a Product (including all pre-launch activities), calculated on a
fully burdened basis, including Allocable Overhead attributable thereto. Sales
and Marketing Expenses include the following:
"Advertising" means all media costs and expenses associated with Product
advertising including: production expense/artwork including set up; design and
art work for an advertisement; the cost of securing print space, air time, etc.
in newspapers, magazines, trade journals, television, radio, billboards, etc.
"Consumer Promotion" means all costs and expenses associated with programs
to promote a Product directly to the prescriber or end user, including expenses
associated with promoting the Product directly to the professional community
such as professional samples, professional literature, promotional material
costs, patient aids and detailing aids.
"Education" means all costs and expenses associated with professional
education with respect to a Product through any means, including articles
appearing in journals, newspapers, magazines or other media; seminars, and
conventions; symposia, advisory boards and opinion leader development
activities; and the costs and expense of medical liaisons.
"Market and Consumer Research" means all compensation and departmental
expenses for market and consumer research personnel and payments to Third
Parties related to conducting and monitoring professional and consumer
appraisals of existing, new or proposed competitors to the Product, such as
market share services (e.g., IMS data), special research testing and focus
groups.
"Marketing Management" means all product management and sales promotion
management compensation and departmental costs and expenses, including costs
associated with developing overall sales and marketing strategies (e.g., product
line or customer segment), as well as planning and programs for the Product. In
addition, payments to Third Parties in connection with trademark selection,
filing, prosecution and enforcement will be included in this category.
"Selling Expenses" means all costs directly associated with the efforts of
field sales representatives with respect to the Product to the extent approved
by the Steering Committee, including field sales force; field sales offices;
district, regional and home offices; staffs directly involved in the management
of and the performance of the selling functions; sales training and meetings;
call reporting and other monitoring/tracking activities, and payments to Third
Parties under contract sales and marketing agreements. The Parties shall agree
in advance on the rate(s) of reimbursement for Details.
"Trade Promotion" means all allowances given to retailers, brokers,
distributors, hospital buying groups, etc. for purchasing, promoting, and
distribution of the Product, including purchasing, advertising, new
distribution, and display allowances as well as free goods, wholesale allowances
and reasonable field sales samples.
1.12 "Sales Returns and Allowances" with respect to a Product, means (a)
ordinary and customary trade discounts actually allowed; (b) credits, rebates
and returns (including, but not limited to, wholesaler and retailer returns);
(c) payments and rebates directly related to the sale of Product accrued, paid
or deducted pursuant to agreements with managed care organizations or
governmental regulations; (d) freight, postage, insurance and duties paid; (e)
excise taxes, other consumption taxes, customs duties and compulsory payments to
governmental authorities whether or not specifically identified as such in the
invoice to the Third Party and (f) bad debt expense.
2. Marketing/Development Partners. In the event that Aphton exercises its
rights under Section 5.2 or Section 5.5, the definitions set forth in Section 1
of this Schedule A shall be interpreted to include, and the calculation
contemplated by Section 3 of this Schedule A shall include, revenues, costs and
expenses of the Aphton Marketing/Development Partner or Joint
Marketing/Development Partner, as applicable.
3. Operating Profit/Loss. Operating Profit/Loss shall be calculated by
determining, in the manner provided in Section 4 below, the sum of Net Sales of
Products and any Joint Marketing/Development Partner Revenues (excluding both of
the foregoing with respect to any Products as to which either Party has Opted
Out and not Opted Back In) and then subtracting the Allowable Expenses incurred
by Aphton and XOMA (and/or any Aphton Marketing/Development Partner or Joint
Marketing/Development Partner) in respect of Products (excluding any Products as
to which either Party has Opted Out and not Opted Back In) in the relevant time
period. For the avoidance of doubt, [*].
4. Quarterly Reporting, Reconciliation and Payments.
4.1 Within ten (10) days after the end of each calendar quarter, XOMA shall
submit a written report to Aphton setting forth in reasonable detail Allowable
Expenses incurred by or on behalf of XOMA in the Territory during such calendar
quarter. Within ten (10) days after the end of each calendar quarter, Aphton
shall submit a written report to XOMA setting forth in reasonable detail Net
Sales (including Sales Returns and Allowances), Joint Marketing/ Development
Partner Revenues and Allowable Expenses (including Cost of Goods Sold,
Distribution Expenses, Sales and Marketing Expenses and Commercialization
Expenses) incurred by or on behalf of Aphton (and/or any Aphton
Marketing/Development Partner or Joint Marketing/Development Partner) in the
Territory during such calendar quarter. Within ten (10) days of receipt of
XOMA's report, Aphton shall provide to XOMA a report setting forth in reasonable
detail the calculation of Operating Profit/Loss and the calculation of any net
amount owed by Aphton to XOMA or by XOMA to Aphton, as the case may be, in order
to ensure the sharing of Operating Profit/Loss specified in Section 7.1. For the
avoidance of doubt, the Parties intend that, after reconciliation, (A) Aphton
(and any Aphton Marketing/Development Partner) will, in aggregate, have paid or
received (as applicable) seventy percent (70%) of the Operating Profit/Loss; and
(B) XOMA (and any XOMA Marketing/Development Partner) will, in aggregate, have
paid or received (as applicable) thirty percent (30%) of the Operating
Profit/Loss.
The net amounts payable under this subsection shall be paid by Aphton or
XOMA, as the case may be, within thirty (30) days after the end of the relevant
calendar quarter.
In the event that any Party has Opted Out of a particular Region with
respect to a Product, the above reports, calculations and payments shall be
provided and carried-out on a Region-by-Region basis.
4.2 Costs and expenses included in Cost of Goods Sold, Distribution
Expenses, Sales and Marketing Expenses and Commercialization Expenses shall not
be double counted (i.e., any item of expense included in any expense category
shall not also be included in any other expense category).
4.3 Disputes regarding this Schedule A shall be submitted to the dispute
resolution procedures of Article 13.
SCHEDULE 1.1A
PHAGE DISPLAY LICENSE AGREEMENTS
License Agreement between [*] and XOMA Ireland Limited dated as of [*]
License Agreement between [*] and XOMA Ireland Limited dated as of [*]
License Agreement between [*] and XOMA Technology Ltd. dated as of [*]
Antibody Library License Agreement between [*] and XOMA Technology Ltd
dated as of [*]
License Agreement between [*] and XOMA Ireland Limited dated as of [*]
SCHEDULE 1.1B
TARGET ANTIGEN SEQUENCE
[*]
SCHEDULE 3.1(b)
ACCEPTANCE CRITERIA FOR PRODUCTS
[*]
SCHEDULE 4.2
INITIAL DEVELOPMENT PLAN
Duration of
Year Budget Activities Activity
[*] ~$ [*] [*] [*] months
[*] [*] months
[*] ~$ [*] [*] [*] months
[*] [*] months
[*] [*]
[*] [*] months
[*] [*] months
[*] ~$[*] [*] [*] months
[*] [*]
SCHEDULE 8.1
OPT-OUT MILESTONES
[*]