1. Research & Development |
| A. Scope of the Agreement: |
Kirin and Amgen shall establish Kirin-Amgen Inc. ("JV") which shall engage in the development, manufacture, production and sale of erythropoietin (EPO) Products for human therapeutic use in the Field of Activity and to otherwise exploit such EPO Technology for commercial purposes by whatever means including the license or sale of such EPO Technology by mutual agreement of Kirin and Amgen.
In connection with the founding of the JV and changes made thereafter, the following agreements and amendments were filed with the SEC:
1) Shareholders' Agreement;
2) Assignment and License Agreement of EPO Technology ("EPO Assignment Agreement");
3) Development and Supply Agreement whereby Amgen and Kirin conduct further development work with respect to the improvement and commercial development of the EPO Technology ("EPO Project");
4) Articles of Incorporation;
5) Bylaws;
6) Kirin/Kirin-Amgen Services Agreement whereby Kirin shall provide management support and administrative services to the JV;
7) Amgen/Kirin-Amgen Services Agreement whereby Amgen shall provide management support and administrative services to the JV;
8) Kirin/Kirin-Amgen License Agreement with respect to rights to EPO in Japan;
9) Amgen/Kirin-Amgen License Agreement with respect to rights to EPO in the US;
10) Amendment No.1 to Shareholders' Agreement (3/85);
11) Amendment No.2 to Shareholders' Agreement (7/85) whereby the parties agree to expand the Project to include pluripotent human granulocyte colony stimulating factor ("G-CSF");
12) Amendment No.3 to Shareholders' Agreement (12/85) whereby (i) Kirin shall be granted an exclusive license in Japan, and (ii) Amgen shall be granted an exclusive license in the US with respect to EPO and/or G-CSF (PPO) Products;
13) Research, Development, Technology Disclosure and License Agreement for G-CSF in 1/86;
14) Assignment and License Agreement entered in 10/86 for the transfer of the G-CSF Technology;
15) Amendment No.4 to the Shareholders' Agreement entered in 10/86 as the Commercial Production System for G-CSF has been established;
16) Amendment No.5 to the Shareholders' Agreement entered in 12/86 as the parties have made certain agreements regarding non-dialysis indications for EPO;
17) G-CSF European License Agreement entered in 12/86, whereby Amgen shall be granted an exclusive license to develop, manufacture and sell G-CSF Products for the territory of Europe;
18) Research, Development, Technology Disclosure and License Agreement: Granulocyte/ Machrophase Colony Stimulating Factor ("GM-CSF") in 3/87, whereby Amgen shall immediately commence a research and development program on the GM-CSF molecule ("GM-CSF Project"); and
19) Amendment Agreement entered in 6/88, whereby the parties amended the terms of transfer of GM-CSF Technology.
[An Amendment Agreement was entered related to megakaryocyte growth and development factor ("MGDF") in 1995. This Amendment was not filed with the SEC.]
Field of Activity shall mean the areas of development, manufacture, production and worldwide commercial sale of EPO, including EPO pharmaceuticals, ___(CON).
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| B. Research Period: |
The term of the EPO Project is not specified. The G-CSF Project shall be for two years.
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| C. Cost Sharing & Reimbursement Basis: |
[Per Amgen's Annual Reports, Amgen was paid at specified amounts not to exceed its actual costs plus a stated percentage of such costs. Amgen received the following R&D payments from the JV and Kirin:
Amount From Project
FY85 $2.1M JV EPO
FY86 $3.7M JV EPO
FY87 $4.9M JV EPO & G-CSF
$1.7M Kirin G-CSF
FY88 $10.4M JV EPO & G-CSF
$0.8M Kirin GM-CSF
FY89 $14.3M JV EPO & G-CSF
$1.8M Kirin GM-CSF
FY90 $12.6M JV G & GM-CSF
$2.5M Kirin GM-CSF
Total $54.8M]
The JV shall reimburse Amgen and Kirin for any and all expenditures made by them in connection with the ___(CON but EPO Project).
Per the 1/86 Agreement, Kirin shall fund the R&D Project (with respect to G-CSF Technology) up to an amount not to exceed $___(CON). Per the 12/86 Amendment, the JV shall not reimburse either Kirin or Amgen for non-dialysis expenses relating to the EPO project.
Per the G-CSF European License Agreement, Amgen shall reimburse the JV ___(CON) related to European clinical trial expenses within 90 days after December 31st of each year.
Per the 3/87 Agreement, Amgen shall bear the cost of GM-CSF Project until the occurrence of the Trigger Event (definition CON).
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| D. Upfront Payment: |  |
See Section V.A with respect to the initial capital contributions to the JV.
Per the 3/85 Amendment, (i) the JV shall pay Amgen $___(CON), (ii) Kirin shall pay the JV $___(CON), and (iii) Amgen shall pay the JV $___(CON).
