Bayer and Millennium entered into this Agreement on September 22, 1998 (the "Execution Date") to collaborate in the discovery and development of targets and assays to identify and develop small molecule drugs for the treatment of certain human diseases and conditions. The Agreement was amended on 9/2000, 12/2000 and 9/2001 (Amendments).
The primary objective of the Target Discovery Program is to identify and qualify a minimum of 225 Qualified Targets during the Program Term. The principal focus of the Target Discovery Program shall be the identification and qualification of CFA QTs, based upon a Target by Class Drug Discovery Approach.
"Target by Class Drug Discovery Approach" means a program for the discovery of targets for Small Molecules that has both of the following elements: (i) the ___(CON) identify Druggable Targets and/or support a Disease/Therapeutic Hypothesis for the Druggable Targets, and (ii) the use of ___(CON) identify or support a Disease/Therapeutic Hypothesis for the Druggable Targets.
"Discovery Program" means collectively (a) the discovery and development program to be undertaken by Millennium in collaboration with Bayer during the Program Term to identify Druggable Targets and Qualified Targets (the "Target Discovery Program"), and (b) the Assay Configuration Activities and Screen to Clinic Validation Activities to be undertaken by Bayer and Millennium (the "Post-Target Discovery Program").
"Qualified Target" or "QT" means a target for Small Molecule drug discovery identified or developed in the course of the Target Discovery Program that has all of the following characteristics: (a) is a Druggable Target that is ___(CON)(except in the case of Druggable Targets for ___(CON), in which case the gene may be ___(CON) in nature); (b) has a ___(CON); (c) is either (i) ___(CON), or (ii) ___(CON) or (iii) a Druggable Target that is otherwise ___(CON) as a Qualified Target; and (d) the use of such target in the manner contemplated in the Research Plan would not, at the time of its identification or annotation in the Target Discovery Program, ___(CON), unless such target is otherwise approved by the Bayer Program Director.
"CFA" or "Collaborative Focus Area" means one or more of the following human diseases and/or conditions:
a) hematological diseases and/or conditions (not including diseases and/or conditions excluded under subsections (b) and (c) below);
b) oncology, including, but not limited to, lung cancer, breast cancer, ovarian cancer and colon cancer, but excluding prostate cancer;
c) cardiovascular diseases and/or conditions, including, but not limited to, arrhythmia, abnormal hemodynamics, hypertension and the following diseases and/or conditions (included in this CFA as of the effective dates specified):(i) atherosclerosis (effective as of 6/9/1999), and (ii) thrombosis and excessive clotting (effective as of 6/30/2000); but excluding (x) restenosis occurring following arterial or venous mechanical or surgical intervention; and (y) cardiomyopathy of any origin;
d) pain (including all therapies for relieving pain as distinct from curing or treating the underlying diseases or conditions that cause pain);
e) viral diseases; provided that effective as of 10/31/2000 the only viral disease covered by this subsection (e) shall be human immunodeficiency virus (HIV); and
f) effective as of the 9/7/2001, urology, consisting of Urinary Incontinence and Benign Prostatic Hypertrophy (BPH).
"Urinary Incontinence" shall includes overactive/oversensitive bladder, overflow urinary incontinence, stress urinary incontinence caused by dysfunction of the bladder, urethra or central/peripheral nervous system regulating their functions, and all therapies for relieving urinary incontinence; and specifically excludes cystitis.
Effective as of 6/30/2000, osteoporosis and liver fibrosis shall cease to constitute CFAs.
"CFA QT" means a QT that has a Disease/Therapeutic Hypothesis in a CFA, ___(CON).
"___(CON) QT" means a QT that has a Disease/Therapeutic Hypothesis ___(CON) and that ___(CON).
"Small Molecule" means a compound that is non-peptidic or, if peptidic, is comprised ___(CON), including, without limitation, a compound that is a natural product or is developed using medicinal chemistry or combinatorial chemistry technologies.
"Small Molecule Drug" means any therapeutic agent, the active ingredient in which is a Small Molecule, that (a) is identified on the basis of its interaction with a Qualified Target in a Small Molecule screening assay, or (b) is designed or developed using medicinal chemistry, combinatorial chemistry, rational design techniques or other techniques to interact with a Qualified Target. The term "Small Molecule Drug" shall not include any pharmaceutical product in which the active ingredient is (i) a Protein, (ii) any vaccine, (iii) an antibody (whether polyclonal or monoclonal, multiple or single chain, whole or fragment), (iv) a nucleic acid sequence encoding an expressed gene, or (v) a nucleic acid or ribozyme that acts as an antisense code blocker.
"Druggable Target" means (a) a nucleic acid sequence and/or the Protein it encodes, where there is reasonable evidence (based upon bioinformatics analysis) to suggest that the Protein is of a class that (i) is reasonably believed to be capable, given commercially reasonable efforts over a ___(CON) period, of being developed into a Configured Assay, and (ii) is reasonably believed to be capable, given commercially reasonable efforts, of being modulated by Small Molecules identified through high throughput screening, and (b) any other class of nucleic acid sequences and/or the associated encoded Proteins that is determined to be a Druggable Target by mutual agreement of the Program Directors. Druggable Targets under subsection (a) consist of the following classes: ___(CON) (each, a "Druggable Target Class").
"Disease/Therapeutic Hypothesis" means a scientifically reasonable association of a Druggable Target with a disease/therapeutic area where such association is based upon scientific evidence derived from gene expression data of appropriate tissue distribution and, subject to scientifically reasonable efforts (as mutually agreed upon by the Program Directors), disease tissue, as further described in the Research Plan. Without limiting the generality of the foregoing, the gene expression data upon which a Disease/Therapeutic Hypothesis is based shall include ___(CON).
"Protein" means a compound composed of a variety of amino acids joined by amide linkages, including allelic variants thereof and post-translationally modified variants thereof (e.g., glycosylated Proteins), provided that a Protein shall not include any peptide that is comprised ___(CON).
"Novel Protein" means the nucleic acid sequence of the full length coding sequence supplied by Millennium where such sequence ___(CON).
