C OLLABORATION A GREEMENT

B Y AND B ETWEEN

PG X H EALTH , LLC

AND

C OMBINATO R X , I NC .

E FFECTIVE ON A UGUST 11, 2009

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T ABLE OF C ONTENTS
				P AGE
ARTICLE 1		DEFINITIONS		1
1.1		“Affiliate”		1
1.2		“Allowable Expenses”		2
1.3		“ATL”		2
1.4		“Claim”		2
1.5		“Co-Development Notice”		2
1.6		“Co-Development Option”		2
1.7		“Collaboration”		2
1.8		“Collaboration Know-How”		2
1.9		“Collaboration Information”		2
1.10		“Collaboration Patents”		2
1.11		“Collaboration Technology”		2
1.12		“Commercialization”		3
1.13		“Commercialization Plan”		3
1.14		“Compound”		3
1.15		“Confidential Information”		3
1.16		“Control”		3
1.17		“Cost of Goods Sold”		3
1.18		“CRXX Claims”		3
1.19		“CRXX Indemnitees”		3
1.20		“CRXX Know-How”		3
1.21		“CRXX Patents”		4
1.22		“CRXX Technology”		4
1.23		“Damages”		4
1.24		“Development”		4
1.25		“Development Plan”		4
1.26		“Diligent Efforts”		4
1.27		“Distribution Expenses”		5
1.28		“European Union” or “EU”		5
1.29		“Executive Officer”		5
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
1.30		“Existing Confidentiality Agreement”		5
1.31		“FDA”		5
1.32		“FD&C Act”		5
1.33		“Field”		5
1.34		“First Commercial Sale”		5
1.35		“FTE”		5
1.36		“Governmental Authority”		5
1.37		“Information”		6
1.38		“Initial Development Plan”		6
1.39		“JAMS Rules”		6
1.40		“Joint Invention”		6
1.41		“Joint Patent”		6
1.42		“JSC”		6
1.43		“License Commercialization Report”		6
1.44		“License Development Report”		6
1.45		“Major EU Country”		6
1.46		“Marketing Authorization Application” or “MAA”		6
1.47		“Marketing Expenses”		6
1.48		“Marks”		6
1.49		“NDA”		6
1.50		“Net Sales”		6
1.51		“Partnering Agreement”		8
1.52		“Partnering Revenue”		8
1.53		“Patent Expenses”		8
1.54		“PGx Claims”		8
1.55		“PGx Indemnitees”		8
1.56		“PGx Know-How”		8
1.57		“PGx Patents”		8
1.58		“PGx Technology”		9
1.59		“Phase 2 Clinical Trial”		9
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
1.60		“Phase 3 Clinical Trial”		9
1.61		“Phase 4 Clinical Trial”		9
1.62		“Post-Launch Product R&D Expenses”		9
1.63		“Pre-Launch Commercialization Costs”		9
1.64		“Product”		10
1.65		“Product Infringement”		10
1.66		“Product Profit”		10
1.67		“Publication”		10
1.68		“Recall Expenses”		10
1.69		“Regulatory Approval”		10
1.70		“Regulatory Authority”		10
1.71		“Regulatory Expenses”		10
1.72		“Regulatory Materials”		10
1.73		“Retained Field”		10
1.74		“Royalty Term”		11
1.75		“SEC”		11
1.76		“Section 8.4(a) Sublicensing Arrangement”		11
1.77		“Section 8.4(b) Sublicensing Arrangement”		11
1.78		“Shared Development Costs”		11
1.79		“Sole Inventions”		11
1.80		“Term”		11
1.81		“Territory”		11
1.82		“Third Party”		11
1.83		“UVA”		11
1.84		“UVA Agreement”		11
1.85		“UVAPF”		11
ARTICLE 2		LICENSES		12
2.1		License to CRXX		12
2.2		License to PGx		12
2.3		PGx Retained Rights		12
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
2.4		No Non-Permitted Use		12
2.5		No Other Licenses		13
2.6		Sublicense Agreements		13
2.7		UVA Agreement		13
2.8		Other Third Party Agreements		15
2.9		Government Rights		15
2.10		Mutual Exclusivity		16
2.11		Partnering Agreements		16
ARTICLE 3		GOVERNANCE		16
3.1		Joint Steering Committee		16
3.2		Meetings of the JSC		16
3.3		Responsibilities of the JSC		17
3.4		Areas Outside the JSC’s Authority		17
3.5		JSC Decisions		18
3.6		Subcommittees		18
3.7		Operating Principles		19
3.8		Termination of JSC		19
ARTICLE 4		DEVELOPMENT		19
4.1		Overview		19
4.2		Development Plan		19
4.3		Materials Transfer		20
4.4		Diligent Development		20
4.5		Development Reports		20
4.6		Standards of Conduct		21
4.7		Development Expenses		21
4.8		Option to Co-Develop		22
4.9		License Development Reports		22
ARTICLE 5		REGULATORY		23
5.1		Regulatory Filings		23
5.2		Product Withdrawals and Recalls		23
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
ARTICLE 6		COMMERCIALIZATION		24
6.1		General		24
6.2		Commercialization Plan		24
6.3		Diligent Commercialization		25
6.4		Commercialization Reports		25
6.5		Commercialization Standards of Conduct		26
6.6		License Commercialization Reports		26
ARTICLE 7		MANUFACTURE AND SUPPLY		26
7.1		Manufacturing Responsibility		26
7.2		Transfer of Manufacturing Technology		26
7.3		Supply of Product to CRXX		27
ARTICLE 8		FINANCIALS		27
8.1		License Fee		27
8.2		Development and Regulatory Milestone Payments		27
8.3		Commercialization Milestone Payments		28
8.4		Royalties		29
8.5		Reduction for Payments for Necessary Licenses		32
8.6		Profit-Share		33
8.7		Taxes		34
8.8		Blocked Currency		34
8.9		Foreign Exchange		34
8.10		Late Payments		34
8.11		Financial Records; Audits		34
ARTICLE 9		INTELLECTUAL PROPERTY		35
9.1		Ownership of Inventions		35
9.2		Disclosure of Inventions		35
9.3		Prosecution of Patents		36
9.4		Enforcement of Collaboration Patents		38
9.5		Patent Marking		41
9.6		Employee Obligations		41
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
9.7		Trademarks		42
ARTICLE 10		REPRESENTATIONS AND WARRANTIES		42
10.1		Mutual Representations and Warranties		42
10.2		Disclaimer		43
10.3		No Other Representations or Warranties		43
ARTICLE 11		INDEMNIFICATION		43
11.1		Indemnification by PGx		44
11.2		Indemnification by CRXX		44
11.3		Indemnification Procedures		44
11.4		Third Party Claims Related to Products		45
11.5		Limitation of Liability		45
11.6		Insurance		45
ARTICLE 12		CONFIDENTIALITY		46
12.1		Confidentiality		46
12.2		Authorized Disclosure		46
12.3		Publicity; Terms of Agreement		47
12.4		Publications		48
ARTICLE 13		TERM AND TERMINATION		49
13.1		Term		49
13.2		Termination by Either Party for Breach		49
13.3		Termination for Patent Challenge		50
13.4		Effect of Termination of the Agreement		50
13.5		Other Remedies		52
13.6		Rights in Bankruptcy		52
13.7		Survival		52
ARTICLE 14		DISPUTE RESOLUTION		53
14.1		Disputes		53
14.2		Arbitration		53
14.3		Arbitrator		53
14.4		Governing Law		54
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T ABLE OF C ONTENTS
( CONTINUED )
				P AGE
14.5		Decision		54
14.6		Award		54
14.7		Costs		54
14.8		Injunctive Relief		55
14.9		Confidentiality		55
14.10		Survivability		55
14.11		Jurisdiction		55
14.12		Patent and Trademark Disputes		55
ARTICLE 15		MISCELLANEOUS		55
15.1		Entire Agreement; Amendment		56
15.2		Force Majeure		56
15.3		Notices		56
15.4		No Strict Construction; Headings		57
15.5		Assignment		57
15.6		Performance by Affiliates		57
15.7		Further Actions		58
15.8		Compliance with Applicable Law		58
15.9		Severability		58
15.10		No Waiver		58
15.11		Independent Contractors		58
15.12		Counterparts		58

