UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2006
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
_________
to
_________
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Commission File Number:
0-28298
ONYX PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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94-3154463
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer ID Number)
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2100 Powell Street
Emeryville, California 94608
(Address of principal executive offices)
(510) 597-6500
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes
R
No
£
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-2 of the Act).
Large accelerated filer
£
Accelerated filer
R
Non-accelerated filer
£
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
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No
R
Indicate the number of shares outstanding of each of the issuers classes of Common Stock, as
of the latest practicable date. The number of outstanding shares of the registrants Common Stock,
$0.001 par value, was 41,405,119 as of May 3, 2006.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ONYX
PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
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March 31,
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December 31,
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2006
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2005
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(Unaudited)
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(Note 1)
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(In thousands)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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22,930
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$
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46,064
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Marketable securities
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235,378
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228,754
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Receivable from collaboration partner
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3,947
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4,350
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Other current assets
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4,742
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3,935
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Total current assets
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266,997
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283,103
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Long-term marketable securities
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9,862
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Property and equipment, net
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1,441
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1,617
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Other assets
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83
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83
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$
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268,521
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$
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294,665
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities:
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Accounts payable
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$
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237
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$
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581
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Payable to collaboration partner
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8,976
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30,823
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Accrued liabilities
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2,218
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1,343
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Accrued clinical trials and related expenses
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6,866
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5,567
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Accrued compensation
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2,633
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3,111
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Total current liabilities
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20,930
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41,425
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Advance from collaboration partner
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40,000
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30,000
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Commitments and contingencies
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Stockholders equity:
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Common stock
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41
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41
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Additional paid-in capital
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574,772
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569,800
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Receivable from stock option exercises
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(12
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(24
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Accumulated other comprehensive loss
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(1,048
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(767
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Accumulated deficit
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(366,162
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(345,810
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Total stockholders equity
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207,591
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223,240
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$
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268,521
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$
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294,665
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See accompanying notes.
3
ONYX PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
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March 31,
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2006
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2005
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(In thousands, except per
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share amounts)
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Revenue:
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License fee
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$
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$
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1,000
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Operating expenses:
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Net expense from unconsolidated joint business
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4,102
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Research and development
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7,800
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13,532
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Selling, general and administrative
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11,623
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4,800
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Total operating expenses
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23,525
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18,332
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Loss from operations
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(23,525
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(17,332
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Interest income, net
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3,173
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1,232
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Net loss
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$
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(20,352
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$
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(16,100
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Basic and diluted net loss per share
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$
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(0.49
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$
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(0.46
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Shares used in computing basic and diluted net
loss per share
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41,292
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35,274
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See accompanying notes.
4
ONYX PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended
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March 31
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2006
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2005
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( In thousands)
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Cash flows from operating activities:
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Net loss
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$
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(20,352
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$
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(16,100
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)
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Adjustments to reconcile net loss to net cash used
in operating activities:
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Depreciation and amortization
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188
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126
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Stock-based compensation
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3,753
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237
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Changes in assets and liabilities:
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Receivable from collaboration partner
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403
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(335
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Prepaid expenses and other current assets
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(807
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(65
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Other assets
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(89
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Accounts payable
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(344
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)
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(223
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Accrued liabilities
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875
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(800
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Accrued clinical trials and related expenses
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1,299
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88
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Payable to collaboration partner
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(21,847
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2,063
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Accrued compensation
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(478
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)
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(381
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Accrued restructuring
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(111
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)
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Net cash used in operating activities
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(37,310
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(15,590
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)
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Cash flows from investing activities:
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Purchases of marketable securities
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(67,243
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(53,210
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Maturities of marketable securities
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70,200
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28,705
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Capital expenditures
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(12
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)
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(118
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Proceeds from sale of fixed assets
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6
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Net cash provided by (used in) investing activities
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2,945
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(24,617
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Cash flows from financing activities:
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Advance from collaboration partner
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10,000
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Net proceeds from issuances of common stock
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1,231
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47
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Net cash provided by financing activities
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11,231
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47
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Net decrease in cash and cash equivalents
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(23,134
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)
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(40,160
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)
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Cash and cash equivalents at beginning of period
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46,064
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74,243
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Cash and cash equivalents at end of period
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$
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22,930
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$
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34,083
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See accompanying notes.
5
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance
with U.S. generally accepted accounting principles (GAAP) for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the three ended March
31, 2006 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2006, or for any other future operating periods.
The condensed balance sheet at December 31, 2005 has been derived from the audited financial
statements at that date, but does not include all of the information and footnotes required by
GAAP for complete financial statements.
For further information, refer to the financial statements and footnotes thereto included in
the Onyx Pharmaceuticals, Inc. (the Company or Onyx) Annual Report on Form 10-K for the year
ended December 31, 2005.
Note 2. Net Expense from Unconsolidated Joint Business
Nexavar is currently marketed and sold in the United States for the treatment of advanced
kidney cancer, with regulatory applications pending in the European Union, as well as other
territories internationally. Nexavar received approval to treat patients with advanced kidney
cancer in Mexico in April 2006 and in Switzerland, after nepherectomy and prior palliative or
adjuvant therapy with cytokines, in March 2006. Onyx co-promotes Nexavar in the United States with
Bayer Pharmaceuticals Corporation, or Bayer, under collaboration and co-promotion agreements. On
March 6, 2006, Onyx and Bayer entered into a Co-Promotion Agreement to co-promote Nexavar in the
United States. This agreement amends the original 1994 Collaboration Agreement and supersedes the
provisions of that agreement that relate to the co-promotion of Nexavar in the United States.
Outside of the United States, the terms of the Collaboration Agreement continue to govern. Under
the terms of the Co-Promotion Agreement and consistent with the
Collaboration Agreement, Onyx and Bayer will
share equally in the profits or losses of Nexavar, if any, in the United States, subject only to
the Companys continued co-funding of the development costs of Nexavar worldwide, excluding Japan. The
collaboration was created through a contractual arrangement, not through a joint venture or other
legal entity.
In the United States, Onyx contributes half of the overall number of sales force personnel
required to market and promote Nexavar and half of the medical science liaisons to support Nexavar.
Each of Onyx and Bayer bears its own sales force and medical science liaison expenses. These
expenses are not included in the calculation of the profits or losses of the collaboration.
Bayer provides all product distribution and all marketing support services, including managed care,
customer service, order entry and billing, for Nexavar in the United States. Bayer is compensated
for distribution expenses based on a fixed percent of gross sales of Nexavar in the United States.
Bayer is reimbursed for half of its expenses for marketing services provided by Bayer for the sale
of Nexavar in the United States. The parties share equally in any other out-of-pocket marketing
expenses (other than expenses for sales force and medical science liaisons) that Onyx and Bayer
incur in connection with the marketing and promotion of Nexavar in the United States. Bayer
manufactures all Nexavar sold in the United States and is reimbursed at an agreed transfer price
per unit for the cost of goods sold.
Outside of the United States, except in Japan, Bayer incurs all of the sales and marketing
expenditures, and Onyx reimburses Bayer for half of those expenditures. In addition, upon approval
of Nexavar worldwide, Onyx will reimburse Bayer a fixed percentage of sales to reimburse them for
their marketing infrastructure. Research and development expenditures on a worldwide basis, except
in Japan, are equally shared by both companies regardless of whether Onyx or Bayer incurs the
expense. In Japan,
Bayer is responsible for all development and marketing costs, and Onyx will receive a royalty on any
net sales of Nexavar.
6
Net expense
from the unconsolidated joint business consists of Onyxs share of the pretax
collaboration loss generated from its collaboration with Bayer net of the reimbursement of Onyxs
marketing and research and development costs related to Nexavar. Under the collaboration, Bayer
recognizes net product revenue of Nexavar worldwide. Onyx records its share of the collaboration pre-tax
loss on a quarterly basis. Collaboration loss is derived by calculating United States sales of
Nexavar to third-party customers and deducting cost of goods sold, distribution costs, marketing
costs (including without limitation, advertising and education expenses, selling and promotion
expenses, marketing personnel expenses, and Bayer marketing services expenses), Phase IV clinical
trial costs, allocable overhead costs and research and development costs. As noted above, United States sales
force and medical science liaison expenditures incurred by both companies are borne by each company
separately and are not included in the calculation. Some of the revenue and expenses recorded to
derive the net expense from unconsolidated joint business during the period presented are estimates
of both parties and are subject to further adjustment based on each
partys final review should actual
results differ from these estimates.
For
the quarter ended March 31, 2006, net expense from
unconsolidated joint business was $4.1 million calculated as follows:
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Three Months Ended
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March 31, 2006
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(in thousands)
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Product revenue, net (as recorded by Bayer)
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$
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23,747
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Combined cost of goods sold, distribution, selling,
general and administrative
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17,708
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Combined research and development
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30,031
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Combined collaboration loss
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$
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(23,992
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)
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|
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Onyxs 50% share of collaboration loss
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$
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(11,996
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)
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Reimbursement of Onyxs direct development and marketing
expenses
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7,894
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Onyxs net expense from unconsolidated joint business
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$
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(4,102
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)
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Note 3. Stock-Based Compensation
Effective January 1, 2006,
the Company adopted Statement of Financial Accounting Standards,
or FAS, No. 123(R), Share-Based Payment
,
(FAS 123(R)), which requires the measurement and
recognition of compensation expense for all stock-based payment made to employees and directors
including employee stock option awards and employee stock purchases
made under the Employee Stock Purchase Plan, or ESPP, based on
estimated fair value. The Company previously applied the provisions of Accounting Principles Board
Opinion, or APB, No. 25, Accounting for Stock Issued to Employees (APB 25) and related
Interpretations and provided the required pro forma disclosures under FAS 123, Accounting for
Stock-Based Compensation, or FAS 123.
All stock option awards to non-employees are accounted for at the fair value of the
consideration received or the fair value of the equity instrument issued, as calculated using the
Black-Scholes model, in accordance with FAS 123(R) and Emerging Issues Task Force Consensus No.
96-18, Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services. The option arrangements are subject to periodic
remeasurement over their vesting terms. The Company recorded compensation expense related to option
grants to non-employees of $123,000 for the three months ended March 31, 2006 and $237,000 for the
three months ended March 31, 2005.
7
Employee Stock Plans
In March 1996, the Board amended and restated the 1992 Incentive Stock Plan, renamed it as the
1996 Equity Incentive Plan (the Incentive Plan) and reserved 1,725,000 shares of common stock for
issuance under the Incentive Plan. At the Companys annual meetings of stockholders in subsequent
years, stockholders approved reserving an additional 4,100,000 shares of common stock for issuance
under the Incentive Plan. The Incentive Plan provides for grants to employees of either
nonqualified or incentive options and provides for the grant to consultants of the Company of
nonqualified options. The exercise price of options granted under the Incentive Plan is determined
by the Board of Directors, but cannot be less than 100 percent of the fair market value of the
common stock on the date of grant.
In March 1996, the Board adopted the 1996 Non-Employee Directors Stock Option Plan (the
Directors Plan) and reserved 175,000 shares for issuance to provide for the automatic grant of
nonqualified options to purchase shares of common stock to non-employee directors of the Company.
At the Companys annual meetings of stockholders in subsequent years, stockholders approved
reserving an additional 250,000 shares of common stock for issuance under the Directors Plan.
In June 2005, the 2005 Equity Incentive Plan was approved at the Companys annual meeting of
stockholders to supersede and replace prior plans and reserved 7,560,045 shares of common stock for
issuance under the Plan, consisting of (a) the number of shares remaining available for grant under
the Incentive Plan and the Directors Plan, including shares subject to outstanding stock awards
under those plans, and (b) an additional 3,990,000 shares.
In March 1996,
the Board of Directors adopted the ESPP
covering an aggregate of 100,000 shares of common stock. At the Companys annual meetings of
stockholders in subsequent years, the stockholders approved reserving an additional 225,000 shares
of common stock for issuance under the ESPP. The ESPP is designed to allow eligible employees of
the Company to purchase shares of common stock through periodic payroll deductions. The price of
common stock purchased under the ESPP will be equal to 85 percent of the lower of the fair market
value of the common stock on the commencement date of each offering period or the specified
purchase date. Since inception, a total of 286,412 shares have been issued under the ESPP.
Pro forma Information for Periods prior to the Adoption of FAS 123(R)
Prior to the adoption of FAS 123(R), the Company elected to follow APB 25 to account for
employee stock options and complied with the disclosure provisions of
FAS 123 and FAS 148, Accounting for Stock-Based Compensation-Transition and
Disclosure
. No employee stock-based compensation expense was reflected in the Companys results of
operations for the three-month period ended March 31, 2005 for employee stock option awards as all
options were granted with an exercise price equal to the market value of the underlying common
stock on the date of grant. Our ESPP was deemed non-compensatory under the provisions of APB 25.
Previously reported amounts have not been restated.
The pro forma information for the three months ended March 31, 2005 was as follows:
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|
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|
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Three Months Ended
|
|
|
|
March 31, 2005
|
|
|
|
(in thousands except
|
|
|
|
per share data)
|
|
Net loss, as reported
|
|
$
|
(16,100
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)
|
|
|
|
|
|
Deduct: Total stock-based employee compensation
determined under the fair value based method for
all awards, net of related tax effects
|
|
|
(2,551
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)
|
|
|
|
|
Net loss pro forma
|
|
$
|
(18,651
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
Basic and diluted net loss per share as reported
|
|
$
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share pro forma
|
|
$
|
(0.53
|
)
|
|
|
|
|
8
Impact of the Adoption of FAS 123(R)
The Company adopted FAS 123(R) using the modified prospective transition method beginning
January 1, 2006. Accordingly, during the three-month period ended March 31, 2006, the Company
recorded stock-based compensation expense for awards granted prior to but not yet vested as of
January 1, 2006 as if the fair value method required for pro
forma disclosure under FAS 123 has been followed for expense recognition purposes adjusted for estimated forfeitures. For these awards, we have continued to recognize compensation expense using the accelerated
amortization method under FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or
Award Plans. For stock-based awards
granted after January 1, 2006, the Company recognized compensation expense based on the estimated
grant date fair value method required under FAS 123(R). The compensation expense for these awards
was recognized using a straight-line amortization method. As FAS 123(R) requires that stock-based
compensation expense be based on awards that are ultimately expected to vest, estimated stock-based
compensation for the three-month period ended March 31, 2006 has been reduced for estimated
forfeitures. In the Companys pro forma information required under FAS 123 for periods prior to
January 1, 2006, the Company accounted for forfeitures as they occurred. FAS 123(R) requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. The impact on the results of operations of
recording stock-based compensation for the three-month period ended March 31, 2006 was as follows:
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2006
|
|
|
|
(in thousands except
|
|
|
|
per share data)
|
|
Research and development
|
|
$
|
686
|
|
Selling, general and administrative
|
|
|
2,944
|
|
|
|
|
|
Total share-based compensation expense
|
|
$
|
3,630
|
|
|
|
|
|
|
|
|
|
|
Impact on basic and diluted net loss per share
|
|
$
|
(0.09
|
)
|
|
|
|
|
The weighted average grant date fair value of awards, as determined under FAS 123(R), granted
during the three-month period ended March 31, 2006 was $14.49 per share. The total fair value
vested during the three-month period ended March 31, 2006 was
$2.6 million. As of March 31, 2006, the
total unrecorded stock-based compensation balance for unvested shares, net of expected forfeitures,
was $27.8 million which is expected to be amortized over a weighted-average period of 18 months. Cash
received during the three months ended March 31, 2006 for stock options exercised under all
stock-based compensation arrangements were $1.2 million.
Valuation Assumptions
As of March 31, 2006 and 2005, the fair value of stock-based awards for employee stock option
awards and employee stock purchases made under the ESPP was estimated using the Black-Scholes
option pricing model. The following weighted average assumptions were used:
9
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
2005
|
|
Stock Option Plans:
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
4.57
|
%
|
|
|
3.54
|
%
|
Expected life
|
|
4.2 years
|
|
3.8 years
|
Expected volatility
|
|
|
0.60
|
|
|
|
0.77
|
|
Expected dividends
|
|
None
|
|
None
|
Weighted average option fair value
|
|
$
|
14.49
|
|
|
$
|
15.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
2005
|
|
ESPP:
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
4.33
|
%
|
|
|
2.50
|
%
|
Expected life
|
|
6 months
|
|
6 months
|
Expected volatility
|
|
|
0.60
|
|
|
|
0.80
|
|
Expected dividends
|
|
None
|
|
None
|
Weighted average shares fair value
|
|
$
|
9.32
|
|
|
$
|
16.92
|
|
Stock-Based Payment Award Activity
The following table summarizes stock option activity under all option plans for the
three-month periods ended March 31, 2006 and 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Number of
|
|
|
|
|
|
Weighted
|
|
|
|
|
Available
|
|
|
Shares
|
|
|
|
Average
|
|
|
for Grant
|
|
Outstanding
|
|
Exercise Price
|
Balance at December 31, 2004
|
|
|
1,282,193
|
|
|
|
2,296,442
|
|
|
|
|
$
|
17.99
|
|
|
|
Granted
|
|
|
(729,000
|
)
|
|
|
729,000
|
|
|
|
|
$
|
26.38
|
|
|
|
Exercised
|
|
|
|
|
|
|
(8,590
|
)
|
|
|
|
$
|
5.45
|
|
|
|
Cancelled/expired/forfeited
|
|
|
5,000
|
|
|
|
(5,000
|
)
|
|
|
|
$
|
38.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2005
|
|
|
558,193
|
|
|
|
3,011,852
|
|
|
|
|
$
|
20.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
3,610,461
|
|
|
|
3,806,081
|
|
|
|
|
$
|
21.17
|
|
|
|
Granted
|
|
|
(918,950
|
)
|
|
|
918,950
|
|
|
|
|
$
|
28.50
|
|
|
|
Exercised
|
|
|
|
|
|
|
(176,885
|
)
|
|
|
|
$
|
6.89
|
|
|
|
Cancelled/expired/forfeited
|
|
|
26,604
|
|
|
|
(26,604
|
)
|
|
|
|
$
|
33.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2006
|
|
|
2,718,115
|
|
|
|
4,521,542
|
|
|
|
|
$
|
23.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes nonvested stock option activity under all option plans for the
three-month period ended March 31, 2006.
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Average Grant-
|
|
|
|
Shares
|
|
|
Date Fair Value
|
|
|
|
|
|
|
|
Nonvested at December 31, 2005
|
|
|
2,209,027
|
|
|
$
|
9.69
|
|
Granted
|
|
|
918,950
|
|
|
$
|
14.49
|
|
Vested
|
|
|
(191,565
|
)
|
|
$
|
21.35
|
|
Cancelled/expired/forfeited
|
|
|
(26,604
|
)
|
|
$
|
19.96
|
|
|
|
|
|
|
|
|
|
Nonvested at March 31, 2006
|
|
|
2,909,808
|
|
|
$
|
10.34
|
|
|
|
|
|
|
|
|
|
The options outstanding and exercisable for stock-based payment awards as of March 31, 2006
were in the following exercise price ranges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
Options Exercisable
|
|
|
|
|
|
|
Weighted Average
Contractual Life
|
|
Weighted Average
|
|
|
|
|
|
Weighted Average
|
Range of Exercise Prices
|
Number Outstanding
|
|
Remaining
(In years)
|
|
Exercise Price
|
|
Number Exercisable
|
|
Exercise Price
|
$3.82 - $5.88
|
|
|
538,030
|
|
|
5.8
|
|
|
$
|
4.86
|
|
|
|
453,659
|
|
|
$
|
4.88
|
|
$6.00 - $10.88
|
|
|
453,986
|
|
|
4.9
|
|
|
$
|
8.77
|
|
|
|
417,819
|
|
|
$
|
8.85
|
|
$11.00 - $21.01
|
|
|
743,025
|
|
|
7.7
|
|
|
$
|
18.89
|
|
|
|
191,588
|
|
|
$
|
13.92
|
|
$21.56 - $25.23
|
|
|
233,542
|
|
|
9.3
|
|
|
$
|
23.43
|
|
|
|
2,042
|
|
|
$
|
21.60
|
|
$25.30
|
|
|
533,055
|
|
|
8.9
|
|
|
$
|
25.30
|
|
|
|
136,770
|
|
|
$
|
25.30
|
|
$25.44 - $28.41
|
|
|
142,271
|
|
|
9.5
|
|
|
$
|
26.76
|
|
|
|
19,707
|
|
|
$
|
27.85
|
|
$28.62
|
|
|
864,450
|
|
|
9.9
|
|
|
$
|
28.62
|
|
|
|
|
|
|
$
|
|
|
$28.75 - $38.08
|
|
|
672,900
|
|
|
8.5
|
|
|
$
|
34.06
|
|
|
|
241,519
|
|
|
$
|
35.48
|
|
$38.33 - $48.19
|
|
|
333,950
|
|
|
8.3
|
|
|
$
|
39.75
|
|
|
|
142,297
|
|
|
$
|
39.65
|
|
$53.37
|
|
|
6,333
|
|
|
8.1
|
|
|
$
|
53.37
|
|
|
|
6,333
|
|
|
$
|
53.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,521,542
|
|
|
8.1
|
|
|
$
|
23.15
|
|
|
|
1,611,734
|
|
|
$
|
16.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The aggregate intrinsic value of options represents the total pretax intrinsic value,
based on the Companys closing stock price of $26.26 at March 31, 2006, which would have been
received by award holders had all award holders exercised their awards that were in-the-money as of
that date. As of March 31, 2006, weighted average contractual life remaining for exercisable shares
is 6.0 years. The total number of in-the-money awards exercisable as of March 31, 2006 was
approximately 1,201,878. The aggregate intrinsic value of awards
exercised were $3.7 million and $204,000 for the three months
end March 31, 2006 and 2005, respectively. The aggregate
intrinsic value of in-the-money outstanding and exercisable awards were $26.1 million and $19.5
million, respectively as of March 31, 2006.
During
the three-month period ended March 31, 2006, no purchase was
made under the Companys ESPP. As of
March 31, 2006, securities authorized and available for issuance in connection with our ESPP were
38,588 shares.
Note 4. Revenue
In accordance with the Collaboration Agreement Bayer recognizes all revenue from the sale of
Nexavar. As such, for the quarter ended March 31, 2006, Onyx reported no revenue.
Effective January
2005, the Company licensed exclusive rights to its p53-selective virus, ONYX-015, to Shanghai
Sunway Biotech Co., Ltd. headquartered in Shanghai, Peoples Republic of China. Under this
agreement, Shanghai Sunway is responsible for the research, development, manufacture and
commercialization of ONYX-015 worldwide. During the quarter ended March 31, 2005, the Company
received a cash payment of $1.0 million in exchange for the license to Shanghai Sunway of the
intellectual property and know-how to ONYX-015. As the Company has no further obligations under the
license agreement, the $1.0 million payment was recorded as license fee revenue in the accompanying
statement of operations.
11
Note 5. Net Loss Per Share
Basic and diluted net loss per share have been computed using the weighted-average number of
shares of common stock outstanding during each period. Potentially dilutive outstanding securities
consisting of 4,530,805 stock options and warrants as of March 31, 2006 and 3,048,892 stock
options and warrants as of March 31, 2005 were not included in the computation of diluted net loss
per share because their effect would have been antidilutive.
Note 6. Comprehensive Loss
Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other
comprehensive income (loss) is comprised of unrealized holding gains and losses on the Companys
available-for-sale securities that are excluded from net loss and reported separately in
stockholders equity. Comprehensive loss and its components are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
Net loss as reported
|
|
$
|
(20,352
|
)
|
|
$
|
(16,100
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
Change in unrealized gain (loss) on available-for-sale securities
|
|
|
(281
|
)
|
|
|
(375
|
)
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(20,633
|
)
|
|
$
|
(16,475
|
)
|
|
|
|
|
|
|
|
12
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following Managements Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties. We use words such as
may, will, expect, anticipate, estimate, intend, plan, predict, potential,
believe, should and similar expressions to identify forward-looking statements. These
statements appearing throughout our Form 10-Q are statements regarding our intent, belief, or
current expectations, primarily regarding our operations. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this Form 10-Q. Our actual
results could differ materially from those anticipated in these forward-looking statements for many
reasons, including those set forth under Item 1A Risk
Factors in this Quarterly Report on Form
10-Q.
Overview
We are a biopharmaceutical company building an oncology business by developing innovative
therapies that target the molecular mechanisms implicated in cancer. With our collaborators, we are
developing small molecule drugs with the goal of
changing the way cancer is treated
. A
common feature of cancer cells is the excessive activation of signaling pathways that cause
abnormal cell proliferation. In addition, tumors require oxygen and nutrients from newly formed
blood vessels to support their growth. The formation of these new blood vessels is a process called
angiogenesis. We are applying our expertise to develop oral anticancer therapies designed to
prevent cancer cell proliferation and angiogenesis by inhibiting proteins that signal or support
tumor growth. By exploiting the genetic differences between cancer cells and normal cells, we aim
to create novel anticancer agents that minimize damage to healthy tissue.
Our lead product, Nexavar
®
(sorafenib) tablets, being developed with our
collaborator, Bayer Pharmaceuticals Corporation, or Bayer, was approved by the U.S. Food and Drug
Administration, or FDA, in December 2005 for the treatment of individuals with advanced kidney
cancer. This approval marked the first newly approved drug for patients with this disease in over a
decade. Additionally, Nexavar received approval for the treatment of patients with advanced kidney cancer in
Mexico in April 2006 and in Switzerland, after nepherectomy and prior palliative or adjuvant
therapy with cytokines, in March 2006. Nexavar is a novel, orally available multi-kinase inhibitor
and is one of a new class of anticancer treatments that target growth signaling.