"Unrecognized Protein" means ___%(CON) of the sequence provided by Millennium is ___(CON), but nevertheless ___(CON) sequence by Millennium ___(CON) of the gene as a ___(CON) and such ___(CON). Such may occur where the ___(CON) or where the Program Directors agree that the ___(CON).
"Configured Assay" means an assay embodying a Selected QT that has been appropriately adapted into a cell-free, membrane, or whole-cell microtiter-based format that will identify specific Small Molecules that can selectively interact with the Selected QT.
"Affiliate" means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party. "Control" shall mean (a) in the case of corporate entities, direct or indirect ownership of at least 40% of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least 40% of the equity interest with the power to direct the management and policies of such non-corporate entities.
"Dropped Genes" shall mean each gene for which activities in the Discovery Program have been terminated prior to such gene reaching QT status, based on a determination ___ (CON) in the Discovery Program, it being understood that a gene that is temporarily on hold shall not be a Dropped Gene.
B. Research Period:
"Program Term" means from the Effective Date to the last day of the Fifth Contract Year, subject to extension.
"Effective Date" means the later of the HSR Clearance Date and the Equity Closing Date.
"Contract Year" means the period beginning on the Effective Date and ending on October 31, 1999 and each succeeding 12 month period thereafter.
Bayer shall have the option to extend the Program Term by written notice no later than the end of the Fifth Contract Year if, at the end of the Fifth Contract Year, at least 225 QTs (excluding Failed QTs—see Section I.J.) have not been entered into the Selectable QT Pool, to continue until the earlier of (a) such time as an aggregate of 225 QTs have been entered into the Selectable QT Pool, or (b) ___(CON).
Per the 9/2001 Amendment, for the purposes of providing a pool of potential available QTs for Selected QTs for which Assay Configuration Activities are being undertaken as of the expiration of the Fifth Contract Year, a limited number of QTs ("Excess QTs") shall remain in the QT Pool (the "Excess Pool") for a period ending on the earlier of (x) ___ (CON) after the date of the final selection by Bayer from the Selectable QT Pool, or (y) ___ (CON) (the Post-Term Period").
The number of QTs in the Excess Pool shall be equal to (A) the number of Selected QTs for which Assay Configuration Activities are being undertaken as of the expiration of the Fifth Contract Year, multiplied by (B) a fraction, (i) the numerator of which is the total number of Failed QTs (as defined below) through the end of the Fifth Contract Year, and (ii) the denominator of which is the total number of Selected QTs through the end of the Fifth Contract Year.
C. Cost Sharing & Reimbursement Basis:
[Program Payment Schedule CON].
The Program Payments shall be adjusted as follows:
(i) In the event that ___(CON) are applicable as of the first day of a Contract Quarter on which a Program Payment is due, such Program Payment shall ___(CON);
(ii) In the event that ___(CON) are applicable as of the first day of a Contract Quarter on which a Program Payment is due, such Program Payment shall be ___(CON);
(iii) In the event that, following the making of the first Program Payment,___(CON), and such termination or modification occurs (or such demonstration is made) in the middle of a Contract Quarter, then the amount of the reduction in the Program Payment for such Contract Quarter shall be proportionately adjusted by multiplying the amount of the ___(CON).
The following general limitations shall be applicable with respect to the entry of QTs into the QT Pool:
(i) Unless otherwise agreed by Bayer, in each Contract Year at least ___(CON) of the QTs entered into the QT Pool shall be CFA QTs.
(ii) In each Contract Year, Millennium may, in its discretion, propose that up to ___%(CON) of the QTs entered into the QT Pool be ___(CON), provided that such QTs must have a Disease/Therapeutic Hypothesis in ___(CON) another disease area approved by the Bayer Program Director.
(iii) No QT may be entered into the QT Pool if it is a ___(CON) unless agreed upon by Bayer.
(iv) ___ (CON). Unless otherwise agreed by the Program Directors, Millennium shall have filed a patent application covering and claiming ___ (CON) at or prior to the designation of ___ (CON) as a QT.
The Program Directors shall, on an ongoing basis during the Program Term, review the Druggable Targets identified in the Target Discovery Program and determine and designate by mutual agreement whether a target constitutes a QT, a Disease/Therapeutic Hypothesis or a Hypotheses associated with each such QT, and whether such QT is an Above Quota QT. Each such Above Quota QT shall remain in the Above Quota Pool until the first to occur of the following: selection by Bayer, and transfer to the Selectable QT Pool. If neither conditions occurs ___(CON) it first enters the Above Quota Pool, such above Quota QT shall constitute a Waived QT
The "Primary Pool" shall be, the ___(CON) "oldest" QTs (or such fewer number as shall then be in the Selectable QT Pool), with the balance, if any, remaining in the Holding Pool. The date that a QT enters the Selectable QT Pool shall be the basis for determining which QTs are "oldest" for purposes of including QTs in the Primary Pool.
Once a QT enters into the Primary Pool, it shall remain in the Primary Pool for a period of ___(CON) (or for such shorter period of time until such selection by Bayer). Each QT in the Primary Pool not selected by Bayer within ___(CON) shall be a "Waived QT". As a QT exits the Primary Pool (either due to selection by Bayer or because it becomes a Waived QT), the then oldest QT in the Holding Pool shall enter the Primary Pool and become subject to the ___(CON) selection period. There shall be no limits as to the amount of time that a QT shall remain in the Holding Pool during the Program Term, provided that Failed QTs shall remain in the Holding Pool for the period provided below.
Bayer shall have the right to select a maximum of 225 QTs from either the Primary Pool, the Holding Pool and/or the Above Quota at any time during the Program Term. QTs selected by Bayer pursuant to this subsection constitute "Selected QTs".
If, despite reasonable commercial efforts, a Selected QT is not able to be developed into a Configured Assay within ___(CON) if a Party requests the other Party to assist it in ___(CON), of the Selected QT Designation Date for such QT (a "Failed QT"), Bayer shall be entitled either to retain rights to such Failed QT or make a replacement selection from the Selectable QT Pool (a "Replacement QT") within ___(CON) after such Selected QT becomes a Failed QT.