 

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      T HIS C OLLABORATION A GREEMENT (the “Agreement” ) is entered into as of August 11, 2009 (“ Effective Date ”) by and between PGxHealth, LLC , a Delaware limited liability company having its principal offices at One Gateway Center, Suite 702, Newton, MA 02458 ( “PGx” ), a wholly owned subsidiary of Clinical Data, Inc. ( “CLDA” ), and C OMBINATO R X , I NC . , a Delaware corporation having its principal place of business at 245 First St., Third Floor, Cambridge, MA 02142 ( “CRXX” ). PGx and CRXX are sometimes referred to herein individually as a “Party” and collectively as the “Parties” .

I. CRXX has discovered certain novel results and filed certain patent applications related to the use of pharmacologically active agonists of the adenosine ^A 2A ^{receptor subtype} (“ A2a Agonists ”) for the treatment of various proliferative disorders, including cancer.

II. PGx owns certain intellectual property rights relating to a therapeutic candidate known as ATL313, an A2a Agonist, including patent applications directed to the composition of matter of ATL313.

III. CRXX and PGx desire to establish a collaboration for the development and commercialization of ATL313.

      N OW T HEREFORE , in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows:

As used in this Agreement, the following initially capitalized terms, whether used in the singular or plural form, shall have the meanings set forth in this Article 1.

      1.1 “Affiliate” means, with respect to a particular Party, a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with such Party. For the purposes of this definition, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such entity, whether by the ownership of more than fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

      1.2 “Allowable Expenses” means (a) Pre-Launch Product Commercialization Costs and (b) all costs that are actually incurred, after the First Commercial Sale of a Product in the

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Territory, by a Party or for its account and are specifically attributable to such Party’s satisfaction of its obligations pursuant to the Commercialization Plan for such Product for the purpose of promoting sales of such Product in the Territory, including without limitation any of the following expenses incurred after First Commercial Sale in the Territory of a Product, in each case to the extent consistent with the Commercialization Plan and specifically attributable to a Product: (i) Cost of Goods Sold, (ii) Marketing Expenses, (iii) Distribution Expenses, (iv) Post-Launch Product R&D Expenses, (v) Patent Expenses, (vi) Regulatory Expenses, (vii) Recall Expenses; and (viii) Allocated G&A Expenses, in each case as such terms are defined and calculated in this Article 1 and in Exhibit A . Allowable Expenses shall also include those certain costs described in Section 2.11, those certain payments set forth in Section 8.5(b), those certain expenses described in Sections 8.7(b) and 9.4(c)(ii), and those Damages described in Section 11.4.