On March 6, 2006, we and Bayer entered into a Co-Promotion Agreement to co-promote Nexavar in
the United States. This agreement amends the original 1994 Collaboration Agreement and supersedes
the provisions of that agreement that relate to the co-promotion of Nexavar in the United States.
Outside of the United States, the terms of the Collaboration Agreement continue to govern. Under
the terms of the Co-Promotion Agreement and consistent with the Collaboration Agreement, we will
share equally in the profits or losses of Nexavar, if any, in the United States, subject only to
our continued co-funding of the development costs of Nexavar worldwide, excluding Japan. Please
refer to Note 2 of the Notes to Financial Statements included in Item I of this Form 10-Q for
further information.
We have not been profitable since inception and expect to incur substantial and potentially
increasing losses for the foreseeable future, due to expenses associated with the continuing
development and commercialization of Nexavar. Since inception, we have relied on public, private
financing, combined with milestone payments from our collaborations to fund our operations. In
January 2006, we received the fourth and final $10.0 million milestone advance from Bayer as a
result of the FDA approval of Nexavar. However, we expect that our losses will continue and will
fluctuate from quarter to quarter and that such fluctuations may be substantial. As of March 31,
2006, our accumulated deficit was approximately $366.2 million.
Our business is subject to significant risks, including the risks inherent in our development
efforts, the results of the Nexavar clinical trials, the marketing of Nexavar as a treatment for
patients with advanced kidney cancer, our dependence on collaborative parties, uncertainties
associated with obtaining and
enforcing patents, the lengthy and expensive regulatory approval process and competition from
other products. For a discussion of these and some of the other risks and uncertainties affecting
our business, see Item 1A Risk Factors of this Quarterly Report on Form 10-Q.
13
Critical Accounting Policies and the Use of Estimates
Critical accounting policies are those that require significant estimates, assumptions and
judgments by management about matters that are inherently uncertain at the time that the financial
statements are prepared such that materially different results might have been reported if other
assumptions had been made. These estimates form the basis for making judgments about the carrying
values of assets and liabilities. We base our estimates and judgments on historical experience and
on various other assumptions that we believe to be reasonable under the circumstances. We consider
certain accounting policies related to research and development expenses, stock-based compensation
and use of estimates to be critical policies. Significant estimations used in 2006 included
assumptions used in the determination of stock-based compensation related to stock options granted.
Actual results could differ materially from these estimates. The changes to our critical accounting
policies since we filed our Annual Report on Form 10-K, for the year ended December 31, 2005, with
the Securities and Exchange Commission, or SEC, are described below. For a description of our other
critical accounting policies, please refer to our 2005 Annual Report on Form 10-K for the fiscal
year ended December 31, 2005.
Net Expense from Unconsolidated Joint Business:
Net expense from unconsolidated joint business
relates to our collaboration with Bayer for the development and marketing of Nexavar. It consists
of our share of the net collaboration loss generated from our Collaboration Agreement with Bayer
net of the reimbursement of our development and marketing expenses related to Nexavar. Under the
collaboration, Bayer recognizes all revenue from the sale of Nexavar. The net expense from the
unconsolidated joint business is, in effect, the net amount due to Bayer to balance the companies
economics under the Nexavar collaboration. Under the terms of the collaboration, the companies
share all research and development, marketing, and non-U.S. sales expenses, excluding Japan. Some
of the revenue and expenses recorded to derive the net expense from unconsolidated joint business
during the period presented are estimates of both parties and are subject to further adjustment
based on each partys final review should actual results differ materially from these estimates. If
the Company underestimates activity levels associated with the collaboration of Nexavar at a given
point in time, the Company could record significant additional expenses in future periods.
Stock-Based
Compensation:
Effective January 1, 2006, we adopted the Statement
of Financial Accounting Standards, or FAS, No. 123(R), Share-Based Payment, (FAS 123(R)), which requires the measurement and recognition of compensation expense for all stock-based
payment made to our employees and directors including employee stock option awards and employee stock purchases made under our Employee Stock Purchase Plan, or ESPP, based on estimated
fair value. We previously applied the provisions of Accounting Principles Board Opinion, or APB, No. 25,
Accounting for Stock Issued to Employees (APB 25) and related Interpretations and provided the
required pro forma disclosures under FAS 123, Accounting for
Stock-Based Compensation, or FAS 123.
We adopted FAS 123(R) using the modified prospective transition method beginning
January 1, 2006. Accordingly, during the three-month period
ended March 31, 2006, we
recorded stock-based compensation expense for awards granted prior to but not yet vested as of
January 1, 2006 as if the fair value method required for pro forma disclosure under FAS 123 were in
effect for expense recognition purposes adjusted for estimated forfeitures. For stock-based awards
granted after January 1, 2006, we recognized compensation expense based on the estimated
grant date fair value method required under FAS 123(R). The compensation expense for these awards
was recognized using a straight-line amortization method. The net loss for the quarter ended March
31, 2006 includes a stock-based compensation expense of $3.6 million, or $0.09 per share, for the
adoption of FAS 123(R). As of March 31, 2006, the total
unrecorded stock-based compensation balance for unvested shares, net
of expected forfeitures, was $27.8 million, which is expected to
be amortized over a weighted-average period of 18 months.
While fair
value may be readily determinable for awards of stock, market quotes are not
available for long-term, nontransferable stock options because these instruments are not traded. We
currently use the Black-Scholes option-pricing model to estimate the fair value of stock options.
Option valuation models require the input of highly
subjective assumptions, including but no limited to stock price volatility and stock option
exercise behavior. We expect to continue to use the Black-Scholes model for valuing our stock-based
compensation expense. However, our estimate of future stock-based compensation expense will be
affected by a number of items including our stock price, the number of stock options our board of
directors may grant in 2006, as well as a number of complex and subjective valuation adjustments
and the related tax effect. These valuation assumptions include, but are not limited to, the
volatility of our stock price, expected life and stock option exercise behaviors. Actual results
could differ materially from these estimates.
Results of Operations
14
Three months ended March 31, 2006 and 2005
Revenue
Nexavar,
our only marketed product, was approved in the U.S. in December 2005. In accordance with our
collaboration agreement with Bayer, Bayer recognizes all revenue from the sale of Nexavar. As such,
for the quarter ended March 31, 2006, we reported no revenue. We recognized $1.0 million of license
revenue for the quarter ended March 31, 2005. The 2005 revenue represented a non-refundable payment
received from Shanghai Sunway Biotech Co., Ltd. for exclusive rights to certain Onyx patents from
the now discontinued therapeutic virus program.
Net Expense from Unconsolidated Joint Business
Nexavar is currently marketed and sold in the United States for the treatment of advanced
kidney cancer, with regulatory applications pending in the European Union, as well as other
territories internationally. We co-promote Nexavar in the United States with Bayer under a
collaboration agreement. Under the terms of the collaboration agreement, we share equally in the
profits or losses of Nexavar, if any, in the United States, subject only to our continued
co-funding of the development costs of Nexavar outside of Japan and its continued promotion of
Nexavar in the United States. The collaboration was created through a contractual arrangement, not
through a joint venture or other legal entity.
In the United States, we contributes half of the overall number of sales force personnel
required to market and promote Nexavar and half of the medical science liaisons to support Nexavar.
Each of Onyx and Bayer bears its own sales force and medical science liaison expenses. These
expenses are not included the calculation of the profits or losses of the collaboration.
Bayer provides all product distribution and all marketing support services, including managed care,
customer service, order entry and billing, for Nexavar in the United States. Bayer is compensated
for distribution expenses based on a fixed percent of gross sales of Nexavar in the United States.
Bayer is reimbursed for half of its expenses for marketing services provided by Bayer for the sale
of Nexavar in the United States. The parties share equally in any other out-of-pocket marketing
expenses (other than expenses for sales force and medical science liaisons) that we and Bayer incur
in connection with the marketing and promotion of Nexavar in the United States. Bayer
manufactures all Nexavar sold in the United States and is reimbursed at an agreed transfer price
per unit for the cost of goods sold.
Outside of the United States, except in Japan, Bayer incurs all of the sales and marketing
expenditures, and we share equally in those expenditures. In addition, upon approval of Nexavar
worldwide, we will reimburse Bayer a fixed percentage of sales to reimburse them for their
marketing infrastructure. Research and development expenditures on a worldwide basis, except in
Japan, are equally shared by both companies regardless of whether we
or Bayer incurs the expense. In Japan, Bayer is
responsible for all development and marketing costs and we will receive a royalty on net sales of
Nexavar.
Net expense from unconsolidated joint business consists of our share of the pretax
collaboration loss generated from its collaboration with Bayer net of the reimbursement of our
marketing and research and
development costs related to Nexavar. Under the collaboration, Bayer recognizes all sales of
Nexavar worldwide. We record our share of the collaboration pre-tax loss on a quarterly basis.
Collaboration loss is derived by calculating net sales of Nexavar to third-party customers and
deducting cost of goods sold, distribution costs, marketing costs (including without limitation,
advertising and education expenses, selling and promotion expenses, marketing personnel expenses,
and Bayer marketing services expenses), Phase IV clinical trial costs, allocable overhead cost,
and research and development costs.
The net expense from the unconsolidated joint business is, in effect,
the net amount due to Bayer to balance the companies economics
under the Nexavar collaboration.
As noted above, United States sales force and medical science liaison
expenditures incurred by both companies are borne by each company separately and are not included
in the calculation. Some of the revenue and expenses recorded to derive the net expense from
unconsolidated joint business during the period presented are estimates of both parties and are
subject to further adjustment based on each partys final review should actual results differ from
these estimates. If the Company underestimates activity levels associated with the co-promotion and
collaboration of Nexavar at a given point in time, the Company could record significant additional
expense in future periods.
Net expense from unconsolidated joint business decreases with increased net Nexavar revenue
and as the differential between Bayers and our shared Nexavar expenses declines. If net Nexavar
revenue is greater than the differential between Bayers and our shared Nexavar expenses, we will
report a net profit from unconsolidated joint business on our revenue line. Conversely, if Nexavar
revenue declines or if the differential between Bayers and our shared Nexavar expenses increases,
net expense from unconsolidated joint business will increase. Due to the uncertainty in Bayers
revenue from the sale of Nexavar and the relative expenses of Bayers and our shared Nexavar
expenses, it is not possible to predict our net expense from unconsolidated joint business for
future periods. We expect Bayers and our shared Nexavar research and development expenses to
increase in future periods as the companies develop Nexavar for indications beyond advanced kidney
cancer. We also expect Bayers and our shared cost of goods sold, distribution, selling and general
administrative expense to increase as the companies prepare to market and sell Nexavar outside of
the United States.
15
For the quarter ended March 31, 2006, net expense from unconsolidated joint business was $4.1
million calculated as follows:
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2006
|
|
|
|
(in thousands)
|
|
Product revenue, net (as recorded by Bayer)
|
|
$
|
23,747
|
|
Combined cost of goods sold, distribution, selling,
general and administrative
|
|
|
17,708
|
|
Combined research and development
|
|
|
30,031
|
|
|
|
|
|
Combined collaboration loss
|
|
$
|
(23,992
|
)
|
|
|
|
|
|
|
|
|
|
Onyxs 50% share of collaboration loss
|
|
$
|
(11,996
|
)
|
Reimbursement of Onyxs direct development and marketing
expenses
|
|
|
7,894
|
|
|
|
|
|
Onyxs net expense from unconsolidated joint business
|
|
$
|
(4,102
|
)
|
|
|
|
|
Research and Development Expenses
Research and development expenses were $7.8 million, including a stock-based compensation expense
of $686,000 for the three months ended March 31, 2006, a net decrease of $5.7 million, or 42
percent, from $13.5 million in the same period in 2005. We did not expense employee stock-based
compensation prior to our adoption of FAS 123(R) on January 1, 2006. The decrease was primarily due to change in
presentation of our Statement of Operation to include the net expense from unconsolidated joint
business line item. Offsetting this decrease was an increase to our
research and development expense in the first quarter of 2006 due to
the costs to conduct our Phase II and Phase III metastatic melanoma
clinical trials that were in an initial state in the same period in
2005. Our share of Bayers Nexavar product development expenses are included in net
expense in unconsolidated joint business for the quarter ended March 31, 2006. In prior periods,
Bayers Nexavar product development expense was included in research and development expense. In
the new presentation, only our direct research and development expenses are included in the
research and development line item.
The major components of research and development costs include clinical manufacturing costs,
clinical trial expenses, consulting and other third-party costs, salaries and employee benefits,
supplies and materials, and allocations of various overhead and occupancy costs. The scope and
magnitude of future research and development expenses are difficult to predict at this time given
the number of studies that will need to be conducted for any of our potential product candidates.
In general, biopharmaceutical development involves a series of steps beginning with identification
of a potential target and includes proof of concept in animals and Phase I, II and III clinical
studies in humans, each of which is typically more expensive than the previous step.
We manage the ongoing development program of Nexavar, together with our partner Bayer, through
a joint development committee under the Collaboration agreement between the parties. Together with
Bayer, we have implemented a broad-based global development strategy for Nexavar that implements
simultaneous clinical programs currently designed to expand the number of approved indications of
Nexavar and evaluate the use of Nexavar in new and/or novel combinations. Our global development
plan has included major Phase III studies in kidney and liver in the past, and currently includes
additional major Phase III clinical trials in metastatic melanoma comparing the administration of
Nexavar in combination with the chemotherapeutics carboplatin and
paclitaxel, as well as Nexavar
with chemotherapeutic agents in non-small cell lung cancer. The completion dates of these
trials are currently unknown. As of March 31, 2006, we have invested $149.8 million in the
development of Nexavar, representing our share of the costs incurred to date under the
collaboration.
16
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $11.6 million, including a stock-based
compensation expense of $2.9 million, for the three months ended March 31, 2006, a net increase of
$6.8 million from $4.8 million in the same period in 2005. We did not expense employee stock-based
compensation prior to our adoption of FAS 123(R) on January 1, 2006. In addition to the stock-based
compensation expense, the increase was due to the establishment of our U.S. Nexavar sales force and
our marketing expenses relating to the Nexavar launch. In addition, with the change in accounting
presentation to reflect net expense from unconsolidated joint business, our share of Bayers
Nexavar-related marketing expenses is included in the net expense from unconsolidated joint
business line item. In prior periods, our share of Nexavar related marketing expenses was included
in the companys selling, general and administrative line item. Under the new presentation only our
direct selling, general and administrative expense are included in the selling, general and
administrative expense line item. Our direct selling, general and administrative expenses increased significantly in the first quarter of 2006 over the same period in the prior year due
to the adoption of FAS 123(R), as well as the payroll related costs of our sales force and medical science liaisons who were hired in the second half of 2005.
Interest Income, net
We had net interest income of $3.2 million for the three months ended March 31, 2006, an
increase of $1.9 million from $1.2 million in the same period in 2005. The increase was
primarily due to higher interest rates as well as higher average investment balances for the three
months ended March 31, 2006 resulting from our November 2005 sale of equity securities from which
we received $136.2 million in net cash proceeds.
Liquidity and Capital Resources
Since our inception, we have incurred losses, and we have relied primarily on public and
private financing, combined with milestone payments we have received from our collaborations to
fund our operations.
At March 31, 2006, we had cash, cash equivalents and short and long-term marketable securities
of $258.3 million, compared to $284.7 million at December 31, 2005. The decrease of $26.4 million
was attributable to net cash used in operations of
$37.3 million, primarily related to our expenses
for the quarter and the payment of the year end payable to Bayer, our collaboration partner. The
decrease was offset by our $10.0 million receipt of the final milestone-based advance from Bayer in
January 2006 for the approval of Nexavar by the FDA. The cash was used primarily for co-funding the
clinical development program for Nexavar
.
In addition, we received proceeds of $1.2 million from
the exercise of stock options during the three-month period ended March 31, 2006.
Our collaboration agreement with Bayer calls for creditable milestone-based payments. These
amounts are interest-free and will be repayable to Bayer from a portion of any of our future
profits and royalties. We received $5.0 million in the third quarter of 2002 upon initiation of
Phase II clinical studies and $15.0 million in the fourth quarter of 2003 based upon the initiation
of a Phase III study. Based on the July 2005 NDA filing, we received the third milestone advance
for $10.0 million in the third quarter of 2005. In addition, in January 2006, we received the final
$10.0 million milestone advance as a result of the U.S. approval
in December 2005. We received a total of $40.0 million of milestone advances from Bayer in connection with the
approval of Nexavar. These advances will be repayable to Bayer from a portion of any of our future profits and royalties. If we do not receive any profits or royalties on any products,
we will not have to repay Bayer any creditable milestone-based payments.
Total capital expenditures for equipment and leasehold improvements for the three-month period
ended March 31, 2006, were $12,000. We currently expect to make expenditures for capital equipment
and leasehold improvements of approximately $588,000 for the remainder of 2006.
We believe that our existing capital resources and interest thereon will be sufficient to fund
our current and planned operations into 2008. However, if we change our development plans, we may
need additional funds sooner than we expect. In addition, we
anticipate that our co-development
costs for the Nexavar program may increase over the next several years as we continue our share of
funding the clinical development program and prepare for the potential product launches throughout
the world. While these costs are unknown at the current time, we may need to raise additional
capital to continue the co-funding of the program in future periods through and beyond 2008. We
intend to seek any required additional funding through collaborations, public and private equity or
debt financings, capital lease transactions or other available financing sources. Additional
financing may not be available on acceptable terms, if at all. If additional funds are raised by
issuing equity securities, substantial dilution to existing stockholders may result. If adequate
funds are not available, we may be required to delay, reduce the scope of or eliminate one or more
of our research or development programs or to obtain funds through collaborations with others that
are on unfavorable terms or that may require us to relinquish rights to certain of our
technologies, product candidates or products that we would otherwise seek to develop on our own.
17
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The primary objective of our investment activities is to preserve principal while at the same
time maximize the income we receive from our investments without significantly increasing risk. Our
exposure to market rate risk for changes in interest rates relates primarily to our investment
portfolio. This means that a change in prevailing interest rates may cause the principal amount of
the investments to fluctuate. By policy, we minimize risk by placing our investments with high
quality debt security issuers, limit the amount of credit exposure to any one issuer, limit
duration by restricting the term, and hold investments to maturity except under rare circumstances.
We maintain our portfolio of cash equivalents and marketable securities in a variety of securities,
including commercial paper, money market funds, and investment grade government and non-government
debt securities. Through our money managers, we maintain risk management control systems to monitor
interest rate risk. The risk management control systems use analytical techniques, including
sensitivity analysis. If market interest rates were to increase by 100 basis points, or 1%, as of
March 31, 2006, the fair value of our portfolio would decline by approximately $1.4 million.
The table below presents the amounts and related weighted interest rates of our cash
equivalents and marketable securities at:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2006
|
|
December 31, 2005
|
|
|
Maturity
|
|
Fair Value
(In millions)
|
|
Average
Interest
Rate
|
|
Maturity
|
|
Fair Value
(In millions)
|
|
Average
Rate
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents, fixed rate
|
|
0 -- 3 months
|
|
$
|
22.7
|
|
|
|
4.55
|
%
|
|
0 -- 2 months
|
|
$
|
45.4
|
|
|
|
3.97
|
%
|
Marketable securities,
fixed rate
|
|
0 -- 22 months
|
|
$
|
235.4
|
|
|
|
5.08
|
%
|
|
0 -- 23 months
|
|
$
|
238.6
|
|
|
|
4.66
|
%
|
We did not hold any derivative instruments as of March 31, 2006, and we have not held
derivative instruments in the past. However, our investment policy does allow us to use derivative
financial instruments for the purposes of hedging foreign currency denominated obligations. Our
cash flows are denominated in U.S. dollars.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures:
The Companys chief executive officer
and chief financial officer reviewed and evaluated the Companys disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended). Based on that evaluation, the Companys chief executive officer and principal financial
officer concluded that the Companys disclosure controls and procedures were effective as of March
31, 2006 to ensure the information required to be disclosed by the Company in this Quarterly Report
on Form 10-Q is recorded, processed, summarized and reported within the time periods specified in
the Securities and Exchange Commissions rules and forms.
Changes in Internal Control over Financial Reporting:
There were no changes in the Companys
internal control over financial reporting during the quarter ended March 31, 2006 that have
materially affected, or are reasonably likely to materially affect the Companys internal control
over financial reporting.
Inherent Limitations on Effectiveness of Controls:
Internal control over financial reporting
may not prevent or detect all errors and all fraud. Also, projections of any evaluation of
effectiveness of internal control to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
18
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings.
Item IA. Risk Factors
You should carefully consider the risks described below, together with all of the other
information included in this report, in considering our business and prospects. The risks and
uncertainties described below contain forward-looking statements, and our actual results may differ
materially from those discussed here. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial also may impair our business operations. Each of these risk
factors could adversely affect our business, operating results and financial condition, as well as
adversely affect the value of an investment in our common stock and/or contingent value rights.
We
have marked with an asterisk (*) those risk factors below that
reflect substantial changes from the
risk factors included in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 16, 2006.
Nexavar
®
(sorafenib) tablets is our only product, and we do not have any other product
candidates in Phase II or Phase III clinical development. If Nexavar is not commercially
successful, we may be unable to identify and promote alternative product candidates and our
business would fail.
Nexavar is our only product. In June 2003, following an unsuccessful search for new
collaboration partners for our therapeutic virus product candidates, including ONYX-015 and
ONYX-411, we announced that we were discontinuing the development of all therapeutic virus product
candidates, eliminating all employee positions related to these candidates and terminating all
related research and manufacturing capabilities. As a result, we do not have internal research and
preclinical development capabilities. Our medical, commercial and
administrative employees are dedicated to the development and
commercialization of Nexavar and managing our relationship with Bayer, but are
not actively discovering or developing new product candidates. As a result of the termination of
our therapeutic virus program and drug discovery programs, we do not have a clinical development
pipeline beyond Nexavar. If Nexavar is not commercially successful, we may be unable to identify
and promote alternative product candidates to later stage clinical development, which would cause
our business to fail.
Our clinical trial of Nexavar in kidney cancer may not yield statistically significant overall
survival data, which may negatively impact the commercialization of Nexavar.
í
In March 2005, an independent data monitoring committee reviewed the safety and efficacy data
from our ongoing Phase III trial of Nexavar in kidney cancer and concluded that the trial met its
co-primary endpoint, resulting in statistically significant longer progression-free survival in
those patients administered Nexavar versus those patients administered placebo. As a result, in
July 2005, we and Bayer filed an NDA seeking approval of Nexavar to treat patients with kidney
cancer in the United States. In September 2005, Bayer also filed a Marketing Authorization
Application, or MAA, to the European Medicines Agency, or EMEA, for the approval to market Nexavar
within the European Union to treat patients with kidney cancer.
In April 2005, we and Bayer recommended that all patients in our ongoing Phase III kidney
cancer trial be offered access to Nexavar. This decision followed further review of the
progression-free survival data, as well as additional discussions with the principal investigators,
an independent data monitoring committee, and the FDA. As a result, patients who were previously
administered placebo in the trial could have elected to receive Nexavar. This action has reduced
the number of patients in the trial receiving placebo and is expected to negatively impact our
ability to obtain statistically significant data on overall survival of patients with kidney cancer
participating in this clinical trial.
In November 2005, an investigator-reported interim analysis on overall survival of patients in
the Phase III kidney cancer trial was presented at the thirteenth European Cancer Conference, or
ECCO. The analysis, which was based on the
19
220 deaths that had occurred by May 31, 2005, was conducted while the Phase III kidney cancer study
was ongoing and as described above, in April 2005 we and Bayer offered access to Nexavar to all patients in the trial,
including those who had been receiving placebo. The investigator reported there was a 28% reduction
in rate of death within the measurement period for patients receiving Nexavar compared to those who
were not. While this represents a positive trend, with a p-value of 0.018, the data was not
sufficient to be considered statistically significant according to the predefined specifications
for this interim analysis. P-values are used to indicate the probability that results observed in
two different samples are different due to chance alone, as opposed to a benefit due to the
intervention, such as treatment with Nexavar. In order for the interim analysis of survival data
reported by the investigator to be considered statistically significant, the p-value would have had
to be less than 0.0005. A second interim analysis has been performed and is scheduled to be presented at the
American Society of Clinical Oncology, ASCO, meeting in June 2006. The final survival analysis, which is planned
when 540 deaths have occurred, is not expected for some time. Cross over of patients from placebo
to Nexavar is likely to negatively impact our ability to obtain statistically significant overall
survival data. If our competitors are able to generate statistically significant overall survival data and we are not, it could impair our ability to
successfully market Nexavar.
Nexavar has received only limited approval for sale outside of the United States, and may
never receive broad foreign marketing approval.
í
In July 2005, we and Bayer filed for approval of Nexavar based on the progression-free
survival data. While the FDA granted full approval in December 2005 for patients with advanced
kidney cancer, we and Bayer do not know whether foreign regulatory authorities will broadly grant
approval to Nexavar. In March 2006, the Swiss Agency for Therapeutic Products approved Nexavar as
a treatment for patients with advanced kidney cancer, after nepherectomy and prior palliative or
adjuvant therapy with cytokines. In April 2006 the Mexican Ministry of Health granted approval of
Nexavar as a treatment for advanced kidney cancer. Other foreign regulatory authorities may not,
however, be satisfied with the safety and efficacy data submitted in support of the foreign
applications, which could result in non-approval, a requirement of additional clinical
trials, further analysis of existing data or a restricted use of Nexavar. Lack of marketing approval in a particular country
would prevent us from selling Nexavar in that country, which could harm our business. In
particular, if we do not receive approval from the EMEA to sell Nexavar in Europe, we will be
prevented from selling into this potentially large market.