For purposes of determining the number of QTs Bayer may select during the Program Term, (i) a Failed QT shall not be counted towards the maximum number of selections Bayer is able to make, unless Bayer elects to retain it or re-selects it after its return to the Holding Pool, and (ii) a Replacement QT shall count towards such maximum number assuming such Replacement QT can be developed into a Configured Assay.
Millennium shall retain all rights to use all Waived QTs for all purposes. Bayer and Millennium shall determine by mutual agreement, on a Selected QT-by-Selected QT basis, which Party has the optimal expertise/resources to convert a CFA QT into a Configured Assay. The Program Directors shall allocate development responsibility equitably between the Parties and in a manner reasonably necessary at any given time to enable Millennium to satisfy its overall commitment to configure the number of Configured Assays specified below. If the Parties are unable to agree, the matter shall be resolved by the Bayer Program Director. If a Party responsible for developing a Configured Assay is unable to do so, it shall report to the other Party on its efforts and the reasons for such inability.
Millennium shall make available sufficient assay configuration resources to configure ___(CON) Configured Assays over the term of the Discovery Program, provided that in the event that Millennium is unable to configure an assay for any of the Selected QTs for which it is the designated developer, Millennium shall make available assay configuration resources to configure an additional Configured Assay (not to exceed an additional ___(CON) such Configured Assays).
Millennium shall provide additional resources (approximately ___(CON) in the First Contract Year and an average of approximately ___(CON) in each of the Second through Sixth Contract Years) necessary to engage in (i) additional validation of CFA QTs selected by Bayer for which lead compounds have been discovered and/or (ii) additional validation or optimization of the lead compounds targeted to CFA QTs (collectively, "Screen to Clinic Validation Activities"). Examples of Screen to Clinic Validation Activities include, without limitation, high throughput gain or loss of function studies in cell-based systems, profiling of compounds targeted to CFA QTs and the development of animal models (e.g., through transgenic, knockout and gene delivery methods) to further validate the CFA QTs and/or lead compounds targeted to them.
For the purpose of determining which Selected QTs shall become Returned QTs, each Selected QT shall pass through a series of development stages or become a Returned QT:
(a) First Stage. After a Selected QT has been developed into a Configured Assay, such Selected QT shall become a first stage QT ("First Stage QT") for a maximum of ___(CON). During this First Stage Period, Bayer shall ___(CON) after the expiration of the First Stage Period for each First Stage QT, either Bayer shall designate such First Stage QT as a second stage QT (a "Second Stage QT") or Bayer will relinquish its exclusive rights with respect to such QT (a "Returned QT"). Bayer may not designate more than ___(CON) First Stage QTs to become Second Stage QTs.
(b) Second Stage. For a maximum of ___(CON) from the time of its designation as a Second Stage QT, Bayer shall ___(CON) after the expiration of the Second Stage Period for each Second Stage QT, either Bayer shall designate such Second Stage QT as a third stage QT (a "Third Stage QT"), or such Second Stage QT shall be designated by Bayer as a Returned QT. Bayer may not designate more than ___(CON) Second Stage QTs to become Third Stage QTs.
(c) Third Stage. For a maximum of ___(CON), Bayer shall ___(CON) after the expiration of the Third Stage Period for each Third Stage QT, either the Development Candidate associated with such Third Stage QT shall be taken into further development and be retained by Bayer, or such Third Stage QT shall be designated by Bayer as a Returned QT. Bayer may not designate more than ___(CON) Third Stage QTs to become Development Candidates.
Bayer shall notify Millennium of any decision it makes with respect to discontinuing permanently the activities required to be undertaken for any First, Second or Third Stage QT within ___(CON) of such decision, in which instance such QT shall immediately be designated as a Returned QT.
Any activities undertaken by either Party with respect to a Returned QT following its designation as such shall not be considered to be part of the Discovery Program or the Bayer Development Program.
Per the First Amendment, Failed QTs shall be considered to have entered the Selectable QT Pool upon entrance of certain QTs (CON) in the Selectable QT Pool; provided that in lieu of such provision, Replacement QTs for Failed QTs shall not be considered to have entered the Selectable QT Pool.
"Additional Bayer Focus Areas" means any of the following diseases and/or conditions: ___(CON).
"Selectable QT Pool" means the pool of QTs available for selection by Bayer which shall not include the Above Quota Pool. The Selectable QT Pool shall consist of a Primary Pool and a Holding Pool.
"Above Quota QT" means a QT that, at the time it is entered into the QT Pool, it exceeds one or more of the quotas for CFAs, Druggable Target Class and/or ___(CON).
"Above Quota Pool" means the pool of Above Quota QTs available for selection by Bayer.
"Strategic Project" means a "strategic project" designated by Bayer as such in accordance with Bayer’s internal decision-making processes and guidelines.
"Development Candidate" means a "development candidate" designated by Bayer as such in accordance with Bayer’s internal decision making processes and guidelines.
"FTE" means a full time equivalent person year (consisting of a total of 1,880 hours per year) of scientific or technical work on or directly related to Screen to Clinic Validation Activities as part of the Post-Target Discovery Program.
[Per Millennium’s 12/31/98 annual report, additional payments to Millennium could total up to $335 million, composed of $219 million in ongoing license and research program funding and up to $116 million in performance payments for delivery of targets.
Total payments amount $468 million.]
D. Upfront Payment:
$33,400,000
E. Benchmark Amounts:
Bayer shall pay $___(CON) within ___(CON) following the entry of the ___(CON).
Bayer shall pay the following success fees to Millennium based upon entry of Qualified Targets into the Selectable QT Pool: [CON].
Success fees shall be deemed to be earned on the last business day of the month during which a QT enters into the Selectable QT Pool, subject to the following adjustments:
(i) if $___(CON) success fees are earned during the First Contract Year (i.e., more than ___(CON) QTs enter into the Selectable QT Pool), such fees shall ___(CON);
(ii) if of more than $___(CON) is earned prior to the end of the Second Contract Year, then the excess of shall ___(CON); (iii) if more than $___(CON) is earned prior to the end of the Third Contract Year, then the excess shall ___(CON); and (iv) if more than $___(CON) in success fees is earned prior to the end of the Fourth Contract Year, then the excess shall ___(CON). For example, if at the end of the Third Contract Year, a total of ___(CON) QTs have been entered into the Selectable QT Pool, the aggregate success fees earned by Millennium would be $___(CON).