1.3	“ATL” means Adenosine Therapeutics, LLC.
1.4	“Claim” has the meaning set forth in Section 11.3.
1.5	“Co-Development Notice” has the meaning set forth in Section 4.8(a).
1.6	“Co-Development Option” has the meaning set forth in Section 4.8(b).
1.7	“Collaboration ” means the collaborative Development and Commercialization of

the Product to be undertaken by the Parties pursuant to this Agreement, it being understood that Development and Commercialization of the Product by CRXX and/or its partners or sublicensees following the expiration of the Co-Development Option without exercise by PGx shall not be deemed to be part of the Collaboration.

1.8		“Collaboration		Know-How” means all PGx Know-How and all CRXX Know-
How.
1.9		“Collaboration		Information” has the meaning set forth in Section 13.5(f).
1.10		“Collaboration		Patents” means all PGx Patents, all CRXX Patents and all Joint
Patents.
1.11		“Collaboration		Technology” means all PGx Technology and all CRXX
Technology.

 

      1.12 “Commercialization” means the marketing, promotion, sale and/or distribution of Product for use in Field in the Territory. “Commercialize” has a correlative meaning.

1.13	“Commercialization Plan” has the meaning set forth in Section 6.2(a).
1.14	“Compound” means the compound known as ATL313, the structure of which is

 

shown in Exhibit B .

 

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      1.15 “Confidential Information” means, with respect to a Party, all Information of such Party that is disclosed to the other Party under this Agreement, which may include, without limitation, specifications, know-how, trade secrets, technical information, drawings, models, business information, inventions, discoveries, methods, procedures, formulae, protocols, techniques, data, and unpublished patent applications, whether disclosed in oral, written, graphic, or electronic form. Notwithstanding the foregoing, subject to Section 13.5(f), all Information generated or resulting from the Collaboration, whether generated by one or both Parties, shall be deemed the Confidential Information of both Parties; provided, however, that the Information required to be provided to PGx pursuant to Section 3.8 shall be deemed the Confidential Information of CRXX, subject to Section 13.5(f). All confidential Information disclosed by either Party pursuant to the Existing Confidentiality Agreement, shall be deemed to be such Party’s Confidential Information hereunder.

      1.16 “Control” means, with respect to any material, Information, or intellectual property right, that a Party owns or has a license to such material, Information, or intellectual property right and has the ability to grant to the other Party access, a license, or a sublicense (as applicable) to such material, Information, or intellectual property right on the terms and conditions set forth herein without violating the terms of any then-existing agreement or other arrangement with any Third Party.

1.17	“Cost of Goods Sold” has the meaning set forth in Exhibit A .
1.18	“ CRXX Claims ” has the meaning set forth in Section 11.1.
1.19	“CRXX Indemnitees” has the meaning set forth in Section 11.1.
1.20	“CRXX Know-How” means all Information (excluding any CRXX Patents) that

is (a) Controlled as of the Effective Date by CRXX or its Affiliate; or (b) made by or on behalf of CRXX or its Affiliates or sublicensees pursuant to performing CRXX’s obligations or exercising CRXX’s rights under this Agreement (including any Sole Inventions of CRXX and any Joint Inventions) and, in the case of both (a) and (b), is reasonably necessary or useful for the research, Development, manufacture, use, importation or sale of Products.

      1.21 “CRXX Patents” means all patents and patent applications that (a) are Controlled as of the Effective Date or during the Term by CRXX or its Affiliates and that claim, and only to the extent that such patents and patent applications claim, the composition of matter, manufacture, or use of the Compound, such patents and patent applications and the applicable claims thereof set forth on Exhibit C (including any future claims derived therefrom), (b) are substitutions, divisions, continuations, continuations-in-part (to the extent directed to the subject matter disclosed in a patent or patent application described in (a)) and requests for continued examination of any of the foregoing, (c) are patents arising from or claiming priority to any of the foregoing, (d) are reissues, renewals, registrations, confirmations, re-examinations, extensions, and supplementary protection certificates of any of the foregoing, and/or (e) all foreign equivalents of any of the foregoing. For the avoidance of doubt, the CRXX Patents shall include any patent or application claiming a Sole Invention of CRXX and any Joint Patent, in each case solely to the extent that such patent or patent application claims the composition of matter,

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3

manufacture, or use of the Compound (whether or not such patents or patent applications are listed on Exhibit C).