Per the 1/86 Agreement, Kirin shall pay Amgen $___(CON) in consideration of Amgen's full disclosure of Amgen's G-CSF Technology.
Per the 3/87 Agreement, Kirin shall pay Amgen $___(CON) in consideration of Amgen's full disclosure of its GM-CSF work up through the date of signing.
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| E. Benchmark Amounts: |
[Per Amgen's Annual Reports, Amgen received the following milestone payments from the JV and Kirin:
Amount From Project
FY85 $1.0M JV EPO
FY86 $2.0M Kirin G-CSF
FY87 $3.3M Kirin G-CSF
FY88 $0.9M Kirin GM-CSF
FY89 $3.0M Kirin GM-CSF
With respect to G-CSF European License, Amgen paid the following milestone payments to JV: $1.5M in FY87; $1M in FY88; and $3.5M in FY90. As of 3/31/90, all milestone payments under this agreement have been earned.]
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| F. Technology Acquisition Fees: |
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| G. Payment Schedule: | |
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| H. Budgets: | |
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| I. Reimbursement Start Date: |
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| J. Regulatory Filings: | |
All by each party in its respective Territory.
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| K. Special Capital Requirements |
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| L. Patent Ownership: | |
All EPO & G-CSF Technologies shall be transferred to the JV (see Section I.R).
All G-CSF Technology disclosed by Amgen and developed by Kirin and/or Amgen pursuant to the G-CSF Project shall be owned jointly by Kirin and Amgen.
G-CSF Technology shall mean (i) the gene, host vector systems, and G-CSF producing cells (including microorganisms) used for G-CSF expression, and all proprietary technical information, technology, know-how and patents related to G-CSF, natural sources of PPC and any G-CSF materials purified from natural sources, and (ii) the Commercial Production System for the manufacture of G-CSF Products.
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| M. Patent Filing Costs: | |
The JV shall, in consultation with Amgen and Kirin, file such patent applications as are reasonably required to ___(CON).
Per the G-CSF European License Agreement, the JV shall pay the reasonable cost and expenses incurred to file, prosecute and maintain any applications and patents of the G-CSF Technology which Amgen shall reasonably require the JV to file, prosecute or maintain in the Territory; provided, that, to the extent an application or patent includes subject matter not covering the manufacture, use and sale of G-CSF Products, Amgen shall pay an equitable pro rata share of such expense.
Each party shall pay the JV's reasonable costs and expenses incurred to file, prosecute and maintain any patent applications and patents ___(CON but in its territory); provided, that, to the extent an application or patent includes subject matter not covering the manufacture, use and sale of products in the Field of Activity, the other party shall pay an equitable pro rata share of such expense.
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| N. Patent Defense Costs: |
The JV shall have the right but not the obligation to bring, defend and maintain any appropriate suit or action for infringement ___(CON).
Amgen [Kirin] shall have the right to bring, defend and maintain any appropriate suit or action involving infringement ___(CON).
Per the G-CSF European License Agreement, Amgen shall have the right to bring, defend and maintain any appropriate suit or action involving infringement of any patent of the G-CSF Technology covering only the making, use or sale of G-CSF Products.
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| O. 3rd-Party Patents: | |
Per the 12/85 Amendment, the JV shall bear and pay for royalty obligations to third parties with respect to asserted ownership rights to ___(CON) Technology which would otherwise required from Amgen and/or Kirin. It is agreed that the right to reach agreement with a third party respecting this matter shall be handled by the shareholder(s) whose territories are affected.
Per the G-CSF European License Agreement, the parties agree that the JV and Amgen shall equally assume responsibility, for the payments of any and all royalties due Sloan-Kettering Cancer Center pursuant to the agreement dated 2/12/86, for sales of G-CSF Products in Europe.
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| P. Non-Compete Provisions: |
Kirin and Amgen may engage in or possess an interest in other business venture of any nature or description, independently or with others, other than ___(CON).
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| Q. Publications: | |
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| R. Core Technology: | |
Simultaneously with the Closing of the JV, all steps shall be taken as may be reasonably required to put JV in actual possession and operating control of the EPO Transferred Technology.
Per the 10/86 Agreement, Amgen shall transfer and assign to the JV, perpetually and irrevocably all of its right, title and interest in and to the G-CSF Transferred Technology (definition CON), including to assignment of the patent applications, and any invention disclosed therein, and intangibles to be recorded with the US Patent and Trademark Office.
Per the 3/87 Agreement, ownership of the GM-CSF Technology shall belong to Amgen until the occurrence of the Trigger Event. Upon the occurrence of the Trigger Event, Amgen shall transfer on a perpetual, exclusive and royalty-free basis all GM-CSF Technology to the JV.