The success fees payable by Bayer shall be adjusted as follows: In the event that QTs are entered into the Selectable QT Pool during the Extension Term, the success fees payable for such QTs shall be in an amount equal to a percentage of the success fee otherwise payable, as provided in the following table:
First Contract Quarter, ___%(CON);
Second Contract Quarter, ___%(CON);
Third Contract Quarter, ___%(CON); and
Fourth Contract Quarter, ___%(CON).
Adjustments Based on the Number of QTs Entering Selectable QT Pool:
(A) In the event that the aggregate number of QTs entered into the Selectable QT Pool in the First and Second Contract Years is less than ___(CON), the success fees payable with respect to such QTs shall be reduced by a percentage factor (not to exceed ___%(CON)) and the number of QTs entered into the Selectable QT Pool in the First and Second Contract Years. For example, if ___(CON) QTs are entered into the Selectable QT Pool in the First and Second Contract Years, there would be a ___%(CON) reduction in the success fees ___(CON). If ___(CON) QTs are entered into the Selectable QT Pool in the First and Second Contract Years, there would be a ___%(CON) reduction in the success fees ___(CON), and the total success fees payable for those ___(CON) QTs would be ___(CON).
(B) QTs entered into the Selectable QT Pool in the Third Contract Year shall be reduced by a percentage factor (not to exceed ___%(CON)) and the number of QTs entered into the Selectable QT Pool during the Third Contract Year, if such number is less than ___(CON), provided that no such adjustment shall be made if the total number of QTs entered into the Selectable QT Pool from the Effective Date to the end of the Third Contract Year is ___(CON) or more.
(C) The success fees payable with respect to QTs entered into the Selectable QT Pool in the Fourth Contract Year shall be reduced by a percentage factor (not to exceed ___%(CON)) and the number of such QTs entered into the Selectable QT Pool during the Fourth Contract Year, if such number is less than ___(CON), provided that no such adjustment shall be made if the total number of QTs entered into the Selectable QT Pool from the Effective Date to the end of the Fourth Contract Year is ___(CON) or more.
(D) The success fees payable with respect to QTs entered into the Selectable QT Pool in the Fifth Contract Year shall be reduced by a percentage factor (not to exceed ___%(CON)) and the number of such QTs entered into the Selectable QT Pool during the Fifth Contract Year, if such number is less than ___(CON), provided that no such adjustment shall be made if the total number of QTs entered into the Selectable QT Pool from the Effective Date to the end of the Fifth Contract Year is ___(CON) or more.
(E) For purposes of this subsection (c), Failed QTs shall not be considered to have been entered into the Selectable QT Pool.
Overpayments Due to Success Fee Adjustment:
(A) Millennium shall repay to Bayer the difference necessary within 30 days after the amount of such reduction is determined, provided that if Bayer has not yet received payment, it may reduce the amount of any success fees otherwise owed to Millennium by the amount of such reduction.
(B) If Bayer makes a success fee payment in respect of a QT that is subsequently determined to be a Failed QT, Bayer does not elect to retain such Failed QT and there is no QT in the Selectable QT Pool available for selection as a Replacement QT, then ___(CON).
Per 9/2000 Amendment, success fees related to certain ___ (CON) QTs were waived by Millennium.
Per the 9/2001 Amendment, Bayer shall pay Millennium a success fee of $___ (CON) for each Configured Assay developed on or after 5/1/2001, instead of success fess in consideration of QTs entered into the Selectable QT Pool; provided that the maximum amount of success fees payable by Bayer to Millennium shall be subject to the periodic maximum limitations (all CON).
F. Technology Acquisition Fees:
None
G. Payment Schedule:
Quarterly. Either Party shall pay interest to the other Party on the aggregate amount of any payments that are not paid on or before the date such payments are due under this Agreement at a rate per annum equal to the lesser of the London Interbank Offering Rate of interest plus 1%.
H. Budgets:
None
I. Reimbursement Start Date:
Signing
J. Regulatory Filings:
For Small Molecule Drugs that have reached Development Candidate status, Bayer shall provide Millennium with the opportunity to be informed of and comment on the development, clinical and regulatory activities related to all such Small Molecule Drugs, provided that Bayer shall have the right to make all determinations relating to research, development, clinical and regulatory issues relating to Small Molecule Drugs.
K. Special Capital Requirements
No Provision
L. Patent Ownership:
Each shall own its own Know-How and inventions; joint inventions shall be owned jointly on an undivided one-half interest by Bayer and Millennium, provided that either Party may only sell, license or otherwise transfer such jointly-owned invention without the consent of the other Party in a manner that is consistent with the license granted.
If the Parties are unable to resolve the inventorship dispute, mutually acceptable outside patent counsel not regularly employed by either Party shall resolve such dispute.
Millennium shall disclose to Bayer all Millennium Know-How specified in the Research Plan, and all Millennium Know- How not specified in the Research Plan which Millennium reasonably believes to be pertinent to the Discovery Program.
M. Patent Filing Costs:
Each party shall be responsible for, and bear the expense of, preparing, filing, and prosecuting its own patents and patent applications; provided that responsibility for joint inventions shall be determined by agreement of the Parties on a case-by-case basis.
The responsibility for preparing, filing and prosecuting patent applications and for maintaining patents shall be as follows: (i) for QTs and Millennium Configured Assays - Millennium; (ii) for Bayer Configured Assays - Bayer; and (iii) for Configured Assays that are configured jointly by the Parties - determined by agreement of the Parties on a case-by-case basis.
The responsibility for preparing, filing and prosecuting patent applications and for maintaining patents covering inventions pertaining to Bayer Royalty Products shall be the responsibility of Bayer and covering inventions pertaining to Millennium Royalty Products shall be the responsibility of Millennium.