1.22	“CRXX Technology” means the CRXX Patents and CRXX Know-How.
1.23	“ Damages ” has the meaning set forth in Section 11.4.
1.24	“Development” means all activities that relate to (a) obtaining, maintaining or

expanding Regulatory Approval of Product or (b) developing the ability to manufacture clinical and commercial quantities of Product. This includes, without limitation, (i) research, preclinical testing, toxicology, formulation, manufacturing-related technology development, and clinical studies of Product; (ii) preparation, submission, review, and development of data or information for the purpose of submission to a governmental authority to obtain, maintain and/or expand Regulatory Approval of Product, and outside regulatory services related thereto; (iii) manufacturing process development and scale-up, bulk production and fill/finish work associated with the supply of Product for preclinical and clinical studies, and related quality assurance technical support activities; (iv) post-Regulatory Approval product support for Product (including manufacturing and quality assurance technical support, and laboratory and clinical efforts directed toward the further understanding of the safety and efficacy of Product); and (v) Product-related medical affairs (including regulatory support necessary for product maintenance). “Develop” has a correlative meaning.

      1.25 “Development Plan” means the plan for conducting collaborative Development of Products for use in the Field, as set forth in Section 4.2(a).

      1.26 “Diligent Efforts” means, with respect to CRXX’s obligations under this Agreement to Develop or Commercialize a Product, the efforts and resources comparable to those undertaken by CRXX in pursuing intellectual property protection and the research, discovery or commercialization of proprietary materials and the development of product candidates, as applicable, that are not subject to the Collaboration and that are at an equivalent stage of development or commercialization and have similar market potential and are at a similar stage in their lifecycle, taking into account factors such as, mechanism of action; efficacy and safety; product profile; actual or anticipated Regulatory Authority approved labeling and pricing; and the nature and extent of market exclusivity (including patent coverage, proprietary position and regulatory exclusivity; cost, time required for and likelihood of obtaining Regulatory Approval; competitiveness of alternative products and market conditions, actual or projected profitability and availability of capacity to manufacture and supply for commercial sale), as applicable. In addition, factors beyond the reasonable control of CRXX, including without limitation, regulatory delays, safety findings, unforeseen technical challenges, the failure of a Product to meet necessary scientific or regulatory endpoints, and events described in Section 15.2 shall be taken into account.

1.27	“Distribution Expenses” has the meaning set forth in Exhibit A .
1.28	“European Union” or “EU” means all of the European Union member states as

 

of the applicable time during the Term.

 

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      1.29 “Executive Officer ” means (a) in the case of PGx, the Chief Executive Officer of CLDA and (b) in the case of CRXX, the Chief Executive Officer of CRXX.

      1.30 “Existing Confidentiality Agreement” means the Confidentiality Agreement entered into by CRXX and PGx, as successor in interest to ATL, dated August 3, 2007.

1.31	“FDA” means the United States Food and Drug Administration or its successor.
1.32	“FD&C Act” means the United States Federal Food, Drug and Cosmetic Act, as

 

amended.

      1.33 “Field” means the treatment, prevention and diagnosis of cancer in humans, but specifically excluding the Retained Field.

      1.34 “First Commercial Sale” means, with respect to a Product and country, the first sale to a Third Party of such Product in such country after Regulatory Approval (and any pricing or reimbursement approvals, if necessary) has been obtained in such country.

      1.35 “ FTE ” means a full-time equivalent person-year (consisting of a total of 1960 hours per year) of scientific, technical, or managerial work on or directly related to activities performed under the Collaboration.

      1.36 “Governmental Authority” means any multi-national, federal, state, local, municipal or other government authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal).

      1.37 “Information” means any data, results, and information of any type whatsoever, in any tangible or intangible form, including, without limitation, know-how, trade secrets, practices, techniques, methods, processes, inventions, developments, specifications, formulations, formulae, materials or compositions of matter of any type or kind (patentable or otherwise), software, algorithms, marketing reports, expertise, stability, technology, test data including pharmacological, biological, chemical, biochemical, toxicological, and clinical test data, analytical and quality control data, stability data, studies and procedures.

1.38	“Initial Development Plan” has the meaning set forth in Section 4.2(b).
1.39	“JAMS Rules” has the meaning set forth in Section 14.2.
1.40	“Joint Invention” has the meaning set forth in Section 9.1.
1.41	“Joint Patent” has the meaning set forth in Section 9.3(c).
1.42	“JSC” means the joint steering committee formed by the Parties as described in

 

Section 3.1.
1.43		“License Commercialization Report” has the meaning set forth in Section 6.6.
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		1.44		“License Development Report” has the meaning set forth in Section 4.9.
		1.45		“Major EU Country” means the United Kingdom, France, Germany, Italy or
Spain.
		1.46		“Marketing Authorization Application” or “MAA” means an application for

 

Regulatory Approval in a country, territory or possession other than the United States.

1.47	“Marketing Expenses” has the meaning set forth in Exhibit A .
1.48	“Marks” has the meaning set forth in Section 9.7.
1.49	“NDA” means a New Drug Application, as defined in the FD&C Act and

applicable regulations promulgated thereunder by the FDA.

      1.50 “Net Sales” means, with respect to any Product, the gross amount invoiced by a Party, an Affiliate, or any sublicensee of a Party for sales of such Product to a Third Party less: (a) normal and customary trade, quantity and cash discounts, rebates and chargebacks, and non-affiliated broker’s, distributor’s or agent’s commissions, in each case actually taken; (b) credits actually given for returned Product (including withdrawals and recalls); (c) sales, excise, and turnover taxes and duties levied on and/or other governmental charges made as to production, sale, importation, transportation, delivery or use of a Product imposed directly on and actually paid by a Party or its Affiliates or sublicensees (but excluding any income taxes); (d) transportation costs, including insurance and shipping, freight, and handling charges, to the extent allocated to customers; and (e) the customary costs of special packaging and/or administration items packaged and sold with a Product. Sales between a Party and its Affiliates and sublicensees (including distributors) shall be disregarded for purposes of calculating Net Sales except if such purchaser is an end user.