In April 2006, a positive opinion was issued by the European Committee for Medicinal Products
for Human Use (CHMP) concerning Nexavars use for the treatment of patients with advanced renal
cell carcinoma who have failed prior interferon-alpha or interleukin-2 based therapy or are
considered unsuitable for such therapy. This CHMP opinion will be elevated to the European
Commission for a ruling on a Marketing Authorization for all countries in the European Union. The
recommendation from the CHMP is not a guarantee of approval as the final decision is made by the
European Commission. A regulatory action in the European Union is expected in the second half of
2006.
In addition, if Nexavar is approved in
other European countries, we and Bayer will be required to negotiate the price of Nexavar with
European governmental authorities in order for Nexavar to be eligible for government reimbursement.
In many European countries, patients will not use prescription drugs that are not reimbursable by
their governments. European price negotiations could delay commercialization in a particular
country by twelve months or more.
Nexavar was approved by the FDA for the treatment of advanced kidney cancer on the basis of
the progression-free survival endpoint. Since we have not yet performed the final analysis on
overall survival, we do not know whether we will achieve a statistically significant outcome on
this endpoint. We expect that our ability to obtain statistically significant overall survival data
will be negatively impacted by our April 2005 decision to allow patients that had been receiving
placebo to elect to receive Nexavar. The EMEA and other regulatory authorities may have concerns or
require further analysis of the manner in which tumor progression was determined. It is possible
that in the absence of statistically significant overall survival data, Nexavar will not receive
marketing approval by the EMEA or in individual countries, or will receive more limited approval
than that granted by the FDA. For example, the Swiss Agency for Therapeutic Products did not
approve Nexavar as a front line therapy, and it is possible that other foreign regulatory agencies
will take a similar approach
.
In addition to the question of whether Nexavar has demonstrated
sufficient efficacy in the treatment of kidney cancer, the EMEA and other regulatory authorities
may have questions about the safety of the drug. For example, there were instances of greater
adverse events in the treatment arm relative to the placebo arm of the Phase III trial. In
addition, as an element of the foreign approval process, the applicable regulatory authority must
be satisfied with the processes and facilities for drug manufacture, which includes a physical
inspection of those facilities. Any conclusion that there are shortcomings in the processes,
facilities, or quality control procedures related to manufacture of the drug could result in a
significant delay in foreign approval. For these or other reasons, there is no assurance that
Nexavar will receive any additional foreign approvals on the basis of the current application
without amendment, if it is approved at all.
There is a competing therapy approved for the treatment of advanced kidney cancer, and we
expect the number of approved therapies could rapidly increase, which could harm the prospects for
Nexavar in this indication.
20
Pfizers drug, Sutent, a multi-kinase inhibitor, was recently approved by the FDA for treating
patients with Gleevec-resistant gastrointestinal stromal tumors, or GIST, and Sutent also received
accelerated approval for advanced kidney cancer. Pfizer has also submitted an MAA to the EMEA for
Sutent. The FDA approval of Nexavar permits Nexavar to be used as a first-line therapy for the
treatment of advanced kidney cancer. Moreover, Genentechs Avastin has been reported to have
activity in kidney cancer, and Genentech has indicated that Avastin is now being used off-label for
treatment of some kidney cancer patients. Both Genentech and Pfizer have pivotal Phase III kidney
cancer studies underway in first-line patients that may include superior progression-free survival
or overall survival data than Nexavar. It is not currently known which of Nexavar and these
potential new kidney cancer products, if any, will be accepted by the medical community as the
standard of care. The use of any particular therapy may limit the use of a competing therapy with a
similar mechanism of action.
In addition, Wyeth is conducting a Phase III study of CCI-779, an mTOR inhibitor, in patients
with advanced kidney cancer. Pfizer also has an earlier stage compound, AG-013736, a multi-kinase
inhibitor, which is in clinical development and being evaluated in kidney cancer patients.
Historically, the most commonly used therapeutic agents for patients suffering from metastatic
kidney cancer were interleukin-2 (IL-2) and interferon-alpha (IFN). With the development and
approval of new anticancer therapies, it is anticipated that the initial, or first-line, treatment
for many of these patients could shift to the new therapeutic products. The successful
introduction of other new therapies could significantly reduce the potential market for Nexavar in
this indication. Decreased demand or price for Nexavar would harm our ability to realize revenue
and profits from Nexavar which could cause our stock price to fall.
If our clinical trials fail to demonstrate that Nexavar is safe and effective for cancer types
other than kidney cancer, we will be unable to broadly commercialize Nexavar as a treatment for
cancer, and our business may fail.
In collaboration with Bayer, we are conducting multiple clinical trials of Nexavar. We have
completed Phase I single-agent clinical trials of Nexavar. We are currently conducting a number of
Phase Ib clinical trials of Nexavar in combination with other anticancer agents. Phase I trials are
not designed to test the efficacy of a drug candidate but rather to test safety; to study
pharmacokinetics, or how drug concentrations in the body change over time; to study
pharmacodynamics, or how the drug candidate acts on the body over a period of time; and to
understand the drug candidates side effects at various doses and schedules.
With Bayer, we have completed Phase II clinical trials of Nexavar in kidney and liver cancer
and are conducting Phase II clinical trials in breast, non-small cell lung, melanoma and other
cancers. Phase II trials are designed to explore the efficacy of a product candidate in several
different types of cancers and may be randomized and double-blinded to ensure that the results are
due to the effects of the drug. In addition, in March 2005, we and Bayer initiated a Phase III
clinical trial of Nexavar in patients with liver cancer. In May 2005, we and Bayer initiated a
Phase III clinical trial of Nexavar in combination with the chemotherapeutic agents carboplatin and
paclitaxel in patients with malignant melanoma. In February 2006, we and Bayer initiated a Phase
III clinical trial of Nexavar in combination with carboplatin and paclitaxel in patients with
non-small cell lung cancer, or NSCLC. Phase III trials are designed to more rigorously test the
efficacy of a product candidate and are normally randomized and double-blinded.
Although we have received FDA approval for the use of Nexavar in the treatment of patients
with advanced kidney cancer, the efficacy of Nexavar has not been proven in other types of cancer.
Historically, many companies have failed to demonstrate the effectiveness of pharmaceutical product
candidates in Phase III clinical trials notwithstanding favorable results in Phase I or Phase II
clinical trials. In addition, if previously unforeseen and unacceptable side effects are observed,
we may not proceed with further clinical trials of Nexavar. In our clinical trials, we treat
patients who have failed conventional treatments and who are in advanced stages of cancer. During
the course of treatment, these patients may die or suffer adverse medical effects for reasons
unrelated to Nexavar. These adverse effects may impact the interpretation of clinical trial
results, which could lead to an erroneous conclusion regarding the toxicity or efficacy of Nexavar.
Our clinical trials may fail to demonstrate that Nexavar is safe and effective as a treatment
for types of cancer other than kidney cancer, which would prevent us from marketing Nexavar as a
treatment for those other types of cancer, limiting the potential market for the product, which may
cause our business to fail.
21
If serious adverse side effects are associated with Nexavar, approval for Nexavar could be
revoked, sales of Nexavar could decline, and we may be unable to develop Nexavar as a treatment for
other types of cancer.
The approved package insert for Nexavar for the treatment of patients with advanced kidney
cancer warns of a number of observed adverse side effects:
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Hypertension may occur early in the course of therapy and blood pressure should be
monitored weekly during the first six weeks of therapy and treated as needed.
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Incidence of bleeding, regardless of causality, was 15 percent for Nexavar vs. 8 percent
for placebo and the incidence of treatment-emergent cardiac ischemia/infarction was 2.9
percent for Nexavar vs. 0.4 percent for placebo.
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Most common treatment-emergent adverse events with Nexavar were diarrhea,
rash/desquamation, fatigue, hand-foot skin reaction, alopecia and nausea. Grade 3 / 4
adverse events were 38 percent for Nexavar vs. 28 percent for placebo.
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Women of child-bearing potential should be advised to avoid becoming pregnant and advised
against breast-feeding.
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In cases of any severe or persistent side effects, temporary treatment interruption, dose
modification or permanent discontinuation should be considered.
If additional adverse side effects emerge, or a pattern of severe or persistent previously
observed side effects is observed in the Nexavar patient population, the FDA could modify or revoke
its approval of Nexavar or we may choose to withdraw it from the market. If this were to occur, we
may be unable to obtain approval of Nexavar in additional indications and foreign regulatory
agencies may decline to approve Nexavar for use in any indication. Any of these outcomes would
have a material adverse impact on our business. In addition, if patients receiving Nexavar were to
suffer harm as a result of their use of Nexavar, these patients or their representatives may bring
claims against us. These claims, or the mere threat of these claims, could have a material adverse
effect on our business and results of operations.
We are dependent upon our collaborative relationship with Bayer to manufacture and to further
develop and commercialize Nexavar. There may be circumstances that delay or prevent the development
and commercialization of Nexavar.
Our strategy for manufacturing and further developing and commercializing Nexavar depends in
large part upon our relationship with Bayer. If we are unable to maintain our collaborative
relationship with Bayer, we would need to undertake development, manufacturing and marketing
activities at our own expense, which would significantly increase our capital requirements and
limit the indications we are able to pursue and could prevent us from further commercializing
Nexavar.
Under the terms of the collaboration agreement, we and Bayer are conducting multiple clinical
trials of Nexavar. We and Bayer must agree on the development plan for Nexavar. If we and Bayer
cannot agree, clinical trial progress could be significantly delayed or halted.
Under our agreement with Bayer, we have the opportunity to fund 50 percent of clinical
development costs worldwide except in Japan, where Bayer will fund 100 percent of development costs
and pay us a royalty on net sales. We are currently funding 50 percent of development costs for
Nexavar and depend on Bayer to fund the balance of these costs. Our collaboration agreement with
Bayer does not, however, create an obligation for either us or Bayer to fund additional development
of Nexavar, or any other product candidate. If a party declines to fund development or ceases to
fund development of a product candidate under the collaboration agreement, then that party will be
entitled to receive a royalty on any product that is ultimately commercialized, but not to share in
profits. Bayer could, upon 60 days notice, elect at any time to terminate its co-funding of the
development of Nexavar. If Bayer terminates its co-funding of Nexavar development, we may be unable
to fund the development costs on our own and may be unable to find a new collaborator, which could
cause our business to fail.
22
Bayer has been the sponsor for all regulatory filings with the FDA. As a result, we have been
dependent on Bayers experience in filing and pursuing applications necessary to gain regulatory
approvals. Bayer has limited experience in developing drugs for the treatment of cancer.
Our collaboration agreement with Bayer provides for Bayer to advance us creditable
milestone-based payments. Bayer advanced us a total of $40.0 million pursuant to this provision.
These funds are repayable out of a portion of our future profits and royalties, if any, from any of
our products.
Our collaboration agreement with Bayer terminates when patents expire that were issued in
connection with product candidates discovered under that agreement, or upon the time when neither
we nor Bayer are entitled to profit sharing under that agreement, whichever is later. Bayer holds
the global patent applications related to Nexavar. We currently anticipate that, if issued, the
United States patent related to Nexavar will expire in 2022, subject to possible patent-term
extension, the entitlement to which and the term of which cannot presently be calculated.
We are subject to a number of additional risks associated with our dependence on our
collaborative relationship with Bayer, including:
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the amount and timing of resource expenditures can vary because of decisions by Bayer;
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possible disagreements as to development plans, including clinical trials or regulatory approval strategy;
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the right of Bayer to terminate its collaboration agreement with us on limited notice
and for reasons outside our control;
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loss of significant rights if we fail to meet our obligations under the collaboration agreement;
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withdrawal of support by Bayer following the development or acquisition by it of competing products; and
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possible disagreements with Bayer regarding the collaboration agreement or ownership of proprietary rights.
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Due to these factors and other possible disagreements with Bayer, we may be delayed or
prevented from further developing or commercializing Nexavar, or we may become involved in
litigation or arbitration, which would be time consuming and expensive.
If Bayers business strategy changes, it may adversely affect our collaborative relationship.
Bayer may change its business strategy. Decisions by Bayer to either reduce or eliminate its
participation in the oncology field, or to add competitive agents to its portfolio, could reduce
its financial incentive to promote Nexavar. A change in Bayers business strategy may adversely
affect activities under its collaboration agreement with us, which could cause significant delays
and funding shortfalls impacting the activities under the collaboration and seriously harming our
business.
Provisions in our collaboration agreement with Bayer may prevent or delay a change in control.
Our collaboration agreement with Bayer provides that if Onyx is acquired by another entity by
reason of merger, consolidation or sale of all or substantially all of our assets, and Bayer does
not consent to the transaction, then for 60 days following the transaction, Bayer may elect to
terminate Onyxs co-development and co-promotion rights under the collaboration agreement. If Bayer
were to exercise this right, Bayer would gain exclusive development and marketing rights to the
product candidates developed under the collaboration agreement, including Nexavar. If this
happened, Onyx, or the successor to Onyx, would receive a royalty based on any sales of Nexavar and
other collaboration products, rather than a share of any profits. In this case, Onyx or its
successor would be permitted to continue co-funding development, and the royalty rate would be
adjusted to reflect this continued risk-sharing by Onyx or its successor. These provisions of our
23
collaboration agreement with Bayer may have the effect of delaying or preventing a change in
control, or a sale of all or substantially all of our assets, or may reduce the number of companies
interested in acquiring Onyx.
Our clinical trials could take longer to complete than we project or may not be completed at
all.
Although for planning purposes we project the commencement, continuation and completion of
ongoing clinical trials for Nexavar, the actual timing of these events may be subject to
significant delays relating to various causes, including actions by Bayer, scheduling conflicts
with participating clinicians and clinical institutions, difficulties in identifying and enrolling
patients who meet trial eligibility criteria and shortages of available drug supply. We may not
complete clinical trials involving Nexavar as projected or at all.
We rely on Bayer, academic institutions and clinical research organizations to conduct,
supervise or monitor most clinical trials involving Nexavar. We have less control over the timing
and other aspects of these clinical trials than if we conducted them entirely on our own.
We are directly supervising and monitoring on our own certain Phase II and Phase III clinical
trials of Nexavar for the treatment of malignant melanoma. Onyx has not conducted a clinical trial
that has led to an NDA filing. Consequently, we may not have the necessary capabilities to
successfully execute and complete these planned clinical trials in a way that leads to approval of
Nexavar for the target indication. Failure to commence or complete, or delays in our planned
clinical trials would prevent us from commercializing Nexavar in melanoma, and thus seriously harm
our business.
We face intense competition and rapid technological change, and many of our competitors have
substantially greater managerial resources than we have.
We are engaged in a rapidly changing and highly competitive field. We are seeking to develop
and market Nexavar to compete with other products and therapies that currently
exist or are being developed. Many other companies are actively seeking to develop products that
have disease targets similar to those we are pursuing. Some of these competitive product candidates
are in clinical trials, and others are approved. Competitors that target the same tumor types as
our Nexavar program and that have commercial products or product candidates in clinical development
include Pfizer, Novartis International AG, Amgen, AstraZeneca PLC, OSI Pharmaceuticals, Inc. and
Genentech, Inc. among others. A number of companies have agents targeting Vascular Endothelial
Growth Factor, or VEGF; VEGF receptors; Epidermal Growth Factor, or EGF; EGF receptors; and other
enzymes. These agents include antibodies and small molecules. OSI Pharmaceuticals with Tarceva, a
small molecule inhibitor of the EGF receptor has been approved in the United States for treatment
of NSCLC and pancreatic cancer in combination with gemcitabine. Companies working on developing
antibody approaches include Amgen and ImClone Systems, Inc. ImClone has developed Erbitux, which is
an antibody targeting the EGF receptor. Erbitux has been approved in the United States and the
European Union for treatment of colorectal cancer, as well as in the United States for the
treatment of most types of head and neck cancer. Genentech has developed Avastin, an antibody
targeting VEGF, which has received approvals in the United States and the European Union for
treatment of colorectal cancer and is in clinical development for kidney cancer. In addition, many
other pharmaceutical companies are developing novel cancer therapies that, if successful, would
also provide competition for Nexavar.
Many of our competitors, either alone or together with collaborators, have substantially
greater financial resources and research and development staffs. In addition, many of these
competitors, either alone or together with their collaborators, have significantly greater
experience than we do in:
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undertaking preclinical testing and human clinical trials;
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obtaining FDA and other regulatory approvals of products; and
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manufacturing and marketing products.
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Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA
approval or commercializing product candidates before we do. If we receive FDA approval and
commence commercial product sales, we will compete against companies with greater marketing and
manufacturing capabilities, areas in which we have limited or no experience.
We also face, and will continue to face, competition from academic institutions, government
agencies and research institutions. Further, we face numerous competitors working on product
candidates to treat each of the diseases for which we are seeking to develop therapeutic products.
In addition, our product candidates, if approved, will compete with existing therapies that have
long histories of safe and effective use. We may also face competition from other drug development
technologies and methods of preventing or reducing the incidence of disease and other classes of
therapeutic agents.
Developments by competitors may render our product candidates obsolete or noncompetitive. We
face and will continue to face intense competition from other companies for collaborations with
pharmaceutical and biotechnology companies, for establishing relationships with academic and
research institutions, and for licenses to proprietary technology. These competitors, either alone
or with collaborative parties, may succeed with technologies or products that are more effective
than ours.
We anticipate that we will face increased competition in the future as new companies enter our
markets and as scientific developments surrounding other cancer therapies continue to accelerate.
We have made significant expenditures towards the development of Nexavar and the establishment of a
commercialization infrastructure. If Nexavar cannot compete effectively in the marketplace, we may
be unable to realize revenue from Nexavar sufficient to offset our expenditures towards its
development and commercialization, and our business will suffer.
Our operating results are unpredictable and may fluctuate. If our operating results are below
the expectations of securities analysts or investors, the trading
price of our stock could decline.*
Our operating results will likely fluctuate from fiscal quarter to fiscal quarter, and from
year to year, and are difficult to predict. Sales of Nexavar commenced in late December 2005. Due to a highly competitive environment with existing and emerging products, Nexavar sales
will be difficult to predict from period to period. Our
operating expenses are largely independent of Nexavar sales in any particular period. We believe
that our quarterly and annual results of operations may be negatively affected by a variety of
factors. These factors include, but are not limited to, the level of patient demand for Nexavar,
the ability of Bayers distribution network to process and ship product on a timely basis,
fluctuations in foreign exchange rates, investments in sales and marketing efforts to support the
sales of Nexavar, Bayer and our investments in the research and development and commercialization of Nexavar, and expenditures
we may incur to acquire additional products. In addition, as a result of our adoption of FAS
123(R), we must measure compensation cost for stock-based awards made to employees at the grant
date of the award, based on the fair value of the award, and recognize the cost as an expense over
the employees requisite service period. As the variables that we use as a basis for valuing these
awards change over time, the magnitude of the expense that we must recognize may vary
significantly. Any such variance from one period to the next could cause a significant fluctuation
in our operating results. It is, therefore, difficult for us to accurately forecast profits or
losses. As a result, it is possible that in some quarters our operating results could be below the
expectations of securities analysts or investors, which could cause the trading price of our common
stock to decline, perhaps substantially.
We will need substantial additional funds, and our future access to capital is uncertain.
We will require substantial additional funds to conduct the costly and time-consuming clinical
trials necessary to develop Nexavar for additional indications, pursue regulatory approval and
commercialize this product in Europe and the rest of the world. Our future capital requirements
will depend upon a number of factors, including:
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the size and complexity of our Nexavar program;
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decisions made by Bayer and Onyx to alter the size, scope and schedule of clinical development;
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repayment of our of milestone-based advances;
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progress with clinical trials;
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25
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the time and costs involved in obtaining regulatory approvals;
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the cost involved in enforcing patent claims against third parties and defending claims
by third parties (both of which are shared with Bayer);
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the costs associated with acquisitions or licenses of additional products;
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competing technological and market developments; and
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global product commercialization activities.
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We may not be able to raise additional financing on favorable terms, or at all. If we are
unable to obtain additional funds, we may not be able to fund our share of commercialization
expenses and clinical trials. We may also have to curtail operations or obtain funds through
collaborative and licensing arrangements that may require us to relinquish commercial rights or
potential markets or grant licenses that are unfavorable to us.
We believe that our existing capital resources and interest thereon will be sufficient to fund
our current development plans into 2008. However, if we change our development plans, we may need
additional funds sooner than we expect. In addition, we anticipate that our co-development costs
for the Nexavar program may increase over the next several years as we continue our share of
funding the clinical development program and prepare for the potential product launches of Nexavar
throughout the world. While these costs are unknown at the current time, we expect that we will
need to raise substantial additional capital to continue the co-funding of the Nexavar program in
future periods through and beyond 2008. We may have to curtail our funding of Nexavar if we cannot
raise sufficient capital. If we do not continue to co-fund the further development of Nexavar, we
will receive a royalty on future sales of products, instead of a share of profits.
If the specialty pharmacies and distributors that we and Bayer rely upon to sell our products
fail to perform, our business may be adversely affected.
Our success depends on the continued customer support efforts of our network of specialty
pharmacies and distributors. A specialty pharmacy is a pharmacy that specializes in the dispensing
of medications for complex or chronic conditions, which often require a high level of patient
education and ongoing management. The use of specialty pharmacies and distributors involves
certain risks, including, but not limited to, risks that these specialty pharmacies and
distributors will:
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not provide us with accurate or timely information regarding their inventories, the number
of patients who are using Nexavar or complaints about Nexavar;
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not effectively sell or support Nexavar;
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reduce their efforts or discontinue to sell or support Nexavar;
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not devote the resources necessary to sell Nexavar in the volumes and within the time
frames that we expect;
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be unable to satisfy financial obligations to us or others; and
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cease operations.
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Any such failure may result in decreased product sales and profits, which would harm our
business.
We have a history of losses, and we expect to continue to incur losses.
Our net loss for the year ended December 31, 2003 was $45.0 million, for the year ended
December 31, 2004 was $46.8 million and for the year ended December 31, 2005 was $95.2 million. Our
net loss for the three months ended March 31, 2006 was $20.4 million. As of March 31, 2006, we had
an accumulated deficit of approximately $366.2 million. We
26
have incurred these losses principally from costs incurred in our research and development
programs, from our general and administrative costs and the development of our commercialization
infrastructure. It is not unusual for patients to be offered access to investigational compounds
in late-stage clinical development. Such programs involve substantial costs. We expect to incur
significant and increasing operating losses over the next several years as we continue our clinical
trial activities and, with Bayer, establish commercial infrastructure in Europe and other parts of
the world. We expect our operating losses to increase with our co-funding of ongoing Nexavar
clinical and commercial activities under our collaboration agreement with Bayer.
We and Bayer began to generate revenues from the sale of Nexavar in December 2005, and we
must repay the milestone-based advances we received from Bayer from any future profits and
royalties. We have made significant expenditures towards the development and commercialization of
Nexavar, and may never realize sufficient product sales to offset these expenditures. Our ability
to achieve profitability depends upon success by us and Bayer in completing development of Nexavar,
obtaining required regulatory approvals and manufacturing and marketing the approved product.
We do not have manufacturing expertise or capabilities and are dependent on Bayer to fulfill
our manufacturing needs, which could result in lost sales and the delay of clinical trials or
regulatory approval.
Under our collaboration agreement with Bayer, Bayer has the manufacturing responsibility to
supply Nexavar for clinical trials and to support our commercial requirements. However, should
Bayer give up its right to co-develop Nexavar, we would have to manufacture Nexavar, or contract
with another third party to do so for us. We lack the resources, experience and capabilities to
manufacture Nexavar or any future product candidates on our own and would require substantial funds
to establish these capabilities. Consequently, we are, and expect to remain, dependent on third
parties to manufacture our product candidates and products. These parties may encounter
difficulties in production scale-up, including problems involving production yields, quality
control and quality assurance and shortage of qualified personnel. These third parties may not
perform as agreed or may not continue to manufacture our products for the time required by us to
successfully market our products. These third parties may fail to deliver the required quantities
of our products or product candidates on a timely basis and at commercially reasonable prices.
Failure by these third parties could impair our ability to meet the market demand for Nexavar, and
could delay our ongoing clinical trials and our applications for regulatory approval. If these
third parties do not adequately perform, we may be forced to incur additional expenses to pay for
the manufacture of products or to develop our own manufacturing capabilities.
We have the right to co-promote Nexavar in the United States, but we do not have proven sales
or marketing expertise.
We have the right under our collaboration and co-promotion agreements with Bayer to co-promote
Nexavar in the United States in conjunction with Bayer. While we have invested heavily in our
commercialization infrastructure we have only limited
experience in selling and marketing Nexavar which was approved in
December 2005. If we do not
further develop marketing and sales capabilities as required by the co-promotion agreement, we could lose our co-promotion rights. Further, we compete with other companies that have
experienced and well-funded marketing and sales operations. If we are unable to compete successfully our business will be harmed.
We will be dependent on the efforts of Bayer to market and promote Nexavar in countries
outside the United States where Nexavar may receive approval.
Under our collaboration and co-promotion agreements with Bayer, we and Bayer are co-promoting
Nexavar in the United States. If we continue to co-promote Nexavar, and continue to co-fund
development in the United States, we will share equally in profits or losses, if any, in the United
States.
We do not, however, have the right to co-promote Nexavar in any country outside the United
States, and will be dependent solely on Bayer to promote Nexavar in any foreign countries where
Nexavar is approved. In all foreign countries, except Japan, Bayer would first receive a portion
of the product revenues to repay Bayer for its foreign commercialization infrastructure, before
determining our share of profits and losses. In Japan, we would receive a royalty on any sales of
Nexavar.