N. Patent Defense Costs:
Bayer shall have the sole right and responsibility, and shall bear all costs, to institute legal proceedings against any third party believed to be infringing the intellectual property rights pertaining to Bayer Configured Assays, Configured Assays configured jointly by the Parties and Bayer Royalty Products. Any recoveries in excess of Bayer’s costs shall be deemed to be Net Sales; provided, however, that the royalty payment be based on a royalty rate of ___%(CON).
Millennium shall have the sole right and responsibility, and shall bear all costs, to institute legal proceedings against any third party believed to be infringing the intellectual property rights related to QTs, Configured Assays that are neither Bayer Configured Assays, Configured Assays configured jointly by the Parties nor Millennium Royalty Products. Any recoveries in excess of Millennium’s costs shall be deemed to be Net Sales and shall contribute to the Annual Sales Volume for applicable Millennium Royalty Products, on a product-by-product basis, provided, however, that the royalty payment shall be based on a royalty rate of ___%(CON).
O. 3rd-Party Patents:
Each Party shall be entitled to deduct ___%(CON) of Related Third Party Payments; provided that in no event shall a deduction reduce any quarterly royalty payment by more than ___%(CON). Any deduction hereunder, or portion thereof, that is rendered not usable pursuant to the final clause of the immediately preceding sentence may be carried forward for use in a future period.
Royalties shall be calculated on the Net Sales by such Affiliates or sublicensees to an independent third party.
"Related Third Party Payments" means payments to a third party to license patents covering such third party’s technology if, in the absence of such license, the licensed use by Bayer of the specific technology licensed by Millennium would or is likely to, in the reasonable judgment of the Party seeking such license from such third party, infringe such patents.
P. Non-Compete Provisions:
To further the goals of the Target Discovery Program, Millennium ___(CON) with academic, research or other non-commercial institutions with the of identifying additional CFA QTs or qualifying CFA QTs identified in the Target Discovery Program; in such cases, Millennium ___(CON) to the discoveries relevant to this Agreement made pursuant to such agreements ___(CON). The above provision is not intended to apply to the following:
(i) the identification, discovery and/or development of Small Molecule drugs ___(CON) that have been ___(CON) by third parties (other than third parties making such ___(CON) in collaboration with Millennium or any of its Affiliates) as having a Disease/Therapeutic Hypothesis relevant to a CFA, provided that the foregoing shall not apply to any target that is a Selected QT;
(ii) the identification of targets for Small Molecule drug discovery for CFAs if (A) Millennium’s involvement in the activity results from Millennium’s acquisition of or by a third party (by merger or otherwise) which, prior to such acquisition or merger, was already engaged in such activity; and (B) ___(CON) such activity, if such activity is of the same type as that being undertaken by the Parties in the course of the Target Discovery Program or ___(CON);
(iii) the identification, discovery, development and/or practice of ___(CON);
(iv) the identification, discovery and/or development of any therapeutic product that is not a Small Molecule drug, including any pharmaceutical product in which the active therapeutic substance is ___(CON); and
(v) the development of health care or patient management information systems and the provision of health care or patient management information services.
Per the 9/2001 Amendment, Millennium agrees that, from and after the Execution Date, it shall not enter into any agreements, or transfer Know-How or any other assets to any of its Affiliates, that would, in either case, restrict or limit its or Bayer's rights or ability to conduct the Discovery Program, such as an agreement not to engage in the types of target discovery activities contemplated by the Research Plan.
Q. Publications:
Each Party shall first submit to the other Party an early draft of all publications at least 60 days prior to submission for publication. If the other Party informs such Party that its proposed publication could be expected to have a material adverse effect on any Patent Rights or Know-How of such other Party, then such Party shall delay such proposed publication sufficiently long to permit the timely preparation and first filing of patent application(s) on the information involved. Millennium shall not permit a publication that includes information relating to a Bayer Development Candidate without the prior approval of Bayer.
R. Core Technology:
The leaders of the Parties’ respective technology development activities for drug discovery and development may meet annually to discuss their plans for technology development activities to be conducted in the coming year. Each Party shall be responsible for its own costs associated with any collaborative technology development project and both Parties shall share the right to use any resulting collaboratively developed technologies for its own purposes.
During the Program Term, Millennium shall maintain and make available adequate technical resources and personnel to perform its obligations under the Discovery Program in accordance with the Research Plan, including the software necessary to perform such obligations.
S. Cancellation Amounts:
None
T. Termination:
For material breach, the non-breaching party may terminate this agreement upon 60 days written notice.
Material failure by Millennium to maintain and make available adequate technical resources and personnel to perform its obligations under the Discovery Program in accordance with the Research Plan shall be considered to be a material breach of this Agreement.
By Bayer if:
(a) by the end of the Second Contract Year either (i)at least ___(CON) QTs have not been entered into the Selectable QT Pool, or (ii) at least ___(CON) QTs that are ___(CON) have not been entered into the Selectable QT Pool or the Above Quota Pool, provided that this section (ii) shall not be applicable if at least ___(CON) QTs have been entered into the Selectable QT Pool; and
(b) by the end of the Third Contract Year, either (i) at least ___(CON) QTs have not been entered into the Selectable QT Pool, or (ii) at least ___(CON) QTs that are ___(CON) have not been entered into the Selectable QT Pool or the Above Quota Pool, provided that this section (ii) shall not be applicable if at least ___(CON) QTs have been entered into the Selectable QT Pool.
If a Change of Control (see Section I.V.) occurs during the Program Term, the other Party may, at its sole discretion, elect to terminate this Agreement.
U. Product Reversion:
See Section I.C. The licenses shall survive termination upon continued compliance with obligations such as the royalty and reporting provisions.
V. Change in Control:
Neither Millennium nor Bayer may assign this Agreement in whole or in part without the consent of the other, except if such assignment occurs in connection with the sale or transfer of all or substantially all of the business and assets.
"Change of Control" means (i) a merger or consolidation of a Party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent at least ___%(CON) of the combined voting power of the surviving entity immediately after such merger or consolidation; (ii) the sale of all or substantially all of the assets of a Party; or (iii) any "person", "affiliates" or "associates", becoming the beneficial owner of ___%(CON) or more of the combined voting power of the outstanding securities of a Party.