In the event that a Product is sold as part of a Combination Product, where “Combination Product” means any unified dose (e.g., not a kit of two separate and distinct drug dosage forms) of pharmaceutical product which is comprised of Product and other therapeutically active compound(s) and/or ingredient(s) (collectively the “Other Products”), Net Sales of Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product by the fraction, A / (A+B) where A is the weighted average sale price of the Product when sold separately in finished form, and B is the weighted average sale price of the Other Products sold separately in finished form, in each case in the country of sale of the Combination Product in the calendar quarter of such sale, provided that the Net Sales in any royalty period shall in no event be reduced by more than fifty percent (50%) by reason of the foregoing sentence. In the event that no separate sales are made of either the Product or the Other Products, the reasonably estimated commercial value thereof will be used instead of the sale price. Notwithstanding the foregoing, the adjustment of Net Sales as set forth in this paragraph shall not apply if the composition of matter of such other active ingredient is not claimed in any issued and unexpired patent claim owned by CRXX or a third party.

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Each of “weighted average sale price” and “reasonably estimated commercial value” shall be determined as set forth below: “Weighted average sale price” and “reasonably estimated commercial value,” as the case may be, for a Product and Other Products shall be calculated once at the commencement of each calendar year and such amount shall be used during all applicable royalty reporting periods for the entire following calendar year. When determining the weighted average sale price of a Product or Other Products, the weighted average sale price shall be calculated by dividing the Net Sales (translated into U.S. dollars in accordance with Section 8.9) by the units of active ingredient sold during the twelve (12) months (or the number of months sold in a partial calendar year) of the preceding calendar year for the respective Product or Other Products. “Estimated commercial value” shall be determined by agreement of the Parties using criteria to be mutually agreed upon by the Parties. If the Parties do not agree, such dispute shall be first referred to the JSC to be resolved in accordance with Section 3.5, but if not resolved as set forth in Section 3.5, shall be resolved in accordance with Article 14 hereof. In the calendar year in which the First Commercial Sale occurs, a forecasted weighted average sale price will be used for the Product and Other Products, if applicable. Any over or under payment due to a difference between forecasted and actual weighted average sale prices will be paid or credited in the first royalty payment of the following calendar year.

     With respect to any sale or other disposal of any Product for any consideration other than exclusively monetary consideration on arm's length terms, for purposes of calculating the gross sales amount necessary to calculate the Net Sales under this Agreement, such Product shall be deemed to be sold exclusively for money at the average gross invoice price charged to Third Parties for cash sales during the applicable reporting period.

     Net Sales shall be determined in accordance with generally accepted accounting principles in the United States.

      1.51 “Partnering Agreement” means an agreement under which either or both Parties grant (or, with the written approval of both Parties, if such approval of both Parties is required under the terms of this Collaboration Agreement, one of the Parties grants) a license under the Collaboration Technology to a Third Party to Develop and/or Commercialize a Product in the Field. For the avoidance of doubt, any agreement between PGx and a Third Party (including, but not limited to, Santen Pharmaceuticals) to Develop and Commercialize the Compound for the treatment of any ophthalmic disease by topical administration into the eye shall not be treated as a Partnering Agreement.

      1.52 “Partnering Revenue” means any and all forms of consideration that either Party receives from a Third Party in connection with a Partnering Agreement, which may include upfront license fees, annual license or maintenance payments, milestone payments, royalties, and other similar payments.

1.53	“Patent Expenses” has the meaning set forth in Exhibit A .
1.54	“ PGx Claims ” has the meaning set forth in Section 11.2.

 

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1.55	“PGx Indemnitees” has the meaning set forth in Section 11.2.
1.56	“PGx Know-How” means all Information (excluding any PGx Patents) that is (a)

Controlled as of the Effective Date by PGx ; or (b) made by or on behalf of PGx or its Affiliate pursuant to performing PGx’s obligations or exercising PGx’s rights under this Agreement (including any Sole Inventions of PGx and any Joint Inventions) and, in the case of both (a) and (b), is reasonably necessary or useful for the research, Development, manufacture, use, importation or sale of Products in the Field.

      1.57 “PGx Patents” means all patents and patent applications that (a) are Controlled as of the Effective Date or during the Term by PGx and that claim the composition of matter, manufacture or use in the Field of the Compound, (b) are substitutions, divisions, continuations, continuations-in-part (to the extent directed to the subject matter disclosed in a patent or patent application described in (a)) and requests for continued examination of any of the foregoing, (c) are patents arising from or claiming priority to any of the foregoing, (d) are reissues, renewals, registrations, confirmations, re-examinations, extensions, and supplementary protection certificates of any of the foregoing, and/or (e) are foreign equivalents of any of the foregoing. For the avoidance of doubt, the PGx Patents shall include any patent or application claiming a Sole Invention of PGx and any Joint Patents, in each case solely to the extent that such patent or patent application claims the composition of matter, manufacture, or use in the Field of the Compound.