27
We have limited ability to direct Bayer in its promotion of Nexavar in foreign countries where
Nexavar is approved, if any. Bayer may not have sufficient experience to promote oncology products
in foreign countries and may fail to devote appropriate resources to this task. If Bayer fails to
adequately promote Nexavar in foreign countries, we may be unable to obtain any remedy against
Bayer. If this were to happen, sales of Nexavar in any foreign countries where Nexavar is approved
may be harmed, which would negatively impact our business.
Similarly, Bayer may establish a sales and marketing infrastructure for Nexavar outside the
United States that is too large and expensive in view of the magnitude of the Nexavar sales
opportunity or establish this infrastructure too early in view of the ultimate timing of regulatory
approval. Since we share in the profits and losses arising from sales of Nexavar outside of the
United States, rather than receiving a royalty (except in Japan), we are at risk with respect to
the success or failure of Bayers commercial decisions related to Nexavar as well as the extent to
which Bayer succeeds in the execution of its strategy.
If we lose our key employees and consultants or are unable to attract or retain qualified
personnel, our business could suffer.
Our future success will depend in large part on the continued services of our management
personnel, including Hollings C. Renton, our Chairman, President and Chief Executive Officer,
Edward F. Kenney, our Executive Vice President and Chief Business Officer and Henry J. Fuchs, our
Executive Vice President and Chief Medical Officer as well as each of our other executive officers.
The loss of the services of one or more of these key employees could have an adverse impact on our
business. We do not maintain key person life insurance on any of our officers, employees or
consultants, other than for our chief executive officer. Any of our key personnel could terminate
their employment with us at any time and without notice. We depend on our continued ability to
attract, retain and motivate highly qualified personnel. We face competition for qualified
individuals from numerous pharmaceutical and biotechnology companies, universities and other
research institutions.
In 2003, we restructured our operations to reflect an increased priority on the development of
Nexavar and discontinued our therapeutic virus program. As a result of the restructuring, we
eliminated approximately 75 positions, including our entire scientific team associated with the
therapeutic virus program. Our remaining medical and administrative employees are engaged in
managing our collaboration with Bayer to develop Nexavar, but are not actively involved in new
product candidate discovery. If we resume our research and development of other product candidates,
we will need to hire individuals with the appropriate scientific skills. If we cannot hire these
individuals in a timely fashion, we will be unable to engage in new product candidate discovery
activities.
We have rapidly expanded our sales and marketing operations, and any difficulties managing
this growth could disrupt our operations.
During 2005, in anticipation of the commercial launch of Nexavar in the United States, we
rapidly expanded and developed our sales and marketing operations. We increased expenditures in
these areas, hired additional employees and expanded the scope of our operations. Prior to December
2005, we did not have any products approved for sale, so our sales and marketing operations, and
our ability to manage them, are untested. We do not have any history of managing sales and
marketing operations, and may be unable to do so. If we are unable to effectively manage our newly
expanded sales and marketing capacity, or if this capacity proves inadequate, we may not be able to
implement our business plan.
The market may not accept our products and pharmaceutical pricing and reimbursement pressures
may reduce profitability.*
Nexavar or any future product candidates that we may develop may not gain market acceptance
among physicians, patients, healthcare payors and the medical community or the market may not be as
large as forecasted. One factor that may affect market acceptance of Nexavar or any future products
we may develop is the availability of third-party reimbursement. Our commercial success may depend,
in part, on the availability of adequate reimbursement for patients from third-party healthcare
payors, such as government and private health insurers and managed care organizations. Third-party
payors are increasingly challenging the pricing of medical products and services and their
reimbursement practices may affect the price levels for Nexavar. Changes in government legislation or regulation, such as the Medicare Act, including
Medicare Part D, may reduce reimbursement for our products or reduce
the number of patients eligible for reimbursement. In addition, the market for
Nexavar may be limited by third-party payors who establish lists of approved products and do not
provide reimbursement for products not listed. If Nexavar is not on
the approved lists, our sales may suffer. Further, if patients are
unable to obtain third-party reimbursement on a timely basis or at
all, more patients may receive Nexavar at a reduced cost or free of
charge through our patient assistance program rather than on a
commercial basis which would reduce our profitability.
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If Nexavar is approved in Europe, its success there will also depend largely on obtaining and
maintaining government reimbursement because in many European countries patients will not use
prescription drugs that are not reimbursed by their governments. In addition, negotiating prices
with governmental authorities can delay commercialization by twelve months or more. Even if
reimbursement is available, reimbursement policies may adversely affect our ability to sell our
products on a profitable basis. For example, in Europe as in many international markets,
governments control the prices of prescription pharmaceuticals and expect prices of prescription
pharmaceuticals to decline over the life of the product or as volumes increase. We believe that
this will continue into the foreseeable future as governments struggle with escalating health care
spending.
A number of additional factors may limit the market acceptance of products including the
following:
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rate of adoption by healthcare practitioners;
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types of cancer for which the product is approved;
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rate of a products acceptance by the target population;
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timing of market entry relative to competitive products;
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availability of alternative therapies;
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price of our product relative to alternative therapies;
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extent of marketing efforts by us and third-party distributors or agents retained by us; and
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side effects or unfavorable publicity concerning our products or similar products.
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If Nexavar or any future product candidates that we may develop do not achieve market
acceptance, we may not realize sufficient revenues from product sales, which may cause our stock
price to decline.
We are subject to extensive government regulation, which can be costly, time consuming and
subject us to unanticipated delays.
Drug candidates under development are subject to extensive and rigorous domestic and foreign
regulation. We have not received regulatory approval in any foreign market for Nexavar or any other
product candidate, and have received approval in the United States for the use of Nexavar only in
the treatment of advanced kidney cancer.
We expect to rely on Bayer to manage communications with regulatory agencies, including filing
new drug applications and generally directing the regulatory approval process for Nexavar. We and
Bayer may not obtain necessary additional approvals from the FDA or other regulatory authorities.
If we fail to obtain required governmental approvals, we will experience delays in or be precluded
from marketing Nexavar in particular indications or countries. The FDA or other regulatory
authorities may approve only limited label information for the product. The label information
describes the indications and methods of use for which the product is authorized, and if overly
restrictive may limit our and Bayers ability to successfully market any approved product. If we
have disagreements as to ownership of clinical trial results or regulatory approvals, and the FDA
refuses to recognize us as holding, or having access to, the regulatory approvals necessary to
commercialize our product candidates, we may experience delays in or be precluded from marketing
products.
The regulatory review and approval process takes many years, requires the expenditure of
substantial resources, involves post-marketing surveillance and may involve ongoing requirements
for post-marketing studies. Additional or more rigorous governmental regulations may be promulgated
that could delay regulatory approval of Nexavar. Delays in obtaining regulatory approvals may:
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adversely affect the successful commercialization of Nexavar;
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impose costly procedures on us;
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diminish any competitive advantages that we may attain; and
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adversely affect our receipt of revenues or royalties.
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Even after Nexavar and any other products we may develop are marketed, the products and their
manufacturers are subject to continual review. Later discovery of previously unknown problems with
Nexavar or manufacturing and production by Bayer or other third parties may result in restrictions
on Nexavar, including withdrawal of Nexavar from the market. In addition, problems or failures with
the products of others, before or after regulatory approval, including our competitors, could have
an adverse effect on our ability to obtain or maintain regulatory approval for Nexavar. If we fail
to comply with applicable regulatory requirements, we could be subject to penalties, including
fines, suspensions of regulatory approval, product recall, seizure of products and criminal
prosecution.
We may incur significant liability if it is determined that we are promoting the off-label
use of drugs or are otherwise found in violation of federal and state regulations in the United
States or elsewhere.
Physicians may prescribe drug products for uses that are not described in the products
labeling and that differ from those approved by the FDA or other applicable regulatory agencies.
Off-label uses are common across medical specialties. Physicians may prescribe Nexavar for the
treatment of cancers other than advanced kidney cancer, although neither we nor Bayer are permitted
to promote Nexavar for the treatment of any indication other than kidney cancer, and the FDA and
other regulatory agencies have not approved the use of Nexavar for any other indication. Although
the FDA and other regulatory agencies do not regulate a physicians choice of treatments, the FDA
and other regulatory agencies do restrict communications on the subject of off-label use. Companies
may not promote drugs for off-label uses. Accordingly, prior to approval of Nexavar for use in any
indications other than advanced kidney cancer, we may not promote Nexavar for these indications.
The FDA and other regulatory agencies actively enforce regulations prohibiting promotion of
off-label uses and the promotion of products for which marketing clearance has not been obtained. A
company that is found to have improperly promoted off-label uses may be subject to significant
liability, including civil and administrative remedies as well as criminal sanctions.
Notwithstanding the regulatory restrictions on off-label promotion, the FDA and other
regulatory authorities allow companies to engage in truthful, non-misleading, and non-promotional
speech concerning their products. We engage in medical education activities and communicate with
investigators and potential investigators regarding our clinical trials. Although we believe that
all of our communications regarding Nexavar are in compliance with the relevant regulatory
requirements, the FDA or another regulatory authority may disagree, and we may be subject to
significant liability, including civil and administrative remedies as well as criminal sanctions.
We may not be able to protect our intellectual property or operate our business without
infringing upon the intellectual property rights of others.
We can protect our technology from unauthorized use by others only to the extent that our
technology is covered by valid and enforceable patents or effectively maintained as trade secrets.
As a result, we depend in part on our ability to:
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license technology rights from others;
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operate without infringing upon the proprietary rights of others; and
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30
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|
prevent others from infringing on our proprietary rights.
|
In the case of Nexavar, the global patent applications related to this product candidate are
held by Bayer, but licensed to us in conjunction with our collaboration agreement with Bayer. We
currently anticipate that, if issued, the United States patent related to Nexavar will expire in
2022, subject to possible patent-term extension, the entitlement to which and the term of which
cannot presently be calculated. Patent applications for Nexavar are also pending throughout the
world. As of March 31, 2006, we owned or had licensed rights to 51 United States patents and 34
United States patent applications and, generally, foreign counterparts of these filings. Most of
these patents or patent applications cover protein targets used to identify product candidates
during the research phase of our collaborative agreements with Warner-Lambert Company or Bayer, or
aspects of our now discontinued virus program. Additionally, we have corresponding patents or
patent applications pending or granted in certain foreign jurisdictions.
The patent positions of biotechnology and pharmaceutical companies are highly uncertain and
involve complex legal and factual questions. Our patents, or patents that we license from others,
may not provide us with proprietary protection or competitive advantages against competitors with
similar technologies. Competitors may challenge or circumvent our patents or patent applications.
Courts may find our patents invalid. Due to the extensive time required for development, testing
and regulatory review of our potential products, our patents may expire or remain in existence for
only a short period following commercialization, which would reduce or eliminate any advantage the
patents may give us.
We may not have been the first to make the inventions covered by each of our issued or pending
patent applications, or we may not have been the first to file patent applications for these
inventions. Competitors may have independently developed technologies similar to ours. We may need
to license the right to use third-party patents and intellectual property to develop and market our
product candidates. We may not acquire required licenses on acceptable terms, if at all. If we do
not obtain these required licenses, we may need to design around other parties patents, or we may
not be able to proceed with the development, manufacture or, if approved, sale of our product
candidates. We may face litigation to defend against claims of infringement, assert claims of
infringement, enforce our patents, protect our trade secrets or know-how, or determine the scope
and validity of others proprietary rights. In addition, we may require interference proceedings
declared by the United States Patent and Trademark Office to determine the priority of inventions
relating to our patent applications. These activities, and especially patent litigation, are
costly.
Bayer may have rights to publish data and information in which we have rights. In addition, we
sometimes engage individuals, entities or consultants to conduct research that may be relevant to
our business. The ability of these individuals, entities or consultants to publish or otherwise
publicly disclose data and other information generated during the course of their research is
subject to certain contractual limitations. The nature of the limitations depends on various
factors, including the type of research being conducted, the ownership of the data and information
and the nature of the individual, entity or consultant. In most cases, these individuals, entities
or consultants are, at the least, precluded from publicly disclosing our confidential information
and are only allowed to disclose other data or information generated during the course of the
research after we have been afforded an opportunity to consider whether patent and/or other
proprietary protection should be sought. If we do not apply for patent protection prior to
publication or if we cannot otherwise maintain the confidentiality of our technology and other
confidential information, then our ability to receive patent protection or protect our proprietary
information will be harmed.
We face product liability risks and may not be able to obtain adequate insurance.
The sale of Nexavar and its ongoing use in clinical trials exposes us to liability claims.
Although we are not aware of any historical or anticipated product liability claims against us, if
we cannot successfully defend ourselves against product liability claims, we may incur substantial
liabilities or be required to limit commercialization of Nexavar.
We believe that we have obtained reasonably adequate product liability insurance coverage that
includes the commercial sale of Nexavar and our clinical trials. However, the cost of insurance
coverage is rising. We may not be able to maintain insurance coverage at a reasonable cost. We may
not be able to obtain additional insurance coverage that will be adequate to cover product
liability risks that may arise should a future product candidate receive marketing approval.
Regardless of merit or eventual outcome, product liability claims may result in:
31
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decreased demand for a product;
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injury to our reputation;
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withdrawal of clinical trial volunteers; and
|
Thus, whether or not we are insured, a product liability claim or product recall may result in
losses that could be material.
Our stock price is volatile.
The market price of our common stock has been volatile and is likely to continue to be
volatile. For example, during the period beginning January 1, 2003 and ending March 31, 2006, the
closing sales price for one share of our common stock reached a high of $58.75 and a low of $4.65.
Factors affecting our stock price include:
|
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interim or final results of, or speculation about, clinical trials from Nexavar;
|
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changes in the regulatory approval requirements;
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ability to accrue patients into clinical trials;
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success or failure in, or speculation about, obtaining regulatory approval by us or our competitors;
|
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public concern as to the safety and efficacy of our product candidates;
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developments in our relationship with Bayer;
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developments in patent or other proprietary rights;
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additions or departures of key personnel;
|
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announcements by us or our competitors of technological innovations or new commercial therapeutic products;
|
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|
published reports by securities analysts;
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statements of governmental officials; and
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changes in healthcare reimbursement policies.
|
Existing stockholders have significant influence over us.
Our executive officers, directors and five-percent stockholders own, in the aggregate,
approximately 24 percent of our outstanding common stock. As a result, these stockholders will be
able to exercise substantial influence over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions. This could have the
effect of delaying or preventing a change in control of our company and will make some transactions
difficult or impossible to accomplish without the support of these stockholders.
Bayer, a collaborative party, has the right, which it is not currently exercising, to have its
nominee elected to our board of directors as long as we continue to collaborate on the development
of a compound. Because of these rights, ownership and voting arrangements, our officers, directors,
principal stockholders and collaborator may be able to effectively control the election of all
members of the board of directors and determine all corporate actions.
32
We are at risk of securities class action litigation due to our expected stock price
volatility.
In the past, stockholders have often brought securities class action litigation against a
company following a decline in the market price of its securities. This risk is especially acute
for us, because biotechnology companies have experienced greater than average stock price
volatility in recent years and, as a result, have been subject to, on average, a greater number of
securities class action claims than companies in other industries. Following our announcement in
October 2004 of Phase II clinical trial data in patients with advanced kidney cancer, our stock
price declined significantly. Our closing stock price on the last trading day before the
announcement was $40.81, and our closing stock price on the day of the announcement was $27.34. We
may in the future be the target of securities class action litigation. Securities litigation could
result in substantial costs, could divert managements attention and resources, and could seriously
harm our business, financial condition and results of operations.
Provisions in Delaware law, our charter and executive change of control agreements we have
entered into may prevent or delay a change of control.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These
anti-takeover laws prevent Delaware corporations from engaging in a merger or sale of more than ten
percent of its assets with any stockholder, including all affiliates and associates of the
stockholder, who owns 15 percent or more of the corporations outstanding voting stock, for three
years following the date that the stockholder acquired 15 percent or more of the corporations
stock unless:
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the board of directors approved the transaction where the stockholder acquired 15
percent or more of the corporations stock;
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|
after the transaction in which the stockholder acquired 15 percent or more of the
corporations stock, the stockholder owned at least 85 percent of the corporations
outstanding voting stock, excluding shares owned by directors, officers and employee stock
plans in which employee participants do not have the right to determine confidentially
whether shares held under the plan will be tendered in a tender or exchange offer; or
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on or after this date, the merger or sale is approved by the board of directors and the
holders of at least two-thirds of the outstanding voting stock that is not owned by the
stockholder.
|
As such, these laws could prohibit or delay mergers or a change of control of us and may
discourage attempts by other companies to acquire us.
Our certificate of incorporation and bylaws include a number of provisions that may deter or
impede hostile takeovers or changes of control or management. These provisions include:
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our board is classified into three classes of directors as nearly equal in size as
possible with staggered three-year terms;
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the authority of our board to issue up to 5,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of these shares, without
stockholder approval;
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all stockholder actions must be effected at a duly called meeting of stockholders and
not by written consent;
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special meetings of the stockholders may be called only by the chairman of the board,
the chief executive officer, the board or ten percent or more of the stockholders entitled
to vote at the meeting; and
|
These provisions may have the effect of delaying or preventing a change in control, even at
stock prices higher than the then current stock price.
We have entered into change in control severance agreements with each of our executive
officers. These agreements provide for the payment of severance benefits and the acceleration of
stock option vesting if the executive officers employment is terminated within 24 months of a
change in control of Onyx. These change in control severance agreements may have the effect of
preventing a change in control.
33
Accounting pronouncements may affect our future financial position and results of
operations.
í
There may be new accounting pronouncements or regulatory rulings, which may have an effect on our
future financial position and results of operations. In December 2004, the Financial Accounting
Standards Board, or FASB, issued a revision of Statement of Financial Accounting Standards, or
FAS, No. 123, Accounting for Stock-Based Compensation. The revision is referred to as FAS
123(R) Share-Based Payment, which supersedes Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and will require companies to recognize compensation
expense, using a fair-value based method, for costs related to share-based payments including
stock options and stock issued under our employee stock plans. We adopted FAS 123(R) using the
modified prospective basis on January 1, 2006. We expect that the adoption of FAS 123(R) will
have a material adverse impact on our results of operations and our net loss per share. For the
quarter ended March 31, 2006, our net loss increased by $3.6 million, or $0.09 per share. We
expect that our 2006 results will continue to be adversely affected by the implementation of FAS
123(R) and that the FASB could issue new accounting pronouncements that could affect our future
financial position and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits
3.1(1)
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Restated Certificate of Incorporation of the Company.
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3.2(1)
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Bylaws of the Company.
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3.3(2)
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Certificate of Amendment to Amended and Restated Certificate of Incorporation.
|
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4.1
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Reference is made to Exhibits 3.1, 3.2 and 3.3.
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4.2(1)
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Specimen Stock Certificate.
|
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10.1*
|
|
Collaboration Agreement by and between the Company and Bayer Corporation
(formerly Miles, Inc.) dated April 22, 1994
|
|
10.1(i)*
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|
Amendment to Collaboration Agreement by and between the Company and Bayer
Corporation, dated April 24, 1996
|
|
10.2*
|
|
Research, Development and Marketing Collaboration Agreement by and between the
Company and Warner-Lambert Company dated May 2, 1995
|
|
10.12*
|
|
Amendment to Collaboration Agreement by and between the Company and Bayer
Corporation, dated February 1, 1999
|
34
10.31**
|
|
U.S. Co-Promotion Agreement by and between the Company and Bayer
Pharmaceuticals Corporation, dated March 6, 2006
|
|
10.32(3)
|
|
2006 Base Salaries and Bonuses for Fiscal Year 2005 for Named Executive Officers
|
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31.1(4)
|
|
Certification of Chief Executive Officer as required by Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended
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31.2(4)
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|
Certification of Principal Financial Officer as required by Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended
|
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32.1(4)
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|
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350).
|
*
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|
Confidential treatment has been requested for portions of this document. The redactions
to this agreement have been amended since its original filing in accordance with a request
for extension of confidential treatment filed separately by the Company with the Securities
and Exchange Commission.
|
|
**
|
|
Confidential treatment has been requested for portions of this document.
|
|
(1)
|
|
Filed as an exhibit to the registrants Registration Statement on Form SB-2 (No.
333-3176-LA).
|
|
(2)
|
|
Filed as an exhibit to the registrants Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.
|
|
(3)
|
|
Filed as an exhibit to the registrants Current Report on Form 8-K filed on March 7, 2006
|
|
(4)
|
|
This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is
not deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended (whether made before or after the
date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation
language contained in such filing.
|
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
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|
ONYX PHARMACEUTICALS, INC.
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Date: May 10, 2006
|
By:
|
/s/ Hollings C. Renton
|
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|
Hollings C. Renton
|
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Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
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Date: May 10, 2006
|
By:
|
/s/ Gregory W. Schafer
|
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|
Gregory W. Schafer
|
|
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|
Acting Chief Financial Officer
(Principal Financial Officer)
|
|
36
EXHIBIT INDEX
3.1(1)
|
|
Restated Certificate of Incorporation of the Company.
|
|
3.2(1)
|
|
Bylaws of the Company.
|
|
3.3(2)
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation.
|
|
4.1
|
|
Reference is made to Exhibits 3.1, 3.2 and 3.3.
|
|
4.2(1)
|
|
Specimen Stock Certificate.
|
|
10.1*
|
|
Collaboration Agreement by and between the Company and Bayer Corporation
(formerly Miles, Inc.) dated April 22, 1994
|
|
10.1(i)*
|
|
Amendment to Collaboration Agreement by and between the Company and Bayer
Corporation, dated April 24, 1996
|
|
10.2*
|
|
Research, Development and Marketing Collaboration Agreement by and between the
Company and Warner-Lambert Company dated May 2, 1995
|
|
10.12*
|
|
Amendment to Collaboration Agreement by and between the Company and Bayer
Corporation, dated February 1, 1999
|
|
10.31**
|
|
U.S. Co-Promotion Agreement by and between the Company and Bayer
Pharmaceuticals Corporation, dated March 6, 2006
|
|
10.32(3)
|
|
2006 Base Salaries and Bonuses for Fiscal Year 2005 for Named Executive Officers
|
|
31.1(4)
|
|
Certification of Chief Executive Officer as required by Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
31.2(4)
|
|
Certification of Principal Financial Officer as required by Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
32.1(4)
|
|
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350).
|
*
|
Confidential treatment has been requested for portions of this document. The redactions
to this agreement have been amended since its original filing in accordance with a request
for extension of confidential treatment filed separately by the Company with the Securities
and Exchange Commission.
|
|
** Confidential treatment has been requested for portions of this document.
(1)
|
|
Filed as an exhibit to the registrants Registration Statement on Form SB-2 (No.
333-3176-LA).
|
(2)
|
|
Filed as an exhibit to the registrants Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.
|
(3) Filed as an exhibit to the registrants Current Report on Form 8-K filed on March 7, 2006
(4)
|
|
This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is
not deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended (whether made before or after the
date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation
language contained in such filing.
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
EXHIBIT 10.1
COLLABORATION AGREEMENT
BETWEEN
MILES INC.