W. Options/Other:
If Millennium intends to ___(CON) receive marketing rights to Small Molecule Drugs discovered through the use of one or more Returned QTs, Millennium shall ___(CON) as to whether it has ___(CON) shall include information reasonably necessary ___(CON) with respect to such ___(CON). If, during the ___(CON), the Parties shall ___(CON) on such terms as may be mutually agreeable. If (a) ___(CON) in discussing such ___(CON) or (b) ___(CON) but the Parties are unable to reach mutual agreement with respect to such ___(CON), Millennium shall be free, during the ___(CON) commencing as of the end of the ___(CON)) or the end of the ___(CON), to enter into a transaction relating to such ___(CON). If, prior to the end of the Fifth Contract Year, (a) a collaboration arrangement with respect to a ___(CON) Area between Millennium and one of its commercial collaborative partners as of the Effective Date terminates or expires and (b) Millennium wishes to begin negotiations with another commercial third party(ies) with respect to a relationship to undertake a broad-based program with the goal of identifying and qualifying targets for use in Small Molecule drug discovery in such ___(CON) Area, ___(CON).
If (i) ___(CON) in discussing such ___(CON) or (b) ___(CON) but the Parties are unable to reach mutual agreement with respect to ___(CON), Millennium shall be free, during the ___(CON) commencing as of the end of the ___(CON) or the end of the___(CON), to enter into a collaborative research and development arrangement relating to such ___(CON).
Millennium shall have the right to conduct internal research and development activities within the CFAs (as well as collaborate thereon with academic, research or other non-commercial institutions) with respect to Dropped Genes during the Program Term; prvided, however, that Bayer shall have the right, at any time during the Program Term, to designate Dropped Genes for inclusion in the Discovery Program if Bayer can present New Scientific Data relating to such Dropped Gene. In the event that Millennium has, prior to the date of such designation, developed a Configured Assay with respect to such Dropped Gene and initiated high throughput screening, Bayer shall, within 15 days after Millennium's disclosure relating to the development status of such Dropped Gene, either select the Dropped Gene as a QT or elect to maintain its status as a Dropped Gene at all times thereafter.
2. Product License(s)
A. License Holder/Type:
Millennium grants to Bayer and its Affiliates an exclusive license in the Territory, under Millennium’s rights to Millennium Know-How and Millennium Patent Rights, (i) to research, develop, make and use Selected QTs (___(CON) and Configured Assays that embody or are based on such Selected QTs, to the extent necessary to discover or develop Bayer Royalty Products and (ii) to make, have made, import, use, have used, offer for sale, sell and have sold, in the Field, Bayer Royalty Products that are discovered or developed through the use of Selected QTs ___(CON), subject, in the case of both subsections (i) and (ii), to any applicable field restrictions or exclusivity limitations in the case of any Selected QTs that are ___(CON).
With respect to each Returned QT, the rights of Bayer and Millennium to such Returned QT shall be as follows:
(a) Millennium grants to Bayer and its Affiliates a non-exclusive license, with the right to sublicense, to make, have made, import, use, have used, offer for sale, sell and have sold, in the Field, Bayer Royalty Products that are discovered or developed through the use of Returned QTs;
(b) Millennium shall retain all rights in all fields (including the Field) to each Returned QT (and, if applicable, the Millennium Configured Assay that embodies or is based on such Returned QT), subject to Bayer’s non-exclusive rights.
"Restricted Target" means a target to which Millennium is prevented from granting to Bayer the exclusive right under Millennium Know-How or Millennium Patent Rights to exploit Small Molecule Drugs identified using such target for the treatment of all human diseases and conditions. A target is NOT a Restricted Target if (i) ___(CON); and (ii) Millennium is not prevented (by contract or otherwise) from granting exclusive rights under Millennium Know-How or Millennium Patent Rights to exploit Small Molecule Drugs identified using the target for the treatment of all human diseases and conditions.
"Bayer Royalty Products" means all Small Molecule Drugs discovered or developed by Bayer, its Affiliates or sublicensees.
B. Product Field of Use:
"Field" means therapeutic and prophylactic treatment of all human diseases and conditions.
C. Territory Splits:
“Territory” means worldwide.
D. Royalty Rate:
The royalty rate payable on the Net Sales in a country of a Bayer Royalty Product that (i) is developed through the use of a ___(CON) and (ii) is approved for commercial sale for use in the treatment of a ___(CON) but is not so registered and approved for use in the treatment of any CFA shall be ___%(CON) of such Net Sales; provided, however, that in the event that such Bayer Royalty Product is subsequently registered and approved for commercial sale in such country by the appropriate regulatory authority for use in the treatment of any CFA, then (A) Millennium shall provide Bayer ___%(CON) and the amount of the ___(CON) paid to Millennium ___(CON), and (B) the royalty rate payable on all subsequent Net Sales.
Millennium royalties on Net Sales of Bayer Royalty Products at the following rates: [CON].
The Base Royalty rate shall be applicable to Net Sales of all Bayer Royalty Products except (a) Bayer Royalty Products discovered or developed through the use of ___(CON), (b) Bayer Royalty Products discovered or developed through the use of ___(CON), and (c) Bayer Royalty Products discovered or developed through the use of ___(CON) and registered and approved for commercial sale in a country by the appropriate regulatory authority for use in the treatment of a ___(CON). The Reduced Royalty set forth above shall be applicable to Net Sales of Bayer Royalty Products in subsections (a) and (b) in the preceding sentence. The royalty rate of ___%(CON) shall be applicable to Net Sales of Bayer Royalty Products in subsection (c).
Line extensions, new formulations and Combination Products in which the same active ingredient is present shall be the same Bayer Royalty Product as the original Bayer Royalty Product.
Millennium shall pay to Bayer royalties on Net Sales of Millennium Royalty Products at the following rates: [CON].