1.58	“PGx Technology” means the PGx Patents and PGx Know-How.
1.59	“Phase 2 Clinical Trial” means a human clinical trial of a Product, the principal

purpose of which is to evaluate the effectiveness of such Product in the target patient population, as described in 21 C.F.R. § 312.21(b), or a similar clinical study prescribed by the Regulatory Authorities in a country other than the United States. For purpose of this Agreement, “initiation of a Phase 2 Clinical Trial” for a Product means the first enrollment of a human in the Phase 2 Clinical Trial involving administration of such Product.

      1.60 “Phase 3 Clinical Trial” means a human clinical trial of a Product on a sufficient number of subjects that is designed to (a) establish that a drug is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed; and (c) support Regulatory Approval of such drug, as described in 21 C.F.R. § 312.12(c), or a similar clinical study prescribed by the Regulatory Authorities in a country other than the United States. For purpose of this Agreement, “initiation of a Phase 3 Clinical Trial” for a Product means the first enrollment of a human in the Phase 3 Clinical Trial involving administration of such Product.

      1.61 “Phase 4 Clinical Trial” means a human clinical trial of a Product conducted after Regulatory Approval of such Product has been obtained from an appropriate Regulatory Authority, which trial is (a) conducted voluntarily by a Party to enhance marketing or scientific knowledge of the Product, or (b) conducted due to a request or requirement of a Regulatory Authority.

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1.62	“Post-Launch Product R&D Expenses” has the meaning set forth in Exhibit A .
1.63	“Pre-Launch Commercialization Costs” means all costs that are actually

incurred, prior to the First Commercial Sale of a Product in the Territory, by a Party or for its account and are specifically attributable to such Party’s satisfaction of its obligations pursuant to the Commercialization Plan for such Product for the purpose of promoting sales of such Product in the Territory, provided that such costs are less than or equal to the amount specified therefor in the budget associated with such Commercialization Plan; provided that costs incurred pursuant to Section 11.4 shall not be subject to any limitations set forth in any Commercialization Plan budget.

      1.64 “Product” means a product that contains the Compound, whether as a single active pharmaceutical ingredient or combined with other active pharmaceutical ingredients.

1.65	“Product Infringement” has the meaning set forth in Section 9.4(a).
1.66	“Product Profit” means the worldwide profits or losses resulting from the

Commercialization of Products and shall be equal to Net Sales plus any Partnering Revenue, less Allowable Expenses.

1.67	“Publication” has the meaning set forth in Section 12.4.
1.68	“Recall Expenses” has the meaning set forth in Exhibit A .
1.69	“Regulatory Approval” means all approvals necessary for the manufacture,

marketing, importation and sale of a Product for one or more indications in a country or regulatory jurisdiction, which may include, without limitation, satisfaction of all applicable regulatory and notification requirements, but which shall exclude any pricing and reimbursement approvals.

      1.70 “Regulatory Authority” means, in a particular country or regulatory jurisdiction, any applicable Governmental Authority involved in granting Regulatory Approval and/or, to the extent required in such country or regulatory jurisdiction, pricing or reimbursement approval of a Product in such country or regulatory jurisdiction, including without limitation, (a) the FDA, (b) the European Medicines Agency, (c) the European Commission, and (d) Japanese Ministry of Health, Labour and Welfare, and in each of (a) through (d), including any successor thereto.

1.71	“Regulatory Expenses” has the meaning set forth in Exhibit A .
1.72	“Regulatory Materials” means regulatory applications, submissions,

notifications, registrations, Regulatory Approvals and/or other filings made to or with a Regulatory Authority that are necessary or reasonably desirable in order to Develop, manufacture, market, sell or otherwise Commercialize a Product in a particular country or regulatory jurisdiction. Regulatory Materials include, without limitation, INDs, MAAs, and NDAs.

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      1.73 “ Retained Field ” means the following: (a) the treatment of any ophthalmic disease (including, without limitation, cancer) by topical administration into the eye; and (b) the treatment of pain via intrathecal administration.

		1.74		“Royalty Term” has the meaning set forth in Section 8.4(d).
		1.75		“SEC” means the United States Securities and Exchange Commission.
		1.76		“Section 8.4(a) Sublicensing Arrangement” has the meaning set forth in Section
8.4(b).
		1.77		“Section 8.4(b) Sublicensing Arrangement” has the meaning set forth in

 

Section 8.4(b).

      1.78 “Shared Development Costs” means all costs that are actually incurred by a Party or for its account and are specifically attributable to the Development of Products pursuant to such Party’s obligations under the Development Plan, as such Development Plan may be amended or adjusted pursuant to Article 4. Costs in excess of ten percent (10%) of the amount specified therefor in the budget associated with such Development Plan shall not be deemed Shared Development Costs unless consented to in writing by the Party that did not incur such costs. Shared Development Costs shall include out-of-pocket costs actually incurred by each Party, and all internal direct costs incurred by a Party in connection with the Development of Products. Each Party shall record and account for its internal direct costs for the Development of Products and shall report such costs to the other Party on a quarterly basis as provided in Section 4.8(c). Internal costs shall not include the work of general corporate or administrative personnel, but shall include a twenty percent (20%) overhead fee applied to the cost of internal personnel assigned to the Collaboration. For clarity, Shared Development Costs shall include those certain costs described in Section 2.11 and those certain payments set forth in Section 8.5(b).