AND
ONYX PHARMACEUTICALS, INC.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
TABLE OF CONTENTS
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Page
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CHAPTER 1
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1
|
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Article
1
Defined Terms
|
|
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1
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1.1
Advertising and Education
|
|
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1
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1.2
Advertising and Education Expense
|
|
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1
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1.3
Affiliate
|
|
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1
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1.4
Allocable Overhead Costs
|
|
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2
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1.5
Allowable Expenses
|
|
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2
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1.6
Analoging Program
|
|
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2
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1.7
Back-Up Compound
|
|
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2
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1.8
Clinical Development Period
|
|
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2
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1.9
Collaboration Compound
|
|
|
2
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1.10
Collaboration Product
|
|
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3
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1.11
Collaboration Revenue
|
|
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3
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1.12
Control
|
|
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3
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1.13
Cost of Goods Sold
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|
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3
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1.14
Co-Development
|
|
|
3
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1.15
Co-Development Costs
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|
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4
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1.16
Co-Development Plan
|
|
|
4
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1.17
Co-Promote
|
|
|
4
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1.18
Co-Promotion Program
|
|
|
4
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1.19
Co-Promotion Product
|
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|
4
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|
1.20
Development Compound
|
|
|
4
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1.21
Distribution Costs
|
|
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4
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1.22
Effective Date
|
|
|
4
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|
1.23
Field
|
|
|
4
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|
1.24
Field of Collaborative Research
|
|
|
5
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|
1.25
Information
|
|
|
5
|
|
1.26
Joint Research and Development Committee
or
JRDC
|
|
|
5
|
|
1.27
Lead Structure
|
|
|
5
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|
1.28
Marketing Plan
|
|
|
5
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|
1.29
Marketing Profit or Loss
|
|
|
5
|
|
1.30
Miles Know-How
|
|
|
5
|
|
1.31
Miles Patents
|
|
|
5
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|
1.32
Net Sales
|
|
|
5
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1.33
Onyx Know-How
|
|
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6
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1.34
Onyx Patents
|
|
|
6
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1.35
Patent
|
|
|
6
|
|
1.36
Preclinical Development Period
|
|
|
6
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|
1.37
Pre-Marketing Activities
|
|
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6
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1.39
Post-Collaboration Compound
|
|
|
6
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1.40
Ras Pathway
|
|
|
7
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|
1.41
Ras Function
|
|
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7
|
|
1.42
Regulatory Approval
|
|
|
7
|
|
1.43
Research
|
|
|
7
|
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
1
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|
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|
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Page
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1.44
Research Plan
|
|
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7
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1.45
Research Term
|
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7
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1.46
Royalty-Bearing Product
|
|
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7
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|
1.47
Selling and Promotion Expenses
|
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8
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|
1.48
Sublicense Revenues
|
|
|
8
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|
1.49
Third Party
|
|
|
8
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|
1.50
Third Party Royalties
|
|
|
8
|
|
CHAPTER 2
|
|
|
9
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|
Article
2
Initial Payment And Board Representation
|
|
|
9
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|
2.1
Purchase of Series D Preferred Stock
|
|
|
9
|
|
2.2
Board Representation
|
|
|
9
|
|
3.1
Joint Research and Development Committee
|
|
|
10
|
|
3.2
Meetings of the JRDC
|
|
|
10
|
|
3.3
Functions and Powers of the JRDC
|
|
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10
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|
3.4
Obligations of Parties
|
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11
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3.5
Project Leader
|
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11
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3.6
General
|
|
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11
|
|
Article
4
Licenses
|
|
|
12
|
|
4.1
Research Licenses
|
|
|
12
|
|
4.2
Collaboration Product Commercialization Licenses
|
|
|
12
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|
4.3
Limitations on Exclusivity
|
|
|
12
|
|
4.4
Royalty-Bearing Product Commercialization Licenses
|
|
|
13
|
|
4.6
Onyx License After Research Termination
|
|
|
13
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|
CHAPTER 3
|
|
|
14
|
|
Article
5
Collaborative Research Program
|
|
|
14
|
|
5.1
Program Management
|
|
|
14
|
|
5.2
Decision Points During Research
|
|
|
14
|
|
5.3
Research Efforts and Expenses
|
|
|
14
|
|
5.4
Annual Plan and Budget
|
|
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14
|
|
5.5
Extension of Research Term
|
|
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14
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|
5.6
Termination of Research with Substitution of New Research Target
|
|
|
15
|
|
5.7
Consequences of Research Substitution
|
|
|
15
|
|
5.8
Termination of Research by Miles
|
|
|
16
|
|
5.9
Key Employee Departure
|
|
|
16
|
|
Article
6
Specification of Research Field and Assays
|
|
|
18
|
|
6.1
Refinement of Field of Collaborative Research
|
|
|
18
|
|
6.2
Restriction of the Field of Collaborative Research
|
|
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18
|
|
6.3
Specification of Ras Function Assay Standards
|
|
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19
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Article
7
Allocation of Research Tasks
|
|
|
19
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|
7.1
Onyx Research Obligations
|
|
|
19
|
|
7.2
Miles Research Obligations
|
|
|
19
|
|
7.3
Independent Funded Research Of Onyx Subject to Buy-Back
|
|
|
20
|
|
7.4
Miles Buy-Back
|
|
|
20
|
|
7.6
Conduct of Studies
|
|
|
20
|
|
Article
8
Research Material and Information
|
|
|
21
|
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
2
|
|
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Page
|
|
8.1
Rights In Materials
|
|
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21
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8.2
Acquisition of Third Party Technology
|
|
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21
|
|
Article
9
Research Funding
|
|
|
21
|
|
9.1
Miles Financial Support
|
|
|
22
|
|
9.2
Minimum Level of Financial Support
|
|
|
22
|
|
9.3
Restriction on Government Support
|
|
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22
|
|
9.4
Manner of Payments
|
|
|
22
|
|
9.5
Application of Funds; Reporting
|
|
|
22
|
|
9.6
Research Activities After Research Term
|
|
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22
|
|
Article
10
Research Reports
|
|
|
24
|
|
10.1
Information and Reports During Research
|
|
|
24
|
|
10.2
Reports After Research Term
|
|
|
24
|
|
CHAPTER 4
|
|
|
25
|
|
Article
11
Co-Development
|
|
|
25
|
|
11.1
Scope of Development
|
|
|
25
|
|
11.2
Preclinical Investigation and Development
|
|
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25
|
|
11.3
Synthesis of Preclinical Materials
|
|
|
25
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|
11.4
Selection of Collaboration Compounds for Co-Development
|
|
|
25
|
|
11.5
Budget for Development
|
|
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26
|
|
11.6
Performance of Co-Development
|
|
|
26
|
|
11.7
Funding of Co-Development
|
|
|
27
|
|
11.8
Development Payments
|
|
|
27
|
|
11.9
Development Diligence
|
|
|
28
|
|
11.10
Collaboration Product Information
|
|
|
28
|
|
11.11
Use of Information
|
|
|
28
|
|
11.12
Relationship With Chiron Product Rights
|
|
|
28
|
|
11.13
Manufacture of Clinical Materials
|
|
|
29
|
|
Article
12
Independent Development
|
|
|
29
|
|
12.1
Termination of Funding of Co-Development in Japan
|
|
|
29
|
|
12.2
Termination of Funding of Co-Development Outside Japan
|
|
|
29
|
|
12.3
No Refund of Co-Development Costs
|
|
|
29
|
|
12.4
Independent Development
|
|
|
29
|
|
CHAPTER 5
|
|
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31
|
|
Article
13
Commercialization of Collaboration Products
|
|
|
31
|
|
13.1
Miles Exclusive Rights Outside the United States
|
|
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31
|
|
13.2
Miles Marketing Plan
|
|
|
31
|
|
13.3
Financial Projections and Budget
|
|
|
31
|
|
13.4
Onyx Option To Co-Promote
|
|
|
31
|
|
13.5
Onyx Notice of Intent to Co-Promote
|
|
|
31
|
|
13.6
Co-Promotion Program
|
|
|
31
|
|
13.7
Co-Promotion Sales Efforts
|
|
|
32
|
|
13.8
Co-Promotion Costs
|
|
|
32
|
|
13.9
Training Program
|
|
|
32
|
|
13.10
Advertising and Promotional Materials
|
|
|
32
|
|
13.11
Onyx Marketing
|
|
|
32
|
|
13.12
Price Setting in the United States
|
|
|
32
|
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
3
|
|
|
|
|
|
|
Page
|
|
Article
14
Sales Responsibility
|
|
|
33
|
|
14.1
Sales and Distribution
|
|
|
33
|
|
14.2
Responsibility
|
|
|
33
|
|
14.3
Cost Allocations
|
|
|
33
|
|
14.4
Allocation of Co-Promotion Costs
|
|
|
33
|
|
Article
15
Royalty-Bearing Products
|
|
|
33
|
|
15.1
Commercialization and Marketing of Royalty-Bearing Products
|
|
|
33
|
|
Article
16
Compensation for Sales of Products
|
|
|
34
|
|
16.1
Determination and Allocation of Marketing Profit and Loss with
Respect to Sales Of Collaboration
Products
|
|
|
34
|
|
16.2
Royalty With Respect to Sales of Royalty-Bearing Products
|
|
|
34
|
|
16.3
Special Distribution
|
|
|
35
|
|
16.4
Research Termination
|
|
|
36
|
|
16.5
Duration of Royalty Obligations: Royalty Step-Down
|
|
|
36
|
|
16.6
Royalty for Post-Collaboration Compound Sales
|
|
|
36
|
|
16.7
Royalty Payment Reports
|
|
|
36
|
|
16.8
Royalty Offset
|
|
|
36
|
|
16.9
Taxes
|
|
|
37
|
|
16.10
Blocked Currency
|
|
|
37
|
|
16.11
Foreign Exchange
|
|
|
37
|
|
16.12
Payments to or Reports by Affiliates
|
|
|
37
|
|
16.13
Sales By Sublicensees
|
|
|
37
|
|
Article
17
Information and Reports During Marketing
|
|
|
37
|
|
17.1
Adverse Drug Events
|
|
|
37
|
|
17.2
Records
|
|
|
38
|
|
Article
18
Trademarks
|
|
|
38
|
|
18.1
Collaboration Product Trademarks
|
|
|
38
|
|
18.2
Royalty-Bearing Product Trademarks
|
|
|
39
|
|
18.3
Infringement Of Trademark
|
|
|
39
|
|
18.4
Costs of Defense for Collaboration Product Trademarks
|
|
|
39
|
|
Article
19
Manufacturing and Supply
|
|
|
39
|
|
19.1
Commercial Supply of Collaboration Products
|
|
|
39
|
|
19.2
Labelling
|
|
|
39
|
|
19.3
Commercial Supply of Royalty-Bearing Products
|
|
|
40
|
|
19.4
Supply Shortages
|
|
|
40
|
|
CHAPTER 6
|
|
|
41
|
|
Article
20
Inventions and Patents
|
|
|
41
|
|
20.1
Ownership of Research Products and Inventions
|
|
|
41
|
|
20.2
Disclosure of Patentable Inventions
|
|
|
41
|
|
20.3
Patent Prosecution
|
|
|
41
|
|
20.4
Confidential Treatment
|
|
|
42
|
|
Article
21
Infringement
|
|
|
42
|
|
21.1
Infringement By Third Parties for Collaboration Compound
|
|
|
42
|
|
21.2
Infringement by Third Parties for Royalty-Bearing Products
|
|
|
42
|
|
21.3
Third Party Claims Against Collaboration Compound
|
|
|
43
|
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
4
|
|
|
|
|
|
|
Page
|
|
21.4
Allocation of Expense; Collaboration Compound or Product
|
|
|
43
|
|
21.5
Third Party Claims Relating to Royalty-Bearing Products
|
|
|
43
|
|
Article
22
Confidentiality
|
|
|
44
|
|
22.1
Confidentiality; Exceptions
|
|
|
44
|
|
22.2
Authorized Disclosure
|
|
|
45
|
|
22.3
Survival
|
|
|
45
|
|
22.4
Termination of Prior Agreement
|
|
|
45
|
|
22.5
Publications
|
|
|
45
|
|
CHAPTER 7
|
|
|
46
|
|
Article
23
Federal State Tax Characterization
|
|
|
46
|
|
23.1
Tax Partnership
|
|
|
46
|
|
23.2
Tax Matters Partner
|
|
|
46
|
|
23.3
Tax Returns
|
|
|
47
|
|
23.4
Inconsistent Treatment of Partnership Items
|
|
|
47
|
|
23.5
Tax Partnership Elections
|
|
|
47
|
|
23.6
Characterization of Certain Payments and Activities
|
|
|
48
|
|
23.7
Capital Accounts
|
|
|
48
|
|
23.8
Tax Partnership Allocations
|
|
|
48
|
|
23.9
Liquidation
|
|
|
50
|
|
23.10
Internal Revenue Service Notices
|
|
|
50
|
|
23.11
Tax Partnership Audits and Litigation
|
|
|
50
|
|
Article
24
Term and Termination
|
|
|
50
|
|
24.1
Term of Agreement
|
|
|
50
|
|
24.2
Termination for Breach
|
|
|
50
|
|
24.3
Termination for Other Reasons
|
|
|
51
|
|
24.4
Acquisition of Onyx
|
|
|
51
|
|
24.6
Accrued Rights: Surviving Obligations
|
|
|
52
|
|
Article
25
Dispute Resolution
|
|
|
52
|
|
25.1
Disputes
|
|
|
52
|
|
Article
26
Representations and Warranties; Exclusivity
|
|
|
53
|
|
26.1
Representations and Warranties
|
|
|
53
|
|
26.2
Performance By Affiliates
|
|
|
53
|
|
26.3
Exclusivity; Noncompetition Within the Field of Collaborative Research
|
|
|
53
|
|
Article
27
Products Liability and Indemnification
|
|
|
54
|
|
27.1
Indemnification for Sales of Royalty-Bearing Products
|
|
|
54
|
|
27.2
Actions in Respect of Collaboration Products
|
|
|
54
|
|
27.3
Indemnification for Negligence
|
|
|
54
|
|
Article
28
Miscellaneous
|
|
|
55
|
|
28.1
Assignment
|
|
|
55
|
|
28.2
Consents Not Unreasonably Withheld
|
|
|
55
|
|
28.3
Retained Rights
|
|
|
55
|
|
28.4
Force Majeure
|
|
|
55
|
|
28.5
Further Actions
|
|
|
55
|
|
28.6
No Trademark Rights
|
|
|
55
|
|
28.7
Notices
|
|
|
56
|
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
5
|
|
|
|
|
|
|
Page
|
|
28.8
Waiver
|
|
|
57
|
|
28.9
Severability
|
|
|
57
|
|
28.10
Counterparts
|
|
|
57
|
|
28.11
Press Releases
|
|
|
57
|
|
28.12
Entire Agreement
|
|
|
57
|
|
28.13
Governing Law
|
|
|
57
|
|
EXHIBITS
Exhibit A Diagram of Collaboration
Exhibit B Field of Collaborative Research
Exhibit C Research Plan
Exhibit D Measured Activity Qualifying as ras Positive Inhibition
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
6
Exhibit 10.1
COLLABORATION AGREEMENT
This
Collaboration Agreement
(the Agreement) is dated April 22, 1994, by and
between
Onyx Pharmaceuticals, Inc.
, a California corporation having its principal place of
business in Richmond, California (Onyx), and
Miles Inc
., an Indiana corporation having
its principal place of business in Pittsburgh, Pennsylvania (Miles). Each of Miles and Onyx are
sometimes referred to herein as the Party or, collectively, as the Parties.
In consideration of the covenants and promises contained in this Agreement, the Parties agree
as follows:
CHAPTER 1
DEFINITIONS
Capitalized words used in this Agreement shall have the meanings ascribed in the following
definitions, unless otherwise stated or defined in the Agreement.
Article
1
Defined Terms
1.1
Advertising and Education
means the advertising and promotion of Collaboration Products,
and related professional education, through any means, including, without limitation,
|
(i)
|
|
advertisements appearing in journals, newspapers, magazines or
other media, including direct mail and electronic media,
|
|
|
(ii)
|
|
seminars and conventions,
|
|
|
(iii)
|
|
sample packages of Collaboration Products, promotional
literature, visual aids, three dimensional promotional items, and other selling
materials,
|
|
|
(iv)
|
|
market research, and
|
|
|
(v)
|
|
symposia and opinion leader development activities; provided,
however, that such term shall exclude direct sales force activity.
|
1.2
Advertising and Education Expense
means costs,
[ * ]
incurred by a Party or for its
account which are specifically identifiable to the Advertising and Education of a Collaboration
Product and consistent with the Marketing Plan.
1.3
Affiliate
means (i) with respect to Miles, any entity that directly or indirectly Owns,
is Owned by, or is under common Ownership with, it, and (ii) with respect to Onyx, any entity that
directly or indirectly is Owned by it. As used in Section 1.3, Owns or Ownership means direct
or indirect possession of at least 50% of the
outstanding voting securities of a corporation or a comparable equity interest in any other type of
entity, or, where the laws of the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
jurisdiction in which such entity operates prohibits the
ownership by a Party of 50 %, such ownership shall be at the maximum level of ownership allowed by
such jurisdiction.
1.4
Allocable Overhead Costs
means the overhead costs of the functions that directly support
an activity under this Agreement, as determined using the same allocation methods that the Party
incurring such costs uses throughout its operations. In all cases, Allocable Overhead Costs shall
exclude
[ * ]
.
1.5
Allowable Expenses
means those expenses incurred subsequent to the receipt of Regulatory
Approval for marketing a Collaboration Product in a country and shall consist of:
|
(i)
|
|
Cost of Goods Sold,
|
|
|
(ii)
|
|
Distribution Costs,
|
|
|
(iii)
|
|
Advertising and Education Expenses,
|
|
|
(iv)
|
|
Selling and Promotion Expenses,
|
|
|
(v)
|
|
Third Party Royalties,
|
|
|
(vi)
|
|
[ * ]
|
|
|
(vii)
|
|
[ * ]
|
1.6
Analoging Program
means a program conducted under the Research to prepare, assay, and
analyze chemical analogs to one or more specified Lead Structures or other compounds identified by
the JRDC during the Research, or otherwise conducted pursuant to Section 7.3.
1.7
Back-Up Compound
shall have the meaning described in Section 11.4.
1.8
Clinical Development Period
means, with respect to each Product, the period of
performance of the clinical and non-clinical investigations and other work necessary to and
directly in support of obtaining Regulatory Approval for marketing a Product, commencing
[ * ]
after a party has obtained regulatory approval to conduct human clinical trials
[ * ]
.
1.9
Collaboration Compound
means, except as provided below, any composition of matter:
|
(i)
|
|
that is discovered, identified or synthesized by or on behalf
of Onyx or Miles or an Affiliate of either of them, and is recognized for its
activity for inhibiting Ras Function as provided below,
[ * ]
; or
|
|
|
(ii)
|
|
as to which Onyx or Miles or an Affiliate of either of them
acquires rights from a Third Party,
[ * ]
, and which is recognized for its
activity for inhibiting Ras Function as provided below,
[ * ]
. As used herein,
the activity of a composition of matter for inhibiting Ras Function will be
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
2
|
|
|
recognized if it satisfies the standard for a ras positive set forth in
Exhibit E, or such other specific activity in a particular assay or assays
within the Field of Collaborative Research established by the JRDC from time to
time pursuant to Section 6.3.
|
Notwithstanding the foregoing, the term Collaboration Compound shall not include:
|
(a)
|
|
any composition of matter marketed by Miles or an Affiliate of Miles as of the
Effective Date or as to which Miles or an Affiliate of Miles is conducting human
clinical trials or have approved the commencement of preclinical development (as
determined by the appropriate committee of Miles or an Affiliate of Miles), as of the
Effective Date;
|
|
(b)
|
|
any composition of matter owned by Miles or Onyx or an Affiliate of either of
them that would become subject to this Agreement by reason of an expansion of the Field
of Collaborative Research after the Effective Date but as to which marketing rights
have been granted to a Third Party prior to such expansion; or
|
(c) any composition of matter that is a Back-Up Compound after
[ * ]
following the end of the
Research Term.
1.10
Collaboration Product
means a Product as to which each Party has paid or is paying
one-half of the Co-Development Costs and is ready for commercialization pursuant to Article 13.
The term Collaboration Product excludes Royalty-Bearing Products.
1.11
Collaboration Revenue
means Net Sales of Collaboration Products plus Sublicense
Revenue.
1.12
Control
means possession of the ability to grant a license or sublicense as provided
for herein without violating the terms of any agreement or other arrangement with any Third Party.
1.13
Cost of Goods Sold
means
|
(i)
|
|
the standard unit cost of Collaboration Products in final
therapeutic form, calculated in accordance with reasonable cost accounting
methods of Miles, consistently applied by Miles as a manufacturer, plus
|
|
(ii)
|
|
[ * ]
also calculated in accordance with reasonable cost
accounting methods of Miles, consistently applied by Miles as a manufacturer,
but excluding items referred to in the following sentence. Costs of Goods Sold
shall exclude
[ * ]
.
|
1.14
Co-Development
means the clinical and non-clinical development of a Development
Compound into a Collaboration Product during the Preclinical and Clinical Development Periods by
Miles and Onyx under the Co-Development Plan for the Development Compound worldwide excluding
Japan.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
3
1.15
Co-Development Costs
means all costs and expenses,
[ * ]
identifiable to the
Co-Development of a Development Compound
|
(i)
|
|
after having obtained regulatory approval to conduct human
clinical trials (Clinical Development Period) in the country in question,
within the JRDC budget approved by the Parties, and
|
|
(ii)
|
|
for the Preclinical Development Period pursuant to Section
9.6(b).
|
Co-Development Costs include the cost of products manufactured for Co-Development activities as
determined in Section 11.13.
1.16
Co-Development Plan
means the world-wide plan prepared and managed by the JRDC and
approved by the Parties for the Preclinical and the Clinical Development Period of Development
Compounds as set forth in Section 11.1.
1.17
Co-Promote
means to promote jointly Co-Promotion Products through Miles, Onyx, and
their respective sales forces under a single trademark in the United States.
1.18
Co-Promotion Program
means the plan as set forth in Section 13.6 for Co-Promoting a
Co-Promotion Product in the United States.
1.19
Co-Promotion Product
means a Collaboration Product that is Co-Promoted and sold in the
United States.
1.20
Development Compound
means a Collaboration Compound selected by the JRDC, based upon
research results showing sufficient utility as a potential Product, for entry into the Preclinical
Development Period.
1.21
Distribution Costs
means the costs,
[ * ]
incurred by a Party or for its account,
specifically identifiable to the distribution of a Collaboration Product to a Third Party including
|
(i)
|
|
handling and transportation to fulfill orders (excluding such
costs, if any, treated as a deduction in the definition of Net Sales),
|
|
(ii)
|
|
customer services including order entry, billing and
adjustments, inquiry and credit and collection, and
|
|
(iii)
|
|
[ * ]
for the storage and distribution of Collaboration
Products.
|
1.22
Effective Date
means February 1, 1994.
1.23
Field
means the synthesis, discovery, use of and preclinical research upon
Collaboration Compounds and the clinical development, manufacture, use and sale of Products for all
human and animal therapeutic and/or prophylactic and/or diagnostic indications involving Ras
Pathway or Ras Function, subject to Section 11.12.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
4
1.24
Field of Collaborative Research
means the specific programs, targets, and assays that
are selected for discovering inhibitors of Ras Pathway and Ras Function. As of the Effective Date,
the Field of Collaborative Research shall be as described on the attached Exhibit B, which shall be
amended by the Parties as the specific programs, targets, and assays within the Field of
Collaborative Research are modified and updated by the JRDC pursuant to Section 6.1. The Field of
Collaborative Research shall not include any molecular entities, programs, targets, or assays that
are not involved in the Ras Pathway or Ras Function.
1.25
Information
means information relating to the Field and/or the Field of Collaborative
Research, including, but not limited to, inventions, practices, methods, assays, know-how, test
data including pharmacological, toxicological and clinical test data, analytical and quality
control data, marketing, distribution, cost, sales, manufacturing, patent and legal data or
descriptions.
1.26
Joint Research and Development Committee
or
JRDC
means the committee described in
Section 3.1 of this Agreement.
1.27
Lead Structure
means a compound identified in the Research that meets a specific
minimum profile established by the JRDC and that is selected by the JRDC for entry into a program
conducted under the Research to prepare, assay, and analyze chemical analogs to one or more
specified Lead Structures or other compounds identified by the JRDC during the Research, or
otherwise conducted pursuant to Section 7.3.
1.28
Marketing Plan
means the plan for marketing and selling Collaboration Products,
described in Section 13.2.
1.29
Marketing Profit or Loss
means Net Sales of Collaboration Products plus Sublicense
Revenue less Allowable Expenses.
1.30
Miles Know-How
means Information which
|
(i)
|
|
Miles discloses to Onyx or an Affiliate of Onyx under this Agreement, and
|
|
|
(ii)
|
|
is within the Control of Miles.
|
Miles Know-How shall exclude Miles Patents.
1.31
Miles Patents
means all Patents owned or Controlled by Miles or an Affiliate of Miles
that claim or cover Collaboration Compounds, the manufacture or use of Collaboration Compounds, or
methods or materials useful for discovering, identifying, or assaying for Collaboration Compounds,
where such Patents cover inventions made prior to the first anniversary of the end of the Research
Term.
1.32
Net Sales
means gross receipts and any other consideration received by the selling
Party on account of sales of Products, less deductions of the following items:
|
(i)
|
|
trade, quantity and cash discounts or rebates, actually allowed and taken,
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
5
|
(ii)
|
|
credits or allowances given for rejection or return of
previously sold Product or outdated Product,
|
|
|
(iii)
|
|
any tax or other governmental charge borne by the selling
Party other than income tax levied on the sale, transportation or delivery of
Product, and
|
|
|
(iv)
|
|
any charges for packing, handling, freight, insurance and duty.
|
1.33
Onyx Know-How
means Information which
|
(i)
|
|
Onyx discloses to Miles or an Affiliate of Miles under this Agreement and
|
|
|
(ii)
|
|
is within the Control of Onyx.
|
Onyx Know-How shall exclude Onyx Patents.
1.34
Onyx Patents
means all Patents owned or Controlled by Onyx or an Affiliate of Onyx
that claim or cover Collaboration Compounds, the manufacture or use of Collaboration Compounds, or
methods or materials useful for discovering, identifying, or assaying for Collaboration Compounds,
where such Patents cover inventions made prior to the first anniversary of the end of the Research
Term.
1.35
Patent
means
(1) valid and enforceable Letters Patent in any and all countries relating to the Field
and/or the Field of Collaborative Research, including any extension (SPC),
registration, confirmation, reissue, continuation, division, continuation-in-part,
re-examination or renewal thereof, and
(2) pending applications for any of the foregoing.
1.36
Preclinical Development Period
means the period of preclinical investigations and other
work performed on Development Compounds necessary to generate the data for clinical development as
set forth in Section 11.2.
1.37
Pre-Marketing Activities
means activities undertaken prior to Regulatory Approval in
preparation for the commercial launch of a Collaboration Product in a particular country, including
Advertising and Education, trademark prosecution and enforcement as provided in Article 18,
training as provided in Section 13.9, and pre-marketing clinical studies conducted to support the
Collaboration Product and not as part of an application for Regulatory Approval.
1.38
Product
means any pharmaceutical form or dosage of, or diagnostic product based upon, a
Collaboration Compound.
1.39
Post-Collaboration Compound
means any composition of matter synthesized, identified or
discovered by Onyx or Miles:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
6
(a) that is contained within a chemical genus as defined in any pending or issued claim
of any unexpired Miles Patent or Onyx Patent filed in
[ * ]
and as to which at least one
member of such chemical genus is a Collaboration Compound, and
(b) that is recognized for its activity for inhibiting Ras Function, as defined in
Section 1.11, by Onyx or Miles during the
[ * ]
period after
[ * ]
of the end of the
Research Term pursuant to Section 9.6 (d) (at a royalty rate pursuant to Section 16.6).