Per the 9/2001 Amendment, with respect to Bayer Royalty Products derived from ___ (CON) accepted by Bayer as QTs prior to May 1, 2001 ("Bayer NAP Royalty Products"), the Base Royalty shall be adjusted ___ (CON).
"Millennium Royalty Products" means all Small Molecule Drugs that have as their active therapeutic substance (a) a lead structure provided by Bayer to Millennium pursuant to Millennium’s exercise of the option (CON), or (b) any modified version of such lead structure derived therefrom.
E. Right to Sublicense:
Yes. Each such sublicense shall incorporate the following provisions of this Agreement: The Non-Suit covenant with respect to the use of Returned QTs, royalty reports and accounting, Confidentiality, and product liability indemnification whereby Bayer agrees to indemnify Millennium.
F. Term/Patent Life:
The obligation to make royalty payments shall commence on the date of the First Commercial Sale of a Bayer Royalty Product in a given country and shall continue with respect to Net Sales of such Bayer Royalty Product sold in such country for a period of ___(CON), provided, however, that such obligation to make royalty payments shall continue for an additional period ___(CON) of the date of such First Commercial Sale with respect to a Bayer Royalty Product that contains an active ingredient, the use or sale of which is covered by a Patent Right in such country that precludes the use or sale of such active ingredient by others in such country.
Upon the expiration of Millennium and Bayer’s obligations to pay royalties, the licenses granted herein shall be fully paid up.
G. Adv/Min Royalty & Diligence Requirement
The Parties acknowledge that Millennium is currently a party to an agreement with ___(CON) certain areas of ___(CON) which contains restrictions relating to Millennium’s undertaking of genomic research activities designed primarily to yield biological molecules likely to be useful as targets or as pharmaceutical products in ___(CON) based upon (i) mechanisms of ___(CON), (ii) ___(CON) mechanisms ___(CON) and (iii) ___(CON).
Millennium agrees that it shall not enter into any agreements, or transfer Know-How or any other assets to any of its Affiliates, that would, in either case, restrict or limit its or Bayer’s rights or ability to conduct the Discovery Program.
Millennium shall use commercially reasonable efforts to generate and enter into the Selectable QT Pool a minimum of 225 QTs over the course of the Program Term.
Each Party agrees to use commercially reasonable efforts to undertake the responsibilities assigned to such Party and to make available to the other Party those resources. Each Party agrees to use commercially reasonable efforts to carry out all work done in the course of the Discovery Program and the Bayer Development Program.
Bayer shall use reasonable commercial efforts to undertake the activities relating to each First, Second and Third Stage QT that is not a Returned QT, provided that, Bayer may discontinue or suspend such activities if Bayer determines that it is commercially reasonable to do so.
H. Royalty Accounting:
"Net Sales" means with respect to a Royalty-Bearing Product, the gross amount invoiced by a Party, its Affiliates and/or its sublicensees on sales or other dispositions of the Royalty-Bearing Product to unrelated third parties, less the following items:
(a) ___(CON) with respect to such sales;
(b) ___(CON) with respect to the production, sale, delivery or use of the Royalty- Bearing Product ___(CON);
(c) ___(CON); and
(d) ___(CON) (such as ___(CON) and any other ___(CON) of the gross amount invoiced.
In the event the Royalty-Bearing Product is sold as part of a Combination Product, 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 (as defined in the standard Net Sales definition), during the applicable royalty reporting period, by the fraction, A/A+B, where A is the average sale price of the Royalty-Bearing Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Royalty- Bearing Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Royalty-Bearing Product and all other products(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the fair market value of the Royalty-Bearing Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product. In such event, the selling Party shall in good faith make a determination of the respective fair market values of the Royalty-Bearing Product and all other pharmaceutical products included in the Combination Product, and shall notify the other Party of such determination and provide the other Party with data to support such determination. The other Party shall have the right to review such determination and supporting data, and to notify the selling Party if it disagrees with such determination. If the other Party does not agree with such determination and if the Parties are unable to agree in good faith as to such respective fair market values, then such matter shall be referred to the Executive Officers.
The Program Directors shall provide spreadsheets for each calendar month containing: (i) the QTs entered into the Selectable QT Pool and the Above Quota Pool; the success fees invoiced or paid; statistical information concerning Assay Configuration Activities relating to Selected QTs; statistical information concerning Screen to Clinic Validation Activities; and the QTs that have been designated by Millennium as ___(CON); and (ii) each First Stage QT that has reached the end of the First Stage Period, and whether such First Stage QT has become a Second Stage QT or a Returned QT; each Second Stage QT that has reached the end of the Second Stage Period, and whether such Second Stage QT has become a Third Stage QT or a Returned QT; each Third Stage QT that has reached the end of the Third Stage Period and whether such Third Stage QT has become a Development Candidate or a Returned QT; and the number of First, Second and Third Stage QTs that have become Returned QTs cumulatively since the Effective Date.
If a review reveals an underpayment of royalties equal to or greater than 5% of the royalty amount that was otherwise due, the Royalty Recipient shall be entitled to have the Royalty-Paying Party pay all of the costs of such review.
"Combination Product" means any pharmaceutical product which comprises the Royalty-Bearing Product and other active compounds and/or active ingredients.
I. Patent-Royalty Tie-In:
NA
J. Options/Other:
At Millennium’s option, Bayer will grant Millennium and its Affiliates a non-exclusive license in the Territory, under Bayer’s rights in Bayer Returned QT Know-How and Bayer Returned QT Patent Rights to the extent necessary:
(A) to research, develop, make and use any or all of the following:
(1) the Bayer Configured Assay;
(2) if a Second Stage QT is designated as a Returned QT, the most promising lead structure under development by Bayer, and the optimization history of such lead structure and the data pertinent to critical optimization decisions that relate to such lead structure (the "Second Stage Information"), including without limitation, information on the major structural templates that were evaluated by Bayer and relevant SAR data; and
(3) if a Third Stage QT is designated as a Returned QT, the "Third Stage Information", ___(CON), related pharmacological data (including toxicology and ___(CON) information) and information related to chemical synthesis; provided, however, that, Bayer shall not be obligated to grant any such license with respect to the most promising lead structure if such lead structure is under development by Bayer as a Development Candidate or later stage drug candidate outside of the Bayer Development Program, in which event Bayer shall be obligated to grant such a license with respect to the next most promising lead structure that is not a Development Candidate.