1.79	“Sole Inventions” has the meaning set forth in Section 9.1.
1.80	“Term” has the meaning set forth in Section 13.1.
1.81	“Territory” means all countries in the world, except as may be reduced pursuant

 

to Section 13.3(b).

      1.82 “Third Party” means any entity other than PGx or CRXX or an Affiliate of either of them.

1.83	“UVA” means the University of Virginia.
1.84	“UVA Agreement ” means that certain UVAPF/ATI License Agreement by and

between UVAPF and ATL, effective as of April 22, 1999, as amended.

1.85 “UVAPF” means the University of Virginia Patent Foundation.

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      2.1 License to CRXX. Subject to the terms and conditions of this Agreement, PGx hereby grants to CRXX an exclusive (even as to PGx), worldwide, royalty-bearing, sublicensable (subject to Sections 2.6 and 2.11) license, under the PGx Technology, to Develop, make, have made, use, import, sell, offer for sale, and market Products in the Field in the Territory. CRXX acknowledges and agrees that, as of the Effective Date, the foregoing license grants rights under the PGx Patents solely with respect to the specific patent claims set forth in Exhibit D attached hereto. The Parties acknowledge and agree that, with respect to any and all PGx Patents filed after the Effective Date, the license granted under this Section 2.1 shall include all outstanding claims included in such PGx Patents.

      2.2 License to PGx. Subject to the terms and conditions of this Agreement, CRXX hereby grants to PGx, (a) a non-exclusive, royalty-free license, under the CRXX Technology, solely to the extent necessary to conduct those Development responsibilities assigned to it under the Development Plan in the Territory, sublicensable solely to PGx’s Affiliates or to any of PGx’s subcontractors approved by the JSC; and (b) a non-exclusive, worldwide, and royalty-free license, under the CRXX Patents, solely to the extent necessary to develop, make, have made, use, sell, offer for sale, import and market the Product for use in the Retained Field.

      2.3 PGx Retained Rights. Notwithstanding anything in this Agreement to the contrary:

      (a) PGx shall retain the right under the PGx Technology to conduct those Development responsibilities assigned to it under the Development Plan and to perform non-clinical research relating to the Compound, either internally or together with academic collaborators existing on the Effective Date. Additionally, for the avoidance of doubt, as between the Parties, PGx shall retain exclusive rights under the PGx Technology (i) with respect to all products that are not Products and (ii) with respect to any Product for use outside the Field, including, without limitation, any product for use in the Retained Field.

      (b) For the avoidance of doubt, as between the Parties, CRXX shall retain exclusive rights under the CRXX Technology (i) with respect to all products that are not Products and (ii) with respect to any Product for use outside the Field, subject to the license grant set forth in Sections 2.2 and 13.5.

      2.4 No Non-Permitted Use. CRXX hereby covenants that it shall not, nor shall it cause or permit any Affiliate or sublicensee to knowingly use or practice, directly or indirectly, any PGx Technology for any purposes other than those expressly permitted by this Agreement. PGx hereby covenants that it shall not, nor shall it cause or permit any Affiliate or sublicensee to knowingly use or practice, directly or indirectly, any CRXX Technology for any purposes other than those expressly permitted by this Agreement.

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      2.5 No Other Licenses. Neither Party grants to the other Party any rights or licenses in or to any intellectual property, whether by implication, estoppel, or otherwise, other than the license rights that are expressly granted under this Agreement.

      2.6 Sublicense Agreements. In each agreement under which CRXX grants a sublicense under the license set forth in Section 2.1 (each, a “Sublicense Agreement” ), such Sublicense Agreement(s) shall provide for the right to develop, manufacture and commercialize the Product to revert in the manner consistent with Sections 13.5(a)-(e), to CRXX if such Sublicense Agreement terminates, or, as the case may be, to PGx in the event the Sublicense Agreement terminates and this Agreement terminates for reasons other than by CRXX pursuant to Section 13.3(a). Such Sublicense Agreement shall provide for PGx to be a third party beneficiary to the provisions contained in the Sublicense Agreement equivalent to Section 13.5(a)-(e) hereof if this Agreement terminates other than by CRXX pursuant to Section 13.3(a). Each Sublicense Agreement shall also include (y) diligence obligations no less stringent than those set forth in Sections 4.4 and 6.3; and (z) the terms and conditions (A) that are incorporated into this Agreement pursuant to Section 2.7(d), modified only to indicate that CRXX’s sublicensee is obligated to CRXX as PGx is to UVAPF thereunder, and (B) that are incorporated into this Agreement pursuant to Section 2.7(e), modified only to indicate that CRXX’s sublicensee is obligated to CRXX, PGx, UVA, and UVAPF as PGx is obligated to UVA and/or UVAPF under the UVA Agreement. CRXX shall provide to PGx a copy of each Sublicense Agreement promptly following its execution.

2.7	UVA Agreement.
	(a) The Parties acknowledge that the licenses granted by PGx to CRXX under

Section 2.1 include sublicenses of Third Party intellectual property licensed to PGx under the UVA Agreement.