1.40
Ras Pathway
means all molecular entities that are part of or that regulate signal
transduction through
[ * ]
ras. This includes but is not restricted to ras,
[ * ]
. Ras Pathway
also includes molecules that directly or indirectly regulate the aforementioned
[ * ]
. Ras Pathway
also includes
[ * ]
.
Ras Pathway shall not include (by way of example and not limitation)
[ * ]
.
1.41
Ras Function
means
[ * ]
. Ras Function includes without restriction
[ * ]
.
1.42
Regulatory Approval
means any approvals (including pricing and reimbursement
approvals), licenses, registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other government entity, necessary for the manufacture, use, storage,
import, transport or sale, of Products in a country.
1.43
Research
means all work performed by the Parties
|
(a)
|
|
within the Field of Collaborative Research during the Research Term; or
|
|
|
(b)
|
|
with respect to Collaboration Compounds pursuant to Section 9.6.
|
1.44
Research Plan
means the plan setting forth the research objectives and the Parties
respective obligations in conducting the Research, as described in Section 5.1.
1.45
Research Term
means the period commencing on February 1, 1994 and continuing until
January 31, 1999, unless extended under Sections 5.5 or 5.6, or earlier terminated pursuant to
Section 5.8, 5.9, 24.2, 24.3 or 24.4.
1.46
Royalty-Bearing Product
means a Product
(a) that was not selected for Co-Development by the JRDC and that was independently
developed by a Party pursuant to Section 12.4 (at a rate pursuant to Section 16.2(c));
(b) that is sold in a country in which one Party did not participate in paying its
entire one-half share of the Co-Development Costs in that country pursuant to Section 12.1
and 12.2 (at a rate pursuant to Section 16.2 (a) and (b) respectively); or
(c) for which Miles declined to fund Research pursuant to Section 7.3 (at a rate pursuant to
Section 16.4).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
7
1.47
Selling and Promotion Expenses
means costs,
[ * ]
incurred consistent with the budget
in the Marketing Plan, and specifically identifiable to the sales and/or promotion of Collaboration
Products to all markets and to the operation and maintenance of the sales personnel
[ * ]
.
1.48
Sublicense Revenues
means all revenues received from Third Parties as consideration for
the sublicensing of the manufacture, use and/or sale of Collaboration Products.
1.49
Third Party
means any entity other than Onyx or Miles and their respective Affiliates.
1.50
Third Party Royalties
means royalties payable to a Third Party in respect of the sale
or manufacture of Collaboration Products.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
8
CHAPTER 2
OVERVIEW OF COLLABORATION
Proteins and other effectors in the Ras Pathway are directly involved in control of cell
growth. Changes or mutations to components in the Ras Pathway have been shown to cause abnormal
cell growth, including certain cancers. Onyx has technology, materials, and expertise relating to
the modulation of Ras Function and to assays that can identify compounds having activities useful
in inhibiting Ras Function. Miles has an extensive library of chemical substances and natural
materials, and expertise in the research, development, and commercialization of pharmaceutical
compounds. The Parties desire to establish a broad collaboration in the Field to perform research
towards identifying and investigating substances that inhibit Ras Function and to develop and
commercialize substances identified in such process as pharmaceutical products for the treatment of
cancer and other human conditions and diseases. The Parties intend that this Agreement shall
establish such collaboration and determine the rights and obligations of each Party in conducting
all of the research, development, and marketing of products, and all other related activities,
under the collaboration. Attached as Exhibit A is a flowchart depicting in schematic form, the
various activities of the collaboration and the decision points in the progress of identifying,
researching, and developing Collaboration Products.
Article
2
Initial Payment And Board Representation
2.1
Purchase of Series D Preferred Stock.
Miles agrees to purchase, and Onyx agrees (subject
to the last sentence of this paragraph) to sell, 6,750,000 shares of Onyx Series D Preferred Stock
at a purchase price of Two Dollars ($2.00) per share pursuant to a Stock Purchase Agreement of even
date herewith, with the execution and performance of such Stock Purchase Agreement and the closing
of such purchase and sale to occur within thirty (30) days after the execution of this Agreement.
Promptly following execution of this Agreement, the parties shall cooperate to effect the closing
of such transaction. The parties recognize that to effect such sale of stock, Onyx is required to
obtain certain stockholder consents, and the parties shall cooperate to make such modifications to
the form of Stock Purchase Agreement as such stockholders may reasonably request, provided that
Miles shall not be obligated to approve any modifications which it deems adverse in the reasonable
exercise of its sole discretion.
2.2
Board Representation.
(a) Subject to the provisions of paragraph (b) below, Miles shall be entitled,
commencing on the date hereof, to appoint a representative to serve on the Onyx Board of
Directors, with the Miles representative to be approved in advance by the Onyx Board of
Directors. If the Miles representative is unable to attend one or more meetings of the Onyx
Board of Directors, he may designate an alternative Miles representative acceptable to Onyx
to attend such meeting(s) in a nonvoting, observer capacity. All information received by
such individuals from Onyx shall be subject to the non-disclosure obligations
of Article 22 of this Agreement. The expenses of such Miles representative associated with
attendance at Onyx Board of Directors meetings will be borne by
[ * ]
.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
9
(b) The rights of Miles under this Section 2.3 shall expire upon the later to occur of
(i) the end of the Research Term, or, if the Parties then have Collaboration
Compound in clinical development, such later date on which the Partes do not have a
Collaboration Compound in clinical development, or
(ii) such date on which Miles owns less than twelve and one-half percent
(12.5%) of the then outstanding capital stock of Onyx on an as-converted,
fully-diluted basis.
Article
3
Management of Collaboration
3.1
Joint Research and Development Committee.
The collaboration between Miles, Onyx, and
their respective Affiliates under this Agreement shall be managed by a Joint Research and
Development Committee (the JRDC). The size of the JRDC may be determined from time to time;
initially it shall consist of six members, three each appointed by Onyx and Miles within ten days
after the Effective Date. Members of the JRDC shall be composed of senior officers or
representatives of each party authorized to make decisions with respect to matters within the scope
of the JRDCs authority. An alternate member designated by a Party may serve temporarily in the
absence of a permanent member designated by such Party. Each Party shall appoint and replace its
representatives to the JRDC, as appropriate during the collaboration. The JRDC shall operate by
consensus. Any deadlock shall be referred to the designated executive officers of Miles and Onyx
pursuant to Article 25 of this Agreement.
3.2
Meetings of the JRDC.
The JRDC shall hold meetings at such times as shall be determined
by a majority of the membership of the Committee, at least once a quarter. Notice of meetings
shall be given 30 days in advance to each member, stating the date, time and place of such meeting
and describing the proposed agenda of items to be discussed at such meeting. Either Party may
place items on the proposed agenda. Responsibility for arranging meetings will alternate between
the Parties, with Onyx having responsibility for the first meeting. The JRDC may conduct meetings
in person or by telephone conference; shall keep minutes reflecting actions taken at meetings; may
act without a meeting if prior to such action a written consent thereto is signed by all members of
the committee; and may amend or expand upon the foregoing procedures for its internal operation by
unanimous written consent. At each committee meeting all members shall review and sign the
then-current version of Exhibit B, and the Committee will retain copies of all such signed versions
of Exhibit B generated during the term of the Agreement.
3.3
Functions and Powers of the JRDC.
The activities of the Parties under this Agreement
shall be supervised and
managed by the JRDC. The JRDC shall perform the specific functions set forth in Chapters 2-7 of
the Agreement if not stated otherwise, and in addition shall perform the following general tasks in
managing the collaboration:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
10
(a) determine the overall strategy for the collaboration in the manner
contemplated by this Agreement;
(b) coordinate the activities of the Parties hereunder;
(c) prepare the Annual Plan for the Research (defined in Section 5.4) for each year
during the Research Term, including modifications and amendments to the Research Plan;
(d) review all work done under and results of the Research;
(e) determine the scope of the Field of Collaborative Research and establish the assay
standards used to determine Collaboration Compounds, under Article 6;
(f) review compounds under investigation in the Research for selection as Lead
Structures, and select Collaboration Compounds for Co-Development as Development Compounds;
(g) approve any agreements with Third Parties to be made by either or both Parties
regarding the subject matter of this Agreement (except with respect to Royalty-Bearing
Products and as otherwise expressly provided in this Agreement); and
(h) perform such other functions as appropriate to further the purposes of this
Agreement as determined by the Parties.
3.4
Obligations of Parties.
Onyx and Miles shall provide the JRDC and its authorized
representatives with reasonable access during regular business hours to all records, documents, and
Information relating to this collaboration which it may reasonably require in order to perform its
obligations hereunder, provided that if such documents are under a bona fide obligation of
confidentiality to a Third Party, then Onyx or Miles, as the case may be, may withhold access
thereto to the extent necessary to satisfy such obligation. During the Research Term, neither
party shall knowingly receive information which is relevant to the Field and/or the Field of
Collaborative Research under conditions which would preclude disclosure by reason of this Section
3.4.
3.5
Project Leader.
Each Party shall designate an overall project leader within ten days of
the execution of this Agreement. Such project leaders will be responsible for the day-to-day
worldwide coordination of the collaboration contemplated by this Agreement and will serve to
facilitate communication between the Parties relating to the collaboration. The project leaders
shall attend all meetings of the JRDC.
3.6
General.
In all matters related to the collaboration established by this Agreement, the
Parties shall be guided by standards of reasonableness in
economic terms and fairness to each of the Parties, striving to balance as best they can the
legitimate interests and concerns of the Parties and to realize the economic potential of the
Products. In conducting research, development, and commercialization activities under this
Agreement neither Party shall prejudice the value of a Product by reason of such Partys activities
outside of the Field.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
11
Article
4
Licenses
4.1
Research Licenses.
(a) Onyx hereby grants Miles and its Affiliates a fully paid-up, worldwide license, without
the right to sublicense, under the Onyx Patents and Onyx Know-How
(i) to conduct the Research during the Research Term, and
(ii) to conduct research and development of Products under Section 9.6 following the Research
Term, provided, however, in each case that Miles and its Affiliates may only practice the Onyx
Know-How and Onyx Patents that relate directly to the Field of Collaborative Research as defined at
the time of such use.
Such license shall be exclusive except as to Onyx and its Affiliates.
(b) Miles hereby grants Onyx and its Affiliates a fully paid-up, worldwide license, without
the right to sublicense, under the Miles Patents and Miles Know-How
(i) to conduct the Research during the Research Term, and
(ii) to conduct research and development of Products under Section 9.6 following Research
Term, provided, however, in each case that Onyx and its Affiliates may only practice the Miles
Know-How and Miles Patents that relate directly to the Field of Collaborative Research as defined
at the time of such use.
Such license shall be exclusive except as to Miles and its Affiliates.
4.2
Collaboration Product Commercialization Licenses.
(a) Onyx hereby grants Miles and its Affiliates a worldwide, fully paid-up license, with the
right to grant sublicenses, under the Onyx Patents and the Onyx Know-How to develop, make, have
made, use, have used, sell and have sold Collaboration Products, subject to the terms and
conditions of this Agreement. Such license shall be exclusive except as to Onyx and its
Affiliates.
(b) Miles and its Affiliates hereby grants Onyx a fully paid-up license in the United States,
without the right to grant sublicenses, under the Miles Patents and Miles Know-How to develop, use
and sell Collaboration Products, subject to the terms and conditions of this Agreement. Such
license shall be exclusive except as to Miles and its Affiliates.
4.3
Limitations on Exclusivity.
(a) As used in Sections 4.1 and 4.2, a license that is exclusive except as to the granting
Party means that the Party granting the license shall not grant any other entity (other than its
Affiliates) any license under such intellectual property rights with the right to practice within
the licensed field, but that otherwise such Party retains all its rights of ownership in such
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
12
licensed rights, including without limitation the right to practice such property rights, subject
only to the license granted.
(b) With respect to the Onyx Patents and Onyx Know-How that Onyx Controls pursuant to that
certain Technology Transfer Agreement between Onyx and Chiron Corporation dated April 24, 1992, as
amended (the Chiron Agreement), the exclusive licenses granted to Miles and its Affiliates by
Onyx under such Onyx rights pursuant to this Article 4 shall be exclusive or co-exclusive only to
the extent Onyx holds exclusive or co-exclusive rights under the Chiron Agreement.
4.4
Royalty-Bearing Product Commercialization Licenses.
(a) Onyx hereby grants Miles and its Affiliates an exclusive, royalty-bearing license, with
the right to grant sublicenses, under the Onyx Patents and the Onyx Know-How solely to develop,
make, have made, use, have used, sell and have sold Royalty-Bearing Products of Miles in such
countries where such products are deemed hereunder to be Royalty-Bearing Products, subject to the
terms and conditions of this Agreement.
(b) Miles hereby grants Onyx and its Affiliates an exclusive, royalty-bearing license, with
the right to grant sublicenses, under the Miles Patents and Miles Know-How solely to make, have
made, use, have used, sell and have sold Royalty-Bearing Products of Onyx in such countries where
such products are deemed hereunder to be Royalty Bearing Products, subject to the terms and
conditions of this Agreement.
4.5
Know-How Licenses Following The Research Term
. Each Party hereby grants the other Party
and its Affiliates a non-exclusive, world-wide, fully paid-up license to use the Know-How of the
Party granting such license for any purpose relating to the Ras Pathway or Ras Function.
4.6
Onyx License After Research Termination.
Miles hereby grants Onyx and its Affiliates an
exclusive royalty-bearing, worldwide license (the Termination License), with the right to grant
sublicenses, under the Miles Patents, and Miles Know-How at a rate pursuant to Section 16.4 solely
to discover and develop substances with activity in the Field of Collaborative Research and to
make, use and sell such substances; provided, however, that this Termination License may be
exercised by Onyx only in the event that Miles terminates the Research on or before
[ * ]
under
Section 5.6, 5.7 or 5.8. In the case of termination of Research and substitution under Sections
5.6 and 5.7, this license covers the Field of Collaborative Research as defined prior to such
substitution.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
13
CHAPTER 3
RESEARCH
Article
5
Collaborative Research Program
5.1
Program Management.
Miles and Onyx will conduct the Research on a collaborative basis
with the goal of discovering, synthesizing, and performing preclinical investigations on
Collaboration Compounds for clinical development into Products as rapidly as possible. The
Research will be supervised and managed by the JRDC. The Parties have agreed to the two-year
Research Plan attached as Exhibit C. The Parties will update the Research Plan for subsequent
years of the collaboration at least 120 days before the beginning of each calendar year. The
Research Plan also may be amended and updated by the JRDC at any time in view of the results of the
Research performed up to that time.
5.2
Decision Points During Research.
During the Research, the JRDC shall direct compounds and
other materials, including Collaboration Compounds, through the program of research investigation
and preclinical development work towards selection of Collaboration Compounds for Co-Development as
Development Compounds. The initial stage of this process shall be the development of assays and
the screening of compounds to determine which compounds should be selected as Lead Structures.
Identified Lead Structures will be further investigated, including performing Analoging Programs on
such Lead Structures, and performing needed pharmacology, drug optimization, further chemistry
investigation, and toxicology and pharmacokinetic investigations, as appropriate. Compounds
resulting from an Analoging Program will be further investigated under the Research to determine
which of such compounds are Collaboration Compounds. The Research is intended to generate results
and data sufficient to determine which compounds should be selected as Development Compounds for
preclinical development investigation (see Section 11.2).
5.3
Research Efforts and Expenses.
Each of the Parties will work diligently to carry out the
Research, to cooperate with the other Party in the conduct of the Research, and to achieve the
objectives of the Research, and shall maintain and utilize scientific staff, laboratories, offices
and other facilities consistent with such undertaking. Specific funding for performing the
Research is provided in Article 9. Each Party shall bear any of its own expenses incurred in
connection with the Research not provided for in Article 9 or otherwise in this Agreement.
Management of personnel, including their compensation and evaluation, will be the responsibility of
the Party which employs or engages such personnel.
5.4
Annual Plan and Budget.
At least 120 days prior to the beginning of a new calendar year
during the Research Term, the JRDC shall agree upon and provide to the Parties a plan (the Annual
Plan) setting forth each Partys research tasks and goals under the Research for that year and
setting a budget for such Research.
The Parties shall approve the budget in the Annual Plan, with such changes as they deem appropriate
and mutually approve.
5.5
Extension of Research Term.
The Parties may agree to extend the Research Term by mutual
consent on such terms and conditions as the Parties may then agree.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
14
5.6
Termination of Research with Substitution of New Research Target.
If prior to two and
one-half years after the Effective Date Miles determines that the program of Research on inhibition
of Ras Function is unlikely to prove successful in identifying products useful for treating cancer
and/or other hyperproliferative diseases, Miles may elect to substitute, as of February 1, 1997,
another Onyx research program in the field of oncology, if such program remains available for
collaboration, in place of the research on inhibition of Ras Function in the Research under this
collaboration. Miles may effect such substitution by giving Onyx at least six months written
notice, to be effective on February 1, 1997. Upon the effective date of such notice, the Onyx
research program in oncology covered by such notice shall be substituted into the collaboration
covered by this Agreement in the place of the then-existing Field of Collaborative Research. The
Parties shall meet in good faith to agree on a suitable amendment to this Agreement in order to
reflect such substitution, including by way of example revising the definitions of Research, Field,
Field of Collaborative Research, Collaboration Compound, and Post Collaboration Compound and
developing a new Research Plan, in order to conform this Agreement with the new research program
substituted by Miles. For purposes of determining the Research Term and the funding of the
Research with respect to such substituted target, upon the election of substitution by Miles under
this Section 5.6, the new Research shall be deemed to commence on February 1, 1997, with a new
five-year Research Term and including an annual $5,000,000 Research payment for each year of such
five year term.
5.7
Consequences of Research Substitution.
If Miles terminates, pursuant to Section 5.6, the
existing research project under the Research and substitutes another Onyx research program in its
place, then, after the effective date of the Miles notice of substitution:
(i) Miles shall no longer have any rights under Onyx Patents or Know-How, or with
respect to the Field of Collaborative Research as defined prior to such substitution,
(ii) Onyx may thereafter exercise the Termination License under Miles Patents and
Know-How, and granted to Onyx under Section 4.6;
(iii) Miles shall promptly return to Onyx or destroy all copies of Onyx Information and
any other confidential information belonging to Onyx (except to the extent such information
relates to the Field of Collaborative Research as newly defined after the substitution).
[
* ]
shall use due diligence in prosecuting and maintaining all
[ * ]
Patents arising from
inventions in the Research. In the event
[ * ]
declines to prosecute or maintain any such
[
* ]
Patent,
[ * ]
shall give
[ * ]
notice of such decision at least
[ * ]
prior to any deadline or due date with respect to such patent.
[ * ]
shall then have the
right to prosecute and maintain any such
[ * ]
Patent at its own expense.
[ * ]
shall
authorize, transfer and assign to
[ * ]
the right to enforce and defend all such
[ * ]
Patents within the Field of Collaborative Research.
[ * ]
agrees to perform all acts deemed
necessary or desirable by
[ * ]
to permit and assist
[ * ]
, at
[ * ]
expense, in enforcing
its rights throughout the world in the
[ * ]
Patents arising from inventions in the Research
and other intellectual property rights arising from this collaboration. Such acts may
include, but are not limited to, execution of documents and assistance or cooperation in the
enforcement, including litigation or other legal proceedings, of applicable patents.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
15
5.8
Termination of Research by Miles.
Except for termination of the Agreement under Section
23.2, Miles may terminate the Research only
(a) on the date
[ * ]
after the Effective Date, by giving Onyx at least
[ * ]
written
notice in advance of such termination, or
(b) pursuant to the provisions of Section 5.9.
If Miles terminates the Research hereunder, then:
|
(i)
|
|
Onyx may thereafter exercise the Termination License under Miles Patents and
Know-How granted to Onyx under Section 4.6;
|
|
|
(ii)
|
|
Miles shall promptly return to Onyx or destroy all copies of Onyx Information
and any other confidential information belonging to Onyx; and
|
|
|
(iii)
|
|
this Agreement, including all licenses granted to Miles under Article 4, shall
terminate effective as of such termination, subject to the survival of this Section,
Section 4.6, and the portions of this Agreement referred to in Section 24.5.
|
[ * ]
shall use due diligence in prosecuting and maintaining all
[ * ]
Patents arising from
inventions in the Research. In the event
[ * ]
declines to prosecute or maintain any such
[ * ]
Patent,
[ * ]
shall give
[ * ]
notice of such decision at least
[ * ]
prior to any deadline or due
date with respect to such patent.
[ * ]
shall then have the right to prosecute and maintain any
such
[ * ]
Patent at its own expense.
[ * ]
shall authorize, transfer and assign to
[ * ]
the
right to enforce and defend all such
[ * ]
Patents within the Field of Collaborative Research.
[ *
]
agrees to perform all acts deemed necessary or desirable by
[ * ]
to permit and assist
[ * ]
, at
[ * ]
expense, in enforcing its rights throughout the world in the
[ * ]
Patents arising from
inventions in the Research and other intellectual property rights arising from this collaboration.
Such acts may include, but are not limited to, execution of documents and assistance or cooperation
in the enforcement, including litigation or other legal proceedings, of applicable Patents.
5.9
Key Employee Departure.
If prior to two and one-half years after the Effective Date Dr.
Frank McCormick or Dr. Peter Myers ceases to be employed by Onyx, Onyx shall use diligent efforts
to find a research scientist to replace the departed employee. If Onyx is unable. to find such
replacement who is reasonably
satisfactory to Miles within 180 days after Dr. McCormick or Dr. Myers ceases to be employed by
Onyx, then Miles may terminate this Agreement by giving Onyx 60 days written notice.
If Miles terminates the Agreement under this Section, Onyx may thereafter exercise the
Termination License under Miles Patents and Know-How granted to Onyx and its Affiliates under
Section 4.6. In such a case, however, the Termination License is non-exclusive, and at a rate
pursuant to Section 16.4.
After termination Miles may continue the preclinical research and development work in the
Field of Collaborative Research as defined at the date of termination. For this reason, Onyx
hereby grants to Miles and its Affiliates a non-exclusive, royalty-bearing worldwide license
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
16
under
the Onyx Patents and Know-How, solely to discover and develop substances with activity in the Field
of Collaborative Research and to make, use and sell such substances, at a royalty rate pursuant to
Section 16.4.
Such work by Miles after termination is deemed to be work under Section 7.3 such that Onyx
provides Information and Miles provides reports on results, may elect to prepare and file an IND
and to proceed with clinical trials, etc. Compounds thus independently investigated and developed
by Miles shall be deemed Royalty-Bearing Products of Miles; however, Onyx has an option for
buy-back pursuant to the provisions of Section 7.4. This paragraph applies only to compounds that
were physically available at the time of termination.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
17
Article
6
Specification of Research Field and Assays
6.1
Refinement of Field of Collaborative Research.
In executing this Agreement, the Parties
recognize that scientific understanding of Ras Function is still developing and will continue to
develop during the term of the Research. Further, the Parties recognize that a principal objective
of the Research, particularly in its early stages, is to develop further assays to identify
compounds which may be useful for inhibiting Ras Function. The JRDC shall periodically review the
definition of the Field of Collaborative Research and determine, with specific reference to
programs, targets, and assays then in existence or under development, which programs, targets, and
assays shall comprise the best areas for Research for discovering inhibitors of Ras Function. Such
programs, targets, or assays shall then be selected and included in the Field of Collaborative
Research, and any programs, targets, or assays determined no longer to be useful in identifying
compounds that inhibit Ras Function shall be removed from the Field of Collaborative Research by
the JRDC. Any changes to such Field of Collaborative Research by the JRDC shall be effected by
modification of the attached Exhibit B. In the event the JRDC expands the Field of Collaborative
Research to include other programs, targets, or assays, such expansion shall not affect any rights
or obligations of either Party with respect to Third Parties pursuant to agreements entered into
prior to such expansion. If Miles elects to substitute a different Onyx cancer program for the Ras
Function inhibition program, pursuant to Section 5.6, this Field of Collaboration Research will be
modified to reflect the new programs, targets, and assays included in the program covered by such
substitution, including revision of the attached Exhibit B.
6.2
Restriction of the Field of Collaborative Research.
If, under Section 6.1, the JRDC
removes certain programs, targets, or assays from the definition of Field of Collaborative
Research, then the licenses under the Patents and Know-How relating to such programs, targets, or
assays granted under Article 4 shall then terminate with respect to such programs, targets or
assays. Further, if one Party but not the other had a research program with respect to such
programs, targets, or assays prior to their inclusion in the Field of Collaborative Research (and
so advised the JRDC prior to such inclusion), such Party shall have the option
(a) to acquire the entire right, interest, and title in and to all know-how and Patents
jointly developed by the Parties during the course of the Research that relate directly to
such programs, targets, or assays removed by the JRDC from the Field of Collaborative
Research; and
(b) to obtain an exclusive, worldwide license to all know-how and Patents developed
solely by the other Party during the course of the Research that relate directly to such
programs, targets, or assays removed by the JRDC from the Field of Collaborative Research,
solely for purposes of developing and making, using and selling products based upon such
programs, targets and assays. Such option shall be exercisable for
[ * ]
after such JRDC
decision. If
[ * ]
is the Party exercising such option,
[ * ]
shall pay
[ * ]
for all
amounts expended in the Research directly for developing or discovering
such jointly-developed know-how, Patents, and inventions covered by the option exercised,
and shall pay
[ * ]
a commercially reasonable royalty up to
[ * ]
negotiated in good faith
for the exclusive license. If
[ * ]
exercises such option, it shall
[ * ]
.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
18
6.3
Specification of Ras Function Assay Standards.