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| S. Cancellation Amounts: |
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| T. Termination: | |
The JV shall be dissolved:
a) by mutual consent of the parties; or
b) by either party upon the bankruptcy or uncured material breach of the other party.
The G-CSF Project may be terminated:
a) ___(CON);
b) upon the establishment of the Commercial Production System and the transfer and/or license of G-CSF Technology to the JV;
c) by mutual agreement that the Commercial Production System cannot be established due to factors which include budgetary and/or competitive constraints; or
d) ___(CON).
[See also Sections I.V & IV.F]
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| U. Product Reversion: | |
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| V. Change in Control: | |
The Development Agreement may not be assigned by any, except with the prior written consent of the other parties.
Upon the occurrence of any of the following events with respect to Kirin and Amgen: (i) any transfer of substantially all of its assets, (ii) any transfer of more than 50% of the duly issued and outstanding stock, (iii) a liquidation, dissolution, merger, consolidation or reorganization, or (iv) any insolvency or bankruptcy proceeding, the other party shall have the right to purchase all of the shareholding interest in the JV which is held by such party (see Section IV.F).
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| W. Options/Other: | |
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2. Product License(s) |
| A. License Holder/Type: |
All provisions regarding the grant of license are CON, but per Amgen's Annual Reports, Kirin and Amgen have each been granted a license by the JV for the development, manufacture and sale of EPO Products, in Japan with respect to Kirin, and in the US with respect to Amgen.
Per the 3/85 Amendment, the JV shall (i) purchase from Amgen the worldwide rights to ___(CON) as an expansion of the Field of Activity and (ii) license the same to Kirin for the territory of Japan and to Amgen for the territory of the US. [Per Amgen's Annual Reports, Amgen and the JV entered into an agreement in 6/85, whereby the JV purchased the rights to certain technology for use in human diagnostic and research applications in specified geographic areas of the world.]
G-CSF European License Agreement entered in 12/86, whereby Amgen shall be granted an exclusive license to develop, manufacture and sell G-CSF Products for the territory of Europe.
Per the 6/88 Amendment, Amgen shall transfer rights to its GM-CSF Technology as follows:
a) exclusive rights in and to the GM-CSF Technology for Japan ("Kirin Territory") shall be transferred to Kirin;
b) exclusive rights in and to the GM-CSF Technology for the US and Europe ("Amgen Territory") shall be transferred to Amgen; and
c) exclusive rights in and to the GM-CSF Technology for the entire world other than the Kirin Territory and Amgen Territory shall be transferred to the JV.
Per the 3/87 Agreement, Amgen shall grant Kirin ___(CON) license to all GM-CSF Technology for use in the research, development, manufacture and marketing in the ___(CON).
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| B. Product Field of Use: | |
Human therapeutics uses, primarily in kidney dialysis (with respect to EPO).
G-CSF Products shall mean products with respect to all indications of G-CSF Technology (definition CON).
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| C. Territory Splits: | |
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| D. Royalty Rate: | |
50/50 allocation of all profits of the JV.
Kirin and Amgen shall each pay to the JV a royalty of ___%(CON but 5% per Ortho sublicense agreement) on Sales Value of EPO Products in its respective territory.
Per the 12/98 Amendment, neither Kirin nor Amgen shall have the obligation to pay to the JV any royalties with respect to sales of EPO for non-dialysis indications.
Per the G-CSF European License Agreement, Amgen shall pay to the JV a royalty on Sales Value of G-CSF Products which are sold by Amgen in the Territory.
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| E. Right to Sublicense: | |
To a single manufacturer in addition to Kirin and Amgen for the account of the JV outside of the Amgen Territory and Kirin Territory. No sublicense shall be granted without the prior written consent of Amgen.
[Per the Development & License Agreement in 9/85, the JV granted to Ortho Pharmaceuticals an exclusive license to make, have made, use and sell EPO Products worldwide except Japan and China, and excluding Amgen's Field of Use (kidney dialysis) in the US (see separate contract analysis).]
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| F. Term/Patent Life: | |
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| G. Adv/Min Royalty & Diligence Requirement | |
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| H. Royalty Accounting: | |
Definition
Kirin shall have the right to sudit at its own expense.
Royalty payments, when overdue, shall bear interest at a rate equal to 1% above the prime rate as announced by Security Pacific National Bank.
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| I. Patent-Royalty Tie-In: | |
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| J. Options/Other: | |
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3. Manufacturing & Supply |
| A. Right Holder/Type: | |
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| B. Bulk/Dosage Form: | |
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| C. Territory: | |
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| D. Reimbursement Basis: |
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| E. Proc. Dev. Terms: | |
Per the 1/86 Agreement, Kirin and Amgen shall jointly develop the Commercial Production System for G-CSF within 2 years from the effective date. If the Commercial Production System is not established within such 2 year period, the parties shall mutually discuss further development and funding. If the Commercial Production System is established, the parties shall each license and/or transfer on a perpetual, exclusive and royalty-free basis all G-CSF Technology to the JV. Additionally, Amgen shall promptly grant an exclusive and royalty-free license to JV of Amgen's Core Technology.