      (b) PGx shall be solely responsible for paying all milestones, royalties and other payments owed by PGx under the UVA Agreement as result of Development, manufacture, and Commercialization of Products by CRXX, its Affiliates and sublicensees. Notwithstanding the foregoing, in the event that PGx exercises its Co-Development Option, all such milestones, royalties and other payments under the UVA Agreement shall be charged against the Collaboration as Shared Development Costs or Allowable Expenses, as appropriate based on Section 8.5(b).

      (c) Notwithstanding anything to the contrary in this Agreement, CRXX shall, in exercising such sublicense rights granted under Section 2.1, comply with all applicable provisions of the UVA Agreement expressly applicable to a sublicensee other than any obligations to make payments to UVA.

      (d) Without limiting the generality of Section 2.7(c), both of the parties acknowledge that under the UVA Agreement, this Agreement is required to contain and is therefore agreed and deemed to contain the following provisions of the UVA Agreement, which are incorporated herein by reference as if fully set forth herein, modified only as specifically set forth below and to provide that CRXX is obligated to PGx as PGx (as successor in interest to

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ATL) is to UVAPF and, unless the context otherwise requires, that “CRXX” is substituted for “ATI” and “PGx” is substituted for “UVAPF”:

      (i) Article 5, provided that the reference in Section 5.2.4 of the UVA Agreement to “Section 4.1” is understood to mean Section 8.4 in this Agreement, the reference in Section 5.2.3 of the UVA Agreement to “Section 1.7” is understood to mean Section 1.50 of this Agreement, and Section 5.2.7 of the UVA Agreement shall not apply; further provided that it is understood that the last paragraph of Section 5.2 of the UVA Agreement, the last two sentences of Section 5.3 of the UVA Agreement and Section 5.4 of the UVA Agreement shall only apply with respect to UVAPF with respect to the subject matter of such provisions and shall not apply with respect to such subject matter between the Parties; and

      (ii) Article 7, provided that (A) the incorporation of Section 7.5 of the UVA Agreement shall not grant CRXX any greater termination rights than are set forth in Article 13 hereof and (B) the incorporation of Section 7.4 of the UVA Agreement shall not apply to any provision of the UVA Agreement not incorporated pursuant to Section 2.7(d) or (e) of this Agreement.

      (iii) Articles 8 (it being understood that Article 8 shall only apply with respect to Confidential Information of UVA and UVAPF and not with respect to Confidential Information of the Parties hereto, which shall be decided in accordance with Article 12 of this Agreement), 10 (it being understood that Article 10 shall only apply with respect to adjudication of UVA’s and UVAPF’s rights and not with respect to disputes solely between the Parties hereto, which shall be decided in accordance with Article 14 of this Agreement), 13, 15, 16, 18 (provided that the reference to the term sheet therein is understood to be a reference to the term sheet between CRXX and CLDA, dated March 6, 2009), 19 (it being understood that Article 19 shall only apply with respect to the law governing and the required jurisdiction of UVA’s and UVAPF’s rights and not with respect to the governing law and jurisdiction solely between the Parties hereto, which shall be decided in accordance with Sections 14.4 and 14.11 of this Agreement), and 20 through 22

      (iv) The definitions in Article 1, to the extent such definitions are necessary to implement any of the foregoing.

      (e) Without limiting the generality of Section 2.7(c), both of the parties further acknowledge that under the UVA Agreement, this Agreement is required to contain and is therefore agreed and deemed to contain the following provisions of the UVA Agreement, which are incorporated herein by reference as if fully set forth herein, modified only to indicate that CRXX is obligated to PGx, UVA and UVAPF as PGx (as successor in interest to ATL) is obligated to UVA and/or UVAPF under the UVA Agreement:

(i)	Sections 6.4 and 6.5; and
(ii)	Articles 11 (it being understood that Article 11 shall only apply

with respect to indemnification of UVA’s and UVAPF’s losses and not with respect to losses suffered by either of the Parties hereto, which shall be decided in accordance with Article 11 of

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this Agreement) and 12 (it being understood that Sections 12.1(a)(ii) and 12.3 of the UVA Agreement shall only apply with respect to UVA and UVAPF rights and not with respect to insurance requirements solely between the Parties hereto, which shall be decided in accordance with Section 11.6 of this Agreement).

      (f) The parties agree that the provisions of the UVA Agreement incorporated into this Agreement pursuant to Sections 2.7(d) and (e) are not exhaustive with respect to the subject matter of such sections and that this Agreement contains additional obligations and rights of the Parties related to the subject matter of the UVA Agreement provisions incorporated herein and that such obligations and rights of this Agreement are still applicable to the Parties provided they do not conflict with the incorporated provisions of the UVA Agreement. For the purpose of this Section 2.7(f), two provisions shall only “conflict” if it is not possible, through the use of commercially reasonable efforts, for a Party to comply with both provisions.

      2.8 Other Third Party Agreements. CRXX shall be solely responsible for obtaining, at its sole expense, any agreements with Third Parties (other than the UVA Agreement) required in order to lawfully perform Development, manufacturing, and Commercialization activities, subject to the royalty offset set forth in Section 8.5(a) and the cost sharing contemplated by Section 8.5(b). CRXX shall use commercially reasonable efforts to ensure that each material Third Party clinical trial, contract manufacturing, or service agreement entered into by CRXX or its Affiliates with respect to the Products contains provision(s) permitting such Third Party contract to be assigned