(B) to make, have made, import, use, have used, offer for sale, sell and have sold Small Molecule Drugs.
Millennium’s option under subsection (A)(1) above shall apply to all such assays ___(CON). With respect to subsections (A)(2) or (A)(3) above, Bayer shall also transfer to Millennium as soon as practicable at least ___(CON) of such most promising (or such next most promising, if applicable) lead structure, quantities of the applicable reagents. Millennium may exercise the option by providing written notice to Bayer within ___(CON) after a Selected QT becomes a Returned QT.
Millennium shall have the right to enter into sublicenses relating to the license granted in Section (B).
In the event that Millennium exercises the option in Section (A) or (B), with respect to a Returned QT, ___(CON). In the event that Millennium exercises the option in Section (A)(2) or (3), Millennium shall pay royalties to Bayer on Millennium Royalty Products.
3. Manufacturing & Supply
A. Right Holder/Type:
All by Bayer
B. Bulk/Dosage Form:
All forms
C. Territory:
Worldwide
D. Reimbursement Basis:
NA
E. Proc. Dev. Terms:
NA
F. Clinical Use Manufacturing:
NA
G. Shipment Terms:
NA
H. Financing:
NA
I. Escape Clause:
NA
J. Product Liability:
Each Party covenants not to sue the other Party (or its Affiliates) for using a Returned QT to screen for and/or develop Small Molecule Drugs.
Millennium [Bayer] covenants not to sue Bayer [Millennium] for the making, developing, importing, exporting, using, offering for sale or selling of a Required Pharmacogenomic Assay associated with a Bayer Royalty Product [Small Molecule Drug].
Each Party will hold the other harmless from any claim relating to any breach or personal injury from any product or service offered by it, or its licensees or collaborators.
K. Options/Other:
None
4. Collaboration Management
A. Representation:
Bayer and Millennium shall each appoint a Program Director. The Bayer Program Director shall be resident at Millennium for at least three months of each Contract Year.
The Program Directors shall appoint appropriate Project Teams, consisting of representatives from Bayer and Millennium, in the following areas: (i) the design of searches of the Database and the identification, based upon a review of such searches, of potential Druggable Targets (the "Selection Project Team"); (ii) review of transcript profiling data; (iii) the identification of targets for each disease within the CFA and the use of such targets to develop Small Molecule Drugs in such CFA; and (iv) such other areas as may be agreed upon by the Program Directors.
A "Joint Steering Committee" shall be comprised of (i) three senior executives of each Party, and (ii) the Program Directors.
B. Quorum:
None
C. Basis of Actions:
Decisions of the Joint Steering Committee shall be made by majority vote. The goal of all decision making shall be to achieve consensus.
D. Meetings:
The Joint Steering Committee shall meet at least semi-annually during the Discovery Program and the Bayer Development Program, alternating between Massachusetts and Germany.
E. Disagreements:
If a matter cannot be resolved by a Project Team on a consensus basis, it shall be referred to the Program Directors for resolution then to the Joint Steering Committee and, then to the Executive Officers. If the Executive Officers are unable to resolve a matter and the issue relates to a Designated Scientific Issue, the Parties shall resolve that matter through the use of an expedited mediation process. The decision of the mediator(s) shall be binding.
If the Executive Officers are unable to resolve a matter, it shall be finally resolved by arbitration conducted in England under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). The arbitrators shall rule on each disputed issue within 90 days and shall issue a written decision of the ruling. The arbitrators shall not have the authority to award punitive damages.
Any decision or award of the arbitrators shall be final,conclusive, and binding on the Parties. The Parties exclude any right of application or appeal to the English or other courts in connection with any question of law arising in the arbitration or in connection with any award or decision made by the arbitrators, except as is necessary to recognize or enforce such award or decision.
F. Buyout/Windup:
NA
G. Options/Other:
None
5. Equity Investment
A. Type of Security:
$96,600,000 of Millennium Common Stock. [See Section V.B.]
B. Pricing:
4,957,660 shares @ $19.485 per share (which reflects the greater of (i) 115% of the average daily closing price of a share of the Millennium's Common Stock over the period from March 1, 1998 to August 31, 1998 or (ii) 100% of the closing price of a share of the Millennium's Common Stock on September 21, 1998).
C. Board Seat:
Millennium shall permit a Representative (which Representative shall be designated by Bayer) to attend two regular meetings of the Millennium’s Board of Directors each year during the Program Term (one such meeting to be held between January and June of each year, and the second such meeting to be held between July and December of each year).
D. Research Tie-Ins:
None
E. Options & Rights:
Millennium shall not be required to effect more than two demand registrations and shall be included in piggyback registration.
Prior to the second anniversary of the Closing, Bayer will not, directly or indirectly, sell, transfer or otherwise dispose of any Shares (except to any Affiliate of Bayer).
After the second anniversary of the Closing and prior to the expiration of the Program Term, Bayer will not, directly or indirectly, sell, transfer or otherwise dispose of, in any one calendar year, more than 2,500,000 Shares.
After the second anniversary of the Closing and prior to the expiration of the Program Term, if Bayer proposes to sell any Shares other than pursuant to a registration statement under the Securities Act, Millennium shall have a right of first negotiation.
The limitation on share transfer shall terminate if Millennium enters into a merger agreement.
So long as Bayer has not sold more than 1,000,000 Shares, if Millennium proposes the issuance of New Securities, Millennium shall offer to Bayer a Pro Rata Share of such New Securities.
Prior to the third anniversary of the Closing, Bayer and its Affiliates will not, directly or indirectly, acquire any securities of Millennium.
6. Signatories
A. For Drug Company:
Unsigned
General Manager Business Group Pharmaceuticals
B. For Biotech Company:
Steven H. Holtzman
Chief Business Officer
Key: CON Confidential Treatment granted by SEC; material omitted from public filings. UKN Unknown NA Not applicable