Amgen's Core Technology shall mean Amgen's proprietary technical information technology, know-how and patents, other than the G-CSF Technology, which is to be utilized by the parties.
Per the 10/86 Amendment, the parties have acknowledged that the Commercial Production System has been established by Amgen. The parties shall effect the transfer of all right, title and interest in and to the G-CSF Technology as previously agreed. Amgen shall receive 2/3 of the unexpended proposed second year funding as the Commercial Production System has been established.
Commercial Production System shall mean an established in vivo assay system and commercially viable expression system to produce sufficient materials to commence pre-clinical and clinical trials.
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| F. Clinical Use Manufacturing: |
Per the 10/86 Amendment, Amgen shall (i) supply the JV (and Kirin) with adequate preclinical G-CSF (G-CSF) materials, (ii) continue its G-CSF (G-CSF) Technology transfer to the JV (and Kirin) its standard operating procedures ("SOP"), strain and standard samples, all relating to the G-CSF (G-CSF) Technology.
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| G. Shipment Terms: | |
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| H. Financing: | |
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| I. Escape Clause: | |
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| J. Product Liability: | |
During the EPO Project, the JV indemnifies Kirin and Amgen. Kirin and Amgen shall indemnify each other and the JV for any losses arising from (i) EPO License and (ii) G-CSF License in its respective Territory.
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| K. Options/Other: | |
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4. Collaboration Management |
| A. Representation: | |
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| B. Quorum: | |
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| C. Basis of Actions: | |
By majority, except for such actions as to which a higher than majority vote is required pursuant to the provision of the Shareholders' Agreement, the Articles, the Bylaws or applicable law.
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| D. Meetings: | |
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| E. Disagreements: | |
Any dispute shall be settled by arbitration according to the rules of the AAA.
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| F. Buyout/Windup: | |
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the JV, the holders of Class B Common Stock shall be entitled to receive from the assets of the JV, cash equal to $1.00 per share, plus 3/4 of the aggregate interest earned by the JV on such amount from the date of purchase of such shares to the date of liquidation.
After the occurrence of any Conversion Event, Kirin and Amgen either (a) shall jointly appoint an investment banking firm, or (b) failing this joint action, each separately shall designate an investment banking firm and, the designated investment banking firm shall designate an investment banking firm which shall make the final determination of value ("Neutral Investment Banker"), who shall render its appraisal of the fair market value of shares being purchased, which appraisal shall be binding and conclusive.
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| G. Options/Other: | |
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5. Equity Investment |
| A. Type of Security: | |
The initial capital of JV shall consist of a total of 12 million shares of Class A Common Stock and 12 million shares of Class B Common Stock. Kirin subscribes for 12 million shares of Class B Common Stock, and Amgen subscribes for 12 million shares of Class A Common Stock.
The shares of Class B Common Stock shall be converted into shares of Class A Common Stock on a share-for-share basis when the JV produces biologically active EPO at such levels as agreed upon by the holders of all the shares of Class A Common Stock and Class B Common Stock.
Per the 10/86 Amendment, during the period 2/1/87-3/31/87, Kirin and Amgen shall each contribute the capital of the JV $1 million in exchange for 1 million additional shares.
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| B. Pricing: | |
The subscription price for all shares shall be one dollar per share, which shall be payable as follows:
1) Kirin shall pay its full subscription price of $12 million in cash;
2) CON but Amgen shall contribute $4 million in cash plus the technology for producing EPO per Amgen's Annual Reports.
In the event that the initial capital contributions to the JV are insufficient to fund the activities until such time as all approvals (governmental or otherwise) have been obtained for the manufacture and sale of EPO Products in the Field of Activity in the Kirin Territory and Amgen Territory, then Kirin and Amgen may agree to make additional capital contributions to the JV.
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| C. Board Seat: | |
3 members of the Board of Directors from each party. In the event of a default in the payment of any additional capital contributions, the authorized number of members shall be increased to 7 and 4 of such members shall be nominees of the non-defaulting party.
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| D. Research Tie-Ins: | |
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| E. Options & Rights: | |
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6. Signatories |
| A. For Drug Company: | |
Shinkichi Kubo
Managing Director
Tatsuhiko Kaneko
Vice President
Noboru Miyadai
General Manager
Yasushi Yamamoto
Managing Director
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| B. For Biotech Company: |
George B. Rathmann
President
Gordon M. Binder
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