The JRDC shall specify the assays and the
level of measured activity under such assays in the Field of Collaborative Research that shall be
required by the Parties to establish that a specific compound exhibits a sufficient level of
activity in inhibiting Ras Function to qualify as a Collaboration Compound under Section 1.11. The
initial standards of measured activity for identifying a Collaboration Compound are set forth on
Exhibit E. It is anticipated that the specific assays and required level of activity established
hereunder by the JRDC for qualifying compounds as Collaboration Compounds under Sections 1.11 may
change by JRDC decision during the Research, as the Parties improve and refine their understanding
of Ras Function. Such changes shall be reflected by amendment of Exhibit E and shall take effect
on the date the amended Exhibit E is signed by both Parties. The Parties understand that if a
compound or material shows activity in assays within the Field of Collaborative Research, such
activity may support the Parties conducting further Research on such compound within the Field of
Collaborative Research, but such compound shall not qualify as a Collaboration Compound unless it
meets the requirements established by the JRDC under this Section 6.3.
Article
7
Allocation of Research Tasks
7.1
Onyx Research Obligations.
Onyx shall be primarily responsible for performing the
biological research components of the Research Plan, including investigation of new targets,
development of assays, and production of assay reagents. Onyx shall perform such primary screening
of compounds as the JRDC determines is appropriate. Such primary screening shall include compounds
and materials in the Miles and the Onyx library and collection selected by the JRDC for screening
by Onyx. To the extent assays in the Field of Collaborative Research are appropriate for
large-scale, high throughput primary screening of compounds, Miles shall perform such screening,
with Onyx assistance in transferring needed assay reagents and Onyx Information. Onyx will have a
right to perform
[ * ]
in the first year of the Research Term with
[ * ]
, in the second year with
[
* ]
and starting in the third year of the Research Term, up to
[ * ]
of the scientific full-time
equivalents (FTEs) funded by Miles at Onyx during the remainder of the Research Term under the
Miles funding. Onyx shall also have the right throughout the Research Term to perform
[ * ]
in the
Field of Collaborative Research
[ * ]
. Onyx also will perform
[ * ]
and will assist Miles in
performing preclinical investigations on Development Compounds in the Preclinical Development
Period, at Miles reasonable request. Onyx shall provide the number of FTEs to conduct the
Research as specified by the JRDC under the Annual Plan. Onyx may increase the size of its total
research team beyond that set forth in the Annual Plan, but shall not receive any payment under
Article 9 for any increase in Research effort which was not approved in advance by the JRDC.
7.2
Miles Research Obligations.
Miles shall provide to Onyx samples of a sufficient number
and range of materials from its library and collection, for screening by Onyx under the Research,
to enable Onyx to screen the Miles prototype library, which is representative of the complexity and
diversity of the Miles library and collection. Onyx shall have the right to screen any material
from Miles where sampling or other data indicates likelihood of activity in the Field. Miles shall
perform all pharmacology research and such biological research as the JRDC may request. Miles
shall perform the chemistry required during the Research Term, except as performed by Onyx under
Section 7.1. Onyx shall provide Miles such information and materials
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
19
relating to the Onyx assays
as are necessary for Miles to perform its chemistry obligations under the Research. Miles shall
also perform such primary screening of compounds as the JRDC determines is appropriate using assays
within the Field of Collaborative Research that can be utilized efficiently in large-scale, high
throughput screening.
7.3
Independent Funded Research Of Onyx Subject to Buy-Back.
Onyx may perform independent
preclinical research and development work pursuant to Section 12.4 during the Research Term, or
pursuant to Section 9.6 after the Research Term,
[ * ]
. In those events, upon request by Onyx,
Miles shall provide all Information and materials reasonably requested by Onyx to assist in such
preclinical research and development work. During such work, Onyx shall provide Miles regular
reports on results, including any animal testing data and toxicology. Onyx may elect to prepare
and file an IND and to proceed with clinical trials and Clinical Development Period work. Onyx
shall deliver to Miles a copy of any IND packages. Subject to Miles rights under Section 7.4,
compounds independently investigated and developed by Onyx pursuant to this Section shall be deemed
Royalty-Bearing Products of Onyx. Research performed by Onyx following the Research Term shall not
be subject to buy-back rights of Miles except as provided in this Section 7.3 or Section 7.4, 7.5
or 9.6(b).
7.4
Miles Buy-Back.
If under Section 7.1 Onyx performs
[ * ]
chemistry or under Section 7.3
Onyx performs independent preclinical research and development work, Miles shall have an option to
reestablish the cooperation with Onyx in preclinical research and development work. Such option
may be exercised for any compound deriving from such preclinical research and development work at
any time up until 30 days following
[ * ]
by written notice to Onyx. If Miles exercises such
option, Miles shall pay Onyx, within
[ * ]
following notice of exercise of the option, an amount
equal to
[ * ]
of Onyx expenses in performing such independent preclinical research and
development work on such compound, through the date of the notice. In such a case any license
pursuant to Section 4.6 shall terminate and such compound shall be a Collaboration Compound. If
Miles does not exercise such option, such compounds thereafter shall be deemed Royalty-Bearing
Products of Onyx, and Onyx shall have the exclusive right to develop and market such compound under
Section 12.4.
7.5
Collaboration Compounds Developed After A Termination Under Section 5.9.
In the event
that following a termination under Section 5.9, either Party performs preclinical development of a
Collaboration Compound (including for this purpose any compound that was physically available at
that time and is later determined to satisfy the criteria of a Collaboration
Compound) that had been identified prior to such termination, the other Party shall retain buy-back
rights to reestablish a collaboration with respect to such Collaboration Compound under the terms
and conditions of Section 7.4.
7.6
Conduct of Studies.
All work and investigations done in connection with the Research
shall be carried out in compliance with any federal, state or local laws, regulations, or
guidelines governing the conduct of research at the site where such work is being conducted. Each
Party agrees to provide the other with all safety and other handling information and instructions
available to the disclosing Party relating to all materials transmitted to the other Party
hereunder.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
20
Article
8
Research Material and Information
8.1
Rights In Materials
.
(a) Any compounds or other materials that are tested in the Research but do not become
Collaboration Compounds shall remain the sole and exclusive property of the Party that
brought such materials to the collaboration, and the other Party shall have no rights
therein, except as set forth in Section 8.1(c).
(b) Compounds synthesized in an Analoging Program shall be owned by the Party who
conducted the Analoging Program. If any compound generated under an Analoging Program is
discovered, at any time, to be a Collaboration Compound, then such Collaboration Compound
may be commercialized only as provided hereunder.
(c) Miles shall have the right, exercisable until
[ * ]
after the end of the Research
Term, to screen in any of Miles assays or screens any compound made by Onyx under an
Analoging Program
[ * ]
. If Miles desires to commercialize any such compound identified in
such screening as having pharmaceutical utility, Miles shall give Onyx written notice prior
to
[ * ]
after the end of the Research Term, specifying the compound and the proposed
indication to be developed. Thereafter, the Parties will meet in good faith to negotiate an
exclusive license agreement, including a commercially reasonable royalty and requirement of
diligence, under Onyx rights in such compound for such commercialization. The royalty
shall only be paid if and as long as such compound is covered by a valid claim of an Onyx
Patent. At
[ * ]
after the end of the Research Term, all rights to commercialize compounds
made by Onyx under such an Analoging Program shall return solely and exclusively to Onyx,
except with respect to any such compounds for which Miles gave prior written notice
hereunder. Miles agrees to notify Onyx promptly upon its determination at any time that it
no longer is interested in screening or commercializing any particular compound or compounds
made by Onyx under an Analoging Program. All rights in such compound or compounds then
shall be wholly owned by Onyx, and Miles option to screen with respect to such compound or
compounds shall immediately expire.
8.2
Acquisition of Third Party Technology.
If during the Research Term either Party becomes
aware of any
technology (including compounds) of a Third Party that would be valuable to the discovery,
development or commercialization of Collaboration Compounds or Products, the Party will provide
such information to the JRDC. Within 60 days of such notification, the JRDC will determine whether
that technology should be brought into the Research. In the event that acquisition of any Third
Party technology would result in payment of royalties or other license fees to a Third Party that
would
[ * ]
, then the Parties shall decide jointly whether to acquire such technology. No consent
shall be required with regard to any license for which a Party bears the entire economic burden,
and which does not otherwise impair such Partys performance under the Agreement.
Article
9
Research Funding
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
21
9.1
Miles Financial Support.
Miles shall provide financial support for Onyx Research efforts
during the Research Term as set forth in each Annual Plan. Such support shall be provided for
[ *
]
scientific full-time equivalents (FTEs) annually over 5 years initially at the rate of
[ * ]
per
calendar year for each Onyx scientific FTE working on the Research under the Annual Plan, plus such
Third Party expenses to assist Onyx in performing the Research (such as in vivo animal studies) as
may be approved by the JRDC. Commencing with the calendar year 1995, such reimbursement rate shall
be adjusted each January 1 for inflation based on changes in the Bureau of Labor Statistics
Consumer Price Index for Urban Wage-earners San Francisco/Oakland from September 1993 to the
September immediately preceding such January 1. Upon the request of either Party during the
Research Term, the JRDC shall review the actual costs of Onyx incurred in connection with the
Research. Any such adjustment in the reimbursement rate shall have prospective effect only.
9.2
Minimum Level of Financial Support.
The minimum amount payable by Miles under Section 9.1
shall be US$
[ * ]
in the first year of the Research Term, US$
[ * ]
in each of the next
[ * ]
years
of the Research Term, and
[ * ]
in the
[ * ]
year of the Research Term. These amounts reflect the
total financial support for the
[ * ]
FTE annually over 5 years.
9.3
Restriction on Government Support.
Onyx shall not obtain any new governmental or other
third party support of the Research without the prior approval of Miles. Upon signing of this
Agreement, Onyx shall terminate all government grants it currently is receiving that cover research
in the Field of Collaborative Research. To the best of Onyx knowledge, none of the work done by
Onyx (or its predecessors) under government grants prior to the execution of this Agreement has
resulted in any Patents or patent applications owned or licensed by Onyx that claim subject matter
within the Field of Collaborative Research.
9.4
Manner of Payments.
Miles shall pay Onyx all funding under this Article 9 in U.S. Dollars
in quarterly payments as a lump sum on or before
[ * ]
each calendar quarter, with payment for the
period from the Effective Date through June 30, 1994 in the amount of
[ * ]
to be made within 10
days after the execution of this Agreement. Payment shall be made by wire transfer of immediately
available funds to an account designated in writing by Onyx. Unless otherwise agreed in writing by
Onyx and Miles,
the amount of each installment (except for the first payment) shall be one-fourth of the total
annual budget for a particular year as approved by the JRDC under the Annual Plan.
9.5
Application of Funds; Reporting.
Onyx shall use the funds received by it under this
Article 9 solely for the purpose of the Research. Onyx shall submit to the JRDC within 60 days
after the end of each calendar year of the Research Term a report advising the JRDC of the
scientific FTEs and other efforts and expenses applied by it to the Research during the preceding
calendar year. In the event that such report shows that Onyx did not expend some of the funds it
received hereunder, such amount shall be applied as a credit towards the next payment of funds by
Miles hereunder, or if no such further payment is owed, shall be promptly refunded to Miles.
9.6
Research Activities After Research Term.
The Parties expect that both Parties may
continue to jointly conduct research and preclinical work on Collaboration Compounds not in
development after the end of the Research Term, with the intent of making proposals to the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
22
JRDC for
selection of such Collaboration Compounds for Co-Development into Products. Funding of such
preclinical work shall be as follows:
(a) For any Collaboration Compound in active Preclinical Development Period work as a
Development Compound at the end of the Research Term,
[ * ]
pay all costs approved by the
JRDC relating to the preclinical research and investigations by
[ * ]
in the Preclinical
Development Period.
[ * ]
shall reimburse
[ * ]
for its approved preclinical expenses
within
[ * ]
of the end of each quarter, based upon invoices submitted by
[ * ]
. If
[ * ]
declines to fund the preclinical work on such Development Compound,
[ * ]
may exercise its
rights under Section 7.3. Either Party may propose any such Collaboration Compound to the
JRDC for selection for Co-Development, as set forth in Section 11.4.
(b) For all Collaboration Compounds not under active investigation in the Preclinical
Development Period at the end of the Research Term, either Party may propose to the other
that the Parties conduct jointly funded preclinical research and investigation work on such
Collaboration Compound. If the Parties agree on such arrangement, such preclinical work and
Preclinical Development Period work shall be managed by the JRDC to facilitate bringing such
compound into the Clinical Development Period and to eliminate duplication of effort, with
[
* ]
paying for
[ * ]
of the expenses of such work, reconciled on a quarterly basis. If a
Party does not accept the other Partys proposal to perform joint preclinical work on such
Collaboration Compound, either Party may perform such work independently,
[ * ]
. In that
event, prior to conducting any independent Clinical Development Period work on such
Collaboration Compound, the Party conducting such independent preclinical work shall propose
the Collaboration Compound to the JRDC for selection for Co-Development under Section 11.4.
If the JRDC selects such Collaboration Compound for Co-Development, then the Party that did
not conduct the preclinical work on such Collaboration Compound shall pay the other Party
[
* ]
of that Partys expenses in conducting such independent preclinical work on that
compound. Thereafter, the Parties shall
[ * ]
, and shall conduct
Co-Development of such Collaboration Product as set forth in Chapter 4. The rights of a
Party to buy back into a Collaboration Compound being independently developed by the other
Party under this Section 9.6(b) shall not expire until 30 days following
[ * ]
. If the JRDC
does not then select such compound for Co-Development, the Party desiring to develop such
Collaboration Compound may proceed with development independently pursuant to Section 12.4.
(c) For compounds that are under active investigation as part of the Research at the
end of the Research Term but have not yet been determined to be a Collaboration Compound,
the Parties shall have equal rights to continue work and commercialize any resulting
Products under the same arrangements as set forth in paragraph (b) above.
(d) The Party who is the owner of any pending or issued claim of an unexpired Patent
pursuant to Section 1.39 (a) claiming the chemical genus of compounds at least one of which
was identified as a Collaboration Compound and whose Patent covers a Post-Collaboration
Compound shall have the exclusive right to develop and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
23
market such Post-Collaboration
Compound worldwide, subject to a royalty pursuant to Section 16.6. The testing for
inhibiting Ras Function activity by Post-Collaboration Compounds shall be done by Onyx.
Article
10
Research Reports
10.1
Information and Reports During Research.
Onyx and Miles shall make available and
disclose to each other the Information and all other significant information, data, and results
known or developed by each party as of the Effective Date and during the Research Term, relating to
the Field and the Field of Collaborative Research. All discoveries or inventions made by either
Party in the Field and the Field of Collaborative Research, including without limitation
information regarding initial leads, activities of leads, derivatives, analogs, and results of in
vitro and in vivo studies, will be promptly disclosed to the other Party, with significant
discoveries or advances being communicated as soon as practicable after such information is
obtained or its significance is appreciated. Each Party shall also submit a written report to the
JRDC, at least once a quarter and at least three days prior to the JRDC meeting during such
quarter, summarizing the significant results, data, and information, including a list of all new
materials created, from the Research conducted by that Party during the previous quarter. Each
Party will use reasonable efforts not to communicate information to the other Party that has no
application to the Field. Each Party agrees to provide the other with access to review and make
copies of the raw data for any and all work carried out in the course of the Research, as
reasonably requested by the other Party to further the objectives of this Agreement.
10.2
Reports After Research Term.
Following the Research Term, each Party shall submit
reports to the JRDC on a quarterly basis regarding all work being done by such Party with respect
to Collaboration Compounds not yet in Development and other compounds under active investigation in
the Research as of the end of the Research Term, at a level of detail sufficient to enable the
other Party to understand the progress being made and to evaluate whether to participate in funding
such preclinical work under Section 9.6, and with respect to any efforts under Section 9.6(d)
towards identifying and developing Post-Collaboration Compounds.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
24
CHAPTER 4
PRODUCT DEVELOPMENT
Article
11
Co-Development
11.1
Scope of Development.
Development and commercialization by the Parties, or either of
them, of any and all Collaboration Compounds for any indication in the Field shall be conducted
solely as provided under this Agreement. All Co-Development will be supervised and managed by the
JRDC. The JRDC shall:
|
(i)
|
|
review all proposals under Section 11.4 and select Collaboration Compounds for
Co-Development into Collaboration Products;
|
|
|
(ii)
|
|
review and approve the world-wide plan for the Co-Development of each
Development Compound selected for Co-Development, including an annual budget subject to
approval by the Parties, the clinical plan, and selection of indications (the
Co-Development Plan); and
|
|
|
(iii)
|
|
approve all major decisions regarding Co-Development.
|
11.2
Preclinical Investigation and Development.
The JRDC shall select which Collaboration
Compounds in the Research shall enter the Preclinical Development Period as Development Compounds.
Development Compounds shall be evaluated and investigated under the Preclinical Development Period
to determine whether to select such Development Compounds for Co-Development. The Preclinical
Development Period shall be directed towards obtaining the data necessary or useful for selecting
specific Collaboration Compounds (that are Development Compounds) for Co-Development and for filing
the applications for approval to conduct human clinical trials. The Preclinical Development Period
includes the preclinical work needed to prepare the data necessary or useful for filing an IND (or
related applications) and for obtaining governmental approval to conduct human clinical trials on
such Development Compounds, such as
[ * ]
. Except as otherwise provided in the Annual Plan, Miles
shall perform all of the preclinical and regulatory work under the Preclinical Development Period.
Miles shall bear all costs and expenses related to the work in the Preclinical Development Period
(except as set forth in Section 9.6(b) with respect to preclinical work after the Research Term).
11.3
Synthesis of Preclinical Materials.
The cost of Collaboration Compounds synthesized for
use in the Research and the Preclinical Development Period, and related costs of process
development, shall be part of the Annual Plan and budget pursuant to Section 5.4. Materials used in
the Preclinical Development Period shall be manufactured by
[ * ]
, it being understood that Miles
will be the Party responsible for the development of manufacturing processes.
11.4
Selection of Collaboration Compounds for Co-Development.
Co-Development of a
Development Compound shall be initiated by its selection by the JRDC. At any time during the
Agreement, either Party may make a proposal to the JRDC that a particular Collaboration Compound be
selected for Co-Development. Such proposal shall
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
25
include a summary of all research and preclinical
results upon which such Party bases its belief that such Collaboration Compound is appropriate for
Clinical Development Period work. Within 60 days of receipt of such proposal, the JRDC shall
review all such data and make its decision whether to select such Development Compound for
Co-Development hereunder. In the event that the JRDC needs more information to make its decision,
the JRDC shall inform the Party making the proposal, prior to the end of such 60 day period,
specifying the additional information needed. The JRDC and such Party shall cooperate to provide
the JRDC such additional information as quickly as possible. The JRDC then shall make its decision
as to such Collaboration Compound within 30 days of receiving such additional information. If the
JRDC selects a Collaboration Compound for Co-Development, such Co-Development shall commence with
work necessary for regulatory submission in the Preclinical Development Period to develop a
Collaboration Product. At that time, the JRDC may select an appropriate number of related
Collaboration Compounds to act as back-up compounds to the selected Development Compound (Back-Up
Compounds). Such Back-Up Compounds shall not be subject to independent development under Article
12, during the time that the related Development Compound is in Clinical Development. Such Back-Up
Compounds shall no longer be considered Back-Up Compounds
|
(a)
|
|
if the Back-Up Compounds cease to be in Co-Development (including by reason of
Regulatory Approval), or
|
|
|
(b)
|
|
within
[ * ]
after the end of the Research Term by decision of the JRDC, or
|
|
|
(c)
|
|
after
[ * ]
after the end of the Research Term.
|
11.5
Budget for Development.
Within 60 days after selection by the JRDC of a Collaboration
Compound for Co-Development the JRDC shall agree upon and provide to the Parties for approval a
budget for the Co-Development activities to be undertaken to achieve Regulatory Approval for such
Development Compound. The JRDC shall amend and update the Co-Development budget at least 90 days
prior to the beginning of a new calendar year while such Co-Development is ongoing, and shall
submit such amended budget to the Parties for approval, with such changes as they may deem
appropriate and mutually approve.
11.6
Performance of Co-Development.
The JRDC shall supervise Co-Development with the goal of
achieving Regulatory Approval of such Development Compound as quickly as possible. In all
countries and territories
[ * ]
, Miles shall have the primary responsibility for performing the
required tasks of Co-Development pursuant to the world-wide Co-Development Plan, including
conducting all clinical trials and obtaining all Regulatory Approvals necessary for marketing
Collaboration Products. Onyx shall assist Miles at Miles reasonable request in performing such
Co-Development tasks; provided, however, that Miles shall at all times have decision-making
authority and remain ultimately responsible for completion of all such tasks and obligations.
Miles (and Onyx, where appropriate) performance of such Co-Development obligations shall
be under the management and supervision of the JRDC, and each Party shall keep the JRDC informed as
to all significant work in Clinical Development Period hereunder.
[ * ]
Miles and Onyx shall
jointly participate in performing Co-Development tasks with equal participation by the Parties to
the extent practical, under the supervision of the JRDC. Subject to
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
26
the principle of equal
participation, the Parties expect that such Co-Development will rely, to the extent it is
economically indicated, on the existing structure and capabilities of Miles for performing Clinical
Development Period tasks. Promptly after selection of a Collaboration Compound for Co-Development,
the Parties shall meet to define a specific mechanism for such joint Co-Development
[ * ]
.
11.7
Funding of Co-Development.
Subject to an election as provided in Section 12.2 below,
each Party shall bear one-half of the Co-Development Costs for each Development Compound, for each
country throughout the world excluding Japan that the JRDC selects for Co-Development. Each Party
shall maintain accurate books and records of all costs and expenses allowable as Co-Development
Costs, within the budget of the Co-Development Plan approved by the Parties. Within 60 days after
the end of any calendar quarter, each Party shall submit to the JRDC a summary of all
Co-Development Costs incurred during that quarter with respect to such Development Compound,
including reasonable detail demonstrating the specific basis for the costs and expenses included in
the summary. The JRDC shall review all such expenses to determine if they fall within the annual
budget in the Co-Development Plan. Any amounts expended outside the approved annual budget shall
be borne by the Party making such expenditure, unless approved by JRDC and if so approved shall be
Co-Development Costs. With respect to the expenses within the annual budget of the Co-Development
Plan, the JRDC shall submit to the Party that bore less than half of the Co-Development Costs
within the budget for that quarter an invoice for the amount that Party must remit to the other
Party or bring that Partys share of the Co-Development Costs up to one-half for the previous
quarter. Such Party shall remit the amount on the invoice to the other Party within
[ * ]
of
receiving such invoice.
11.8
Development Payments.
Miles agrees to pay Onyx the amounts (Development Payments)
specified below. Such payments will occur with respect to each Development Compound during the
Clinical Development Period under the management of the JRDC as long as the Co-Development
continues. No payments under this Section shall be due for independent development pursuant to
Section 12.4. Miles shall make the following Development Payments:
(a) $5.0 million in consideration of research and development efforts to be undertaken
by Onyx pursuant to this Agreement following the first administration of a Development
Compound to a subject under a Phase II clinical trial. This amount shall be paid by wire
transfer within
[ * ]
after such administration.
(b) $15.0 million in consideration of research and development efforts to be undertaken
by Onyx pursuant to this Agreement following the first administration of a Development
Compound to a subject under a Phase III clinical trial. This amount shall be paid by wire
transfer within
[ * ]
after such administration.
(c) $10.0 million in consideration of research and development efforts to be undertaken
by Onyx pursuant to this Agreement following the filing of an NDA for a Development
Compound. This amount shall be paid by wire transfer within
[ * ]
after such filing.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
27
(d) $10.0 million in consideration of research and development efforts to be undertaken
by Onyx pursuant to this Agreement following the approval of an NDA for a Development
Compound or equivalent in any one of the following countries: France, Germany, Italy,
Spain, or the United Kingdom. This amount shall be paid by wire transfer within
[ * ]
after
such approval.
11.9
Development Diligence.
The Parties
[ * ]
and Miles
[ * ]
shall use diligent efforts to
complete the work in the Clinical Development Period of Collaboration Compounds selected for
Co-Development, and to file applications to obtain Regulatory Approval for Collaboration Products
in each country in which both Parties bear the Co-Development Costs for a particular Product. The
Parties shall own jointly
[ * ]
and Miles shall own solely in all other countries all regulatory
submissions and Regulatory Approvals.
11.10
Collaboration Product Information.
Miles and Onyx will disclose and make available to
each other all preclinical, clinical, regulatory, commercial and other information known by Miles
or Onyx or their respective Affiliates concerning Collaboration Products at any time during the
term of this Agreement. All significant information will be disclosed to the other Party promptly
after it is learned or its significance is appreciated. The Parties shall agree on an appropriate
mechanism, relying if possible on existing infrastructure, to maintain a database of clinical trial
data accumulated from all clinical trials and of adverse drug event information for all
Collaboration Products. Both Parties shall own (subject to Section 11.9 above) and have rights of
access to such database and information.
11.11
Use of Information.
Any information contained in reports made pursuant to this Article
11 or otherwise communicated between the Parties will be subject to the confidentiality provisions
of Article 22 below. Subject to such limitation, Miles may use any information obtained by it
pursuant to this Agreement for the purposes of obtaining Regulatory Approval for Products in
countries where Onyx is not participating in Co-Development of such Products.
11.12
Relationship With Chiron Product Rights.
The Parties recognize that Onyx has granted
Chiron prior rights relating to developing and commercializing
[ * ]
products, as defined in the
Chiron Agreement, and that all rights granted in this Agreement are subject to those prior rights.
In the event any Collaboration Compound introduced to the collaboration by Onyx or synthesized by
Onyx in the course of the Analoging Program pursuant to Section 8.1.(b) satisfies the definition of
a
[ * ]
product, Onyx shall provide notice to Chiron and comply with Chirons rights with respect
to such product. If as a result of such negotiation Chiron elects to develop and commercialize
such compound as a
[ * ]
product under the Chiron Agreement, then Miles and Onyx shall share
equally any Sublicensing Revenue received from Chiron with respect to such products. If Chiron
does not elect to commercialize such Collaboration Compound as a
[ * ]
product, such compound shall
be developed, if at all, under this Agreement. Any Collaboration Compound introduced to the
collaboration by Miles or synthesized by Miles in the course of the Analoging Program pursuant to
Section 8.1(b) that satisfies the definition of a
[ * ]
product, shall not be provided to Chiron.
Onyx agrees not to make any amendment to the Chiron Agreement or waive any rights thereunder after
the Effective Date which is adverse to the collaboration established by this Agreement without the
prior consent of Miles.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
28
11.13
Manufacture of Clinical Materials.
Miles shall manufacture, or have manufactured, all
quantities of Collaboration Products required for clinical trials and obtaining Regulatory
Approvals. The specifications for such materials shall be established by the JRDC.
The cost of manufacturing such materials
[ * ]
shall be included within Co-Development Costs,
based on Miles then most current estimates of the final Cost of Goods Sold for such Products.
Article
12
Independent Development
12.1
Termination of Funding of Co-Development in Japan.
Onyx has selected not to bear its
share of the Co-Development Costs in Japan. Thus, the Development Compounds shall be deemed
Royalty-Bearing Products for Miles in Japan, but shall remain a Collaboration Product in the rest
of the world. Miles, if it bears the costs to continue work in Japan, shall have the exclusive
rights to develop and market such Products, subject to the payment of royalties pursuant to Section
16.2(b) below.
12.2
Termination of Funding of Co-Development Outside Japan.
Either Party may terminate
entirely its funding for conducting research and preclinical work on Collaboration Compounds not in
development after the end of the Research Term and/or its funding of CoDevelopment Costs for a
particular Development Compound, by giving the other Party 60 days written notice of that decision.
Such Party shall remain responsible for its share of all Co-Development Costs incurred up until
the effective date of such termination under the notice. Thereafter, the other Party may continue
work at its own expense, and the Product shall be deemed a Royalty-Bearing Product. Such Party
continuing work thereby shall obtain the worldwide (excluding Japan), exclusive right to develop
and market such Product, subject to payment to the terminating Party of a royalty on sales of such
Royalty-Bearing Product under Section 16.2(a).
12.3
No Refund of Co-Development Costs.
A Party shall not be entitled to any refund of any
Co-Development Costs it has borne under this Agreement, regardless of any election made under
Sections 12.1 or 12.2.
12.4
Independent Development.
If a Collaboration Compound is not selected by the JRDC as a
Development Compound for Co-Development or has been selected either as Development Compound or as
Back-Up Compound, for which, however, development has been discontinued, either Party may elect, by
written notice to the other Party, to develop such Collaboration Compound as a Product
independently, provided that such Party supported selection by the JRDC at the time the
Collaboration Compound was submitted to the JRDC for consideration. In addition, if Onyx performed
independent research and development on a compound under Section 7.3 and Miles did not exercise the
option under Section 7.4, then Onyx may develop such compound as a Product independently. The
Party performing such independent Clinical Development Period work shall bear all related expenses.
Such independently developed Product shall be a Royalty-Bearing Product. The non-electing Party
shall provide all materials and Know-How relating to such Collaboration Compound as are reasonable
to assist such Party to perform such Clinical Development Period work. The Party
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
29
that performs
such independent development shall pay a royalty to the other Party for sales of such
Royalty-Bearing Product under Section 16.2(c).
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
30
CHAPTER 5
MARKETING OF PRODUCTS
Article
13
Commercialization of Collaboration Products
13.1
Miles Exclusive Rights Outside the United States.
Outside the United States, Miles shall
have the exclusive right, subject to Section 13.11, to commercialize and market Collaboration
Products. Miles shall use reasonable diligence in marketing Collaboration Products outside the
United States and shall endeavor to maximize the economic value of the Products to the Parties.
Onyx shall cooperate and assist in such marketing at Miles reasonable request.
13.2
Miles Marketing Plan.
At least twelve months prior to the expected Regulatory Approval
of marketing a Collaboration Product, Miles shall develop for review a Marketing Plan setting forth
the world-wide plan for marketing and selling such Collaboration Product. Such Marketing Plan
shall also include a budget financial projections, as set forth in Section 13.3. Such Marketing
Plan will be updated by Miles at least 90 days
[ * ]
and at least 90 days prior to
[ * ]
the launch
of such Product. Onyx shall have the right to meet with Miles to discuss the marketing and selling
plans and strategies contained therein.
13.3
Financial Projections and Budget.
Each Marketing Plan shall include a detailed budget
for the marketing and selling of the Collaboration Product and financial projections for sales and
profitability. The financial projections will set forth projections over the first
[ * ]
years
following launch.
13.4
Onyx Option To Co-Promote.
Onyx has the right to Co-Promote with Miles in the United
States each Collaboration Product that receives Regulatory Approval, so long as Onyx paid one-half
of the Co-Development Costs incurred world-wide for such Collaboration Product excluding Japan.
13.5
Onyx Notice of Intent to Co-Promote.
For each Development Compound in Co-Development,
Miles shall give Onyx a presentation promptly after all Phase II clinical trials data have been
collected and analyzed. This presentation shall give an analysis of all relevant data about such
Development Compound, including results from all Clinical Development Period efforts and shall set
forth a detailed plan and budget for the remaining clinical development needed to obtain Regulatory
Approval and a proposed Marketing Plan for the United States after approval. Such presentation
shall be sufficiently detailed to permit Onyx to make an informed decision about Co-Promotion.
Within
[ * ]
after receipt of such presentation, Onyx shall provide the Miles written notice of
whether it elects to Co-Promote such Collaboration Product in the United States. If Onyx does not
elect to Co-Promote within such period or does not participate in the launch of the Product,
Miles shall have the exclusive right to commercialize and market such Collaboration Product in the
United States.
13.6
Co-Promotion Program.
The JRDC shall determine the method of marketing the Co-Promotion
Products that is designed to maximize the economic value of such Products to
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
31
the Parties. With
respect to each Collaboration Product that Onyx elects to Co-Promote under Section 13.5, Onyx and
Miles shall each work diligently, and use reasonable commercial efforts, to Co-Promote and
commercialize such Co-Promoted Products in the United States. The JRDC shall develop, oversee and
implement all such commercialization activities, giving equal position and opportunity to each
Party in Co-Promoting Products (the Co-Promotion Program). At least twelve months prior to the
introduction of each such Co-Promoted Product, the JRDC shall prepare a detailed plan for the
initial launch and the 12 month period following launch (Launch Year). Such Co-Promotion Program
shall be updated and approved on an annual basis not later than 90 days prior to each January 1
following launch.
13.7
Co-Promotion Sales Efforts.
Each Party contributes 50% of the overall level of sales
effort for each Co-Promotion Product. The JRDC shall work with the Parties to achieve a mutually
acceptable level of sales efforts, including numbers of sales representatives allocated.
13.8
Co-Promotion Costs.
The Co-Promotion Program for each Co-Promoted Product shall include
a budget, prepared by the JRDC and approved by the Parties, of the approved costs for all aspects
of Co-Promotion in the United States for such Co-Promoted Product (the Approved Co-Promotion
Costs). Approved Co-Promotion Costs may include:
[ * ]
with respect to such Co-Promoted Product.
13.9
Training Program.
The JRDC shall oversee the development of training programs covering
the Co-Promoted Products for the sales forces of each respective Party. The Parties agree to
utilize such training programs on an ongoing basis to assure a consistent, focused promotional
strategy. Training shall be carried out at a time which is mutually acceptable to the Parties, and
which is prior to but reasonably near the date on which Regulatory Approval is expected. As
additional members are added to the Parties respective sales forces, training will be given to
groups of the newly selected members at reasonable intervals of time. All training shall be
carried out by Miles. All training materials will be prepared and supplied by Miles.
13.10
Advertising and Promotional Materials.
The JRDC shall oversee the development of all
written sales, promotional, and advertising materials and all oral presentations relating to
Co-Promoted Products. All such written or visual materials, and oral presentations (where
applicable), shall comply with the general requirements of Article 18 relating to trademarks and
shall, if they identify either Party, describe Miles and Onyx as joining in a research
collaboration and the co-promotion of such Product, and shall display the Onyx and Miles names and
logos with equal prominence (to the extent permitted by law). All such advertising and promotional
materials will be prepared and supplied by Miles.
13.11
Onyx Marketing.
In a country outside the United States and Japan where Onyx has a sales
force and it is legally permissible to co-promote products, Onyx may request that Miles permit Onyx
to co-promote Collaboration Products in such country. Miles shall consider such request in good
faith, and at its discretion may permit Onyx to perform such co-promotion under terms mutually
agreed to by the Parties.
13.12
Price Setting in the United States.
Miles will have the sole right and responsibility
for establishing and modifying the terms and conditions with respect to the sale of
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
32
the
Co-Promotion Product, including the
[ * ]
, any
[ * ]
and the like. In establishing such prices and
commercial terms, Miles shall seek to maximize the economic value of such Products to the Parties
over time.
Article
14
Sales Responsibility
14.1
Sales and Distribution.
For each Co-Promotion Product, Miles shall be responsible for
booking sales, warehousing, and distribution of all such Products, and for performing all services
related to Product distribution and customer service. If Onyx receives any orders for Co-Promotion
Product, it shall refer such orders to Miles to be filled.
14.2
Responsibility.
Unless otherwise agreed, Miles shall have the sole responsibility with
respect to the following:
(a) Handling all returns of the Co-Promotion Product. If a Co-Promotion Product is
returned to Onyx, it shall be shipped promptly to the facility responsible for shipment of
such product in the country in question, to the attention of the Returned Goods Department
or another location as may be designated by Miles.
(b) Handling all recalls of the Co-Promotion Products. Onyx will make available to
Miles, upon request, all of Onyx pertinent records which Miles may reasonably request to
assist Miles in effecting any recall.
(c) Handling all aspects of order processing, invoicing, distribution, inventory,
receivables and collection in respect of sales of Co-Promotion Products.
(d) Accounting for Collaboration Revenue. Miles shall properly manage and account for
all amounts received on account of sales of Co-Promotion Products.
14.3
Cost Allocations.
To the extent such costs are not
[ * ]
or otherwise allocated as
[ * ]
hereunder, all other costs incurred under Sections 14.1 and 14.2 shall be
[ * ]
.
14.4
Allocation of Co-Promotion Costs.
Miles, as the Party responsible for accounting under
Section 16.1, shall review all invoices submitted by the Parties as
[ * ]
relating to co-promotion
activities for Co-Promotion Products, and shall approve for reimbursement only those invoices for
charges and costs that constitute Approved Co-Promotion Costs. The Parties shall submit to Miles,
on a quarterly
basis, invoices for the Approved Co-Promotion Costs incurred by them during the previous quarter.
The Approved Co-Promotion Costs and the costs pursuant to Section 13.9 and 13.10 shall be deducted
as
[ * ]
from the Collaboration Revenue, in accordance with Section 16.1 below, in determining the
Marketing Profit or Marketing Loss.
Article
15
Royalty-Bearing Products
15.1
Commercialization and Marketing of Royalty-Bearing Products.
Each Party which has
exclusive rights in such countries where Products are deemed Royalty-Bearing Products shall conduct
the development and marketing of such Products in accordance with the Partys internal standards
with respect to matters such as development timetables, expenditures,
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
33
pricing, promotion and
advertising, taking into account relevant parameters including market size, profit margins and
competition and in accordance with legal and regulatory requirements. Each Party shall use its own
discretion, based upon resources and other relevant parameters, to determine which countries are
selected to pursue the development and marketing of such Royalty-Bearing Products.
Article
16
Compensation for Sales of Products
16.1
Determination and Allocation of Marketing Profit and Loss with Respect to Sales Of
Collaboration Products.
Within
[ * ]
of the end of each of the
[ * ]
calendar quarters and
[ * ]
of the
[ * ]
quarter, Miles shall report to Onyx worldwide Collaboration Revenue received for each
Collaboration Product, on a country-by-country and Product-by-Product on a consolidated basis for
each such quarter. Furthermore Miles shall report to Onyx the
[ * ]
incurred by Miles and reported
to Miles pursuant to Section 14.4, on a country-by-country and Product-by-Product on a consolidated
basis during such quarter.
[ * ]
of the Net Sales of all Collaboration Products other than
Co-Promotion Products shall be an additional
[ * ]
to Miles to compensate Miles for the investment
and risk with respect to the sale and marketing of such Products. The Marketing Profit shall be
divided equally between Onyx and Miles, however, subject to Section 16.3 below. In addition, upon
receipt of such reports for the
[ * ]
quarter, Miles shall reconcile all reports for such calendar
year and shall direct the remittance of a reconciling payment between the Parties, as appropriate.
Marketing Profit shall be determined and allocated between the Parties for so long as
[ * ]
. In
the event that the
[ * ]
are greater than the
[ * ]
for a particular quarter, the difference shall
be deemed Marketing Loss, which shall be allocated in equal shares to each Party. Within
[ * ]
of
such allocation, Onyx shall reimburse Miles an amount which, when added to any unreimbursed
Allowable Expense borne by Onyx during the quarter, will be sufficient to allocate to Miles its
one-half share of the Marketing Loss for the quarter.
16.2
Royalty With Respect to Sales of Royalty-Bearing Products.
Sales by a Party or its
sublicensee of Royalty-Bearing Products shall require payment of royalties to the other Party as
determined under the following provisions:
(a)
Royalties After Termination of Co-Development.
For Collaboration Compounds that
are independently developed under Section 12.2 as Royalty-Bearing Products, the royalty to
be paid on Net Sales by the Party conducting such development is as follows:
(i) if the commencement of independent development occurred after the end of
the Research Term and prior to the commencement of the Clinical Development Period,
the royalty shall be at a rate of
[ * ]
to be negotiated in good faith, or
(ii) if the commencement of independent development occurred after the
commencement of the Clinical Development Period at the rate determined by the
following equation:
Royalty Rate =
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
34
(1) L % means
(i) [ * ]
and
(ii) [ * ]
(2) [ * ]
and
(3) [ * ]
(b)
Royalties For Product Sold in Japan.
For Collaboration Compounds, that are
independently developed under Section 12.1 as Royalty-Bearing Products in Japan, the royalty
to be paid on Net Sales is
(i) A rate of
[ * ]
if either (A) the compound in question has entered the
Preclinical Development Period prior to
[ * ]
or (B) such compound is not in the
Preclinical Development Period prior to
[ * ]
but
[ * ]
and
(ii) A rate of
[ * ]
in all other cases, depending on the stage of development,
such rate to be negotiated in good faith.
(c)
Royalties For Independently-Developed Products.
For Collaboration Compounds that
are independently developed under Section 12.4 above, Net Sales of such Royalty-Bearing
Products by such a Party or its sublicensee shall be subject to a royalty payable by such
Party to the other Party. Such royalty will be at a rate between
[ * ]
to be negotiated in
good faith by the Parties based on the following factors:
(i)
[ * ]
(ii)
[ * ]
and
(iii)
[ * ]
16.3
Special Distribution.
At the end of each calendar quarter, Miles shall be entitled to a
special distribution equal to the amounts of Development Payments made by Miles under Section 11.8
and not yet recovered by Miles under this Section 16.3. The amount of the distribution, however,
shall not exceed the sum of:
|
(i)
|
|
[ * ]
of the
[ * ]
of Marketing Profits for such quarter; and
|
|
|
(ii)
|
|
[ * ]
of the
[ * ]
from Royalty-Bearing Products for such
quarter; and
|
|
|
(iii)
|
|
if the end of the
[ * ]
concerned is also the end of the
[ *
]
,
[ * ]
of any Onyx Profit during
[ * ]
. As used herein, Onyx Profit means
any net profit reported by Onyx for financial accounting purposes, as
calculated by
[ * ]
.
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
35
|
|
|
Such distribution shall be effected within 60 days after the end of the
quarter in the following manner or manners, as necessary, in the following
order: (i)
[ * ]
; (ii)
[ * ]
; (iii)
[ * ]
; and (iv)
[ * ]
.
|
16.4
Research Termination.
In the event that Miles terminates the Research under Sections
5.6, 5.7, 5.8 and 5.9 and Onyx sells Products thereafter, then Onyx shall pay Miles a royalty on
Net Sales of such Products, at a commercially reasonable royalty rate up to
[ * ]
.
16.5
Duration of Royalty Obligations: Royalty Step-Down.
The royalty obligation under Section
16.2 shall terminate, with respect to sales of a particular Royalty-Bearing Product, on a
country-by-country basis on the later of: the expiration of the last to expire Patent right
covering such Product owned or Controlled by either Party or
[ * ]
years after the first commercial
sale of such Product. In the event such Product is sold in a country wherein there is no issued
and enforceable Patent owned or Controlled by either Party, covering the manufacture, use or sale
of such Product, then the royalty rate applicable to sales of such Product in such country shall be
[ * ]
rate otherwise specified in this Article.
16.6
Royalty for Post-Collaboration Compound Sales.
In the event a Party sells as a product a
Post-Collaboration Compound it owns, such Party shall pay the other Party a royalty of
[ * ]
of the
Net Sales of such product. Such royalty obligation shall terminate, on a country-by-country basis,
upon the last to expire Onyx Patent or Miles Patent covering such product through its chemical
genus claim.
16.7
Royalty Payment Reports.
Royalty payments under this Agreement shall be made to the
Party owed a royalty hereunder, or its designee, quarterly within
[ * ]
following the end of each
calendar quarter for which royalties
are due from the selling Party. Each royalty payment shall be accompanied by a report summarizing
the Net Sales of Royalty-Bearing Products during the relevant three-month period.
16.8
Royalty Offset.
A Party may offset, against any amounts owed to the other Party as
royalties hereunder due to its sales of Royalty-Bearing Products, the following expenses to the
extent incurred in the year for which such royalty amounts accrued:
(a)
[ * ]
of Third Party Royalties with respect to technology acquired under Section
8.2; and
(b)
[ * ]
of such Partys
(i) one-time settlement payment, and/or
(ii) ongoing Third Party Royalties required in respect of sales of such
Royalty-Bearing Products by reason of claims relating to Patents or Know-How
licensed from the other Party or developed under this Agreement, all under Section
21.5 with respect to such Partys defense of claims by a Third Party made against
such Party in respect of its making, using, or selling such Royalty-Bearing
Products; provided, however, that a Party may only offset against royalties owned
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
36
to the other Party with respect to any particular Product up to an aggregate of
[ * ]
royalties owed the other Party for such Product for the calendar year.
16.9
Taxes.
The Party receiving royalties shall pay any and all taxes levied on account of
royalties it receives under this Agreement. If laws or regulations require that taxes be withheld,
the selling Party will
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(i)
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deduct those taxes from the remittable royalty,
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(ii)
|
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timely pay the taxes to the proper taxing authority, and
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(iii)
|
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send proof of payment to the other Party within sixty (60)
days following that payment.
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The Parties agree to cooperate to obtain the benefit of any tax treaty with respect to such royalty
payments.
16.10
Blocked Currency.
In each country where the local currency is blocked and cannot be
removed from the country, at the election of the selling Party, royalties accrued in that country
shall be paid to the receiving Party in the country in local currency by deposit in a local bank
designated by the receiving Party.
16.11
Foreign Exchange.
For the purpose of computing royalties due upon the Net Sales of
Royalty-Bearing Products sold in a currency other than United States Dollars, such currency shall
be converted into United States Dollars at the
applicable conversion rate published in the Wall Street Journal on the date when the royalty
payment reports pursuant to Section 16.7 is made.
16.12
Payments to or Reports by Affiliates.
Any payment required under any provision of this
Agreement to be made to either Party or any report required to be made by any Party shall be made
to or by an Affiliate of that Party if designated by that Party as the appropriate recipient or
reporting entity.
16.13
Sales By Sublicensees.
In the event either Party grants licenses or sublicenses to
Third Parties to make or sell Royalty-Bearing Products, such licenses or sublicenses shall include
an obligation for the licensee or sublicensee to account for and report its Net Sales of such
Royalty-Bearing Products on the same basis as if such sales were made by the Party granting the
license or sublicense, and such Party shall pay royalties to the Party receiving royalties under
this Agreement as if the Net Sales of such Royalty-Bearing Products of the sublicensee were Net
Sales of the Party granting the license or sublicense.
Article
17
Information and Reports During Marketing
17.1
Adverse Drug Events.
The Parties shall maintain and promptly provide to each other
information regarding adverse drug events with respect to Collaboration Products as follows:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
37
(a) Each Party shall notify the other Party of any fatal or severe events occurring in
a given country and reported to it in respect of Collaboration Products within twenty-four
(24) hours of receipt of such report and immediately thereafter shall supply to the other
Party all further details which become available to the reporting Party with respect to any
such events;
(b) The Parties shall immediately decide who shall be responsible for notifying such
events reported to it to the appropriate health authorities in accordance with legal
requirements and governmental registrations applying the given country including reporting
to the medical and scientific community if appropriate;
(c) The Parties shall also keep informed each other on a quarterly basis of all other
events with regard to adverse reactions occurring in the countries in respect of
Collaboration Products.
17.2
Records.
Each Party shall keep or cause to be kept such records as are required to
determine in a manner consistent with generally accepted accounting principles in the United States
the sums or credits due under this Agreement, including, but not limited to,
[ * ]
At the request
(and expense) of either Party, the other Party and its sublicensees shall permit the requesting
Party or an independent certified public accountant appointed by such Party and reasonably
acceptable to the other Party, at reasonable times and upon reasonable notice, to examine those
records as may be necessary to:
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(i)
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determine, with respect to any calendar year ending not more
than three years prior to such Partys request, the correctness of any report
or payment made under this Agreement; or
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(ii)
|
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obtain information as to the royalty payable for any calendar
year. Any such examination shall be subject to Article 22. Results of any
such examination shall be made available to both Parties. The Party requesting
the audit shall bear the full cost of the performance of any such audit, unless
such audit discloses a variance of more than five percent (5%) from the amount
of the original report, royalty or payment calculation. In such case, the
Party being audited shall bear the full cost of the performance of such audit.
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Article
18
Trademarks
18.1
Collaboration Product Trademarks.
Collaboration Products shall be sold under trademarks
selected by agreement of the Parties and owned by
[ * ]
shall grant to
[ * ]
an exclusive,
royalty-free license
[ * ]
to use Collaboration Product trademarks, in addition to
[ * ]
use, for
Products developed in the Field.
[ * ]
shall bear all costs associated with the filing,
prosecution and maintenance of Collaboration Product trademarks. In the event a decision is made
to not maintain a Collaboration Product trademark,
[ * ]
shall give
[ * ]
notice to this effect;
after notice,
[ * ]
may request the assignment of such Collaboration Product trademark and may at
its expense maintain such Collaboration Product trademark. Each Party agrees to conform with the
customary guidelines of the licensing Party with respect to manner of use.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
38
18.2
Royalty-Bearing Product Trademarks.
The Party selling a Royalty-Bearing Product shall
select and own trademarks covering such Royalty-Bearing Products in the countries of sale. Where a
Royalty-Bearing Product is a Collaboration Product in some other countries, the Party selling such
Royalty-Bearing Product may use the Product-specific trademark of such Collaboration Product.
18.3
Infringement Of Trademark. [ * ]
shall notify
[ * ]
promptly upon learning of any
actual, alleged or threatened infringement of a trademark specific to a Collaboration Product (the
Trademark) or of any unfair trade practices, trade dress imitation, passing off of counterfeit
goods, or like offenses. Upon learning of such offenses from
[ * ]
shall take all reasonable and
appropriate steps to protect, defend and maintain the Trademark for use by the Parties in
connection with the Collaboration Product.
18.4
Costs of Defense for Collaboration Product Trademarks.
All of the costs, expenses and
legal fees in bringing, maintaining and prosecuting any action to maintain, protect or defend a
Trademark which is specific to a Collaboration Product shall be an
[ * ]
, and any recovery shall be
[ * ]
.
Article
19
Manufacturing and Supply
19.1
Commercial Supply of Collaboration Products.
(a) Miles shall manufacture, or have manufactured, all Collaboration Products for worldwide
sales in conformance with the specifications set forth in the respective applications for
Regulatory Approval and any amendments or supplements thereto, and any substitutes. Subject to
subparagraphs (b) below, the
[ * ]
shall be kept by Miles as an
[ * ]
. Miles shall also be allowed
to keep as an
[ * ]
its
[ * ]
for each Collaboration Product (to the extent not recovered as
Co-Development Costs pursuant to Sections 11.3 and 11.13)
(i) incurred prior to the first commercial sale, without interest, in equal
quarterly amounts over a period of
[ * ]
years, commencing with the first commercial
sale of such Collaboration Product, and
(ii) incurred after the first commercial sale as they occur in each year.
(b) The Parties intend that Miles shall be the worldwide manufacturer of Collaboration
Products, unless Miles elects to use the services of a Third Party, but desire to assure Onyx that
the
[ * ]
are reasonable. If Onyx believes the
[ * ]
actually charged by Miles may exceed a
reasonable amount, it shall so advise Miles, and Miles shall confer with Onyx in good faith
regarding the Miles cost structure and accounting methodology and whether cost reducing
alternatives may be available. Following consultations with Onyx, Miles shall in good faith
determine whether any reductions in its
[ * ]
Sold are appropriate.
19.2
Labelling.
Co-Promotion Products shall bear Miles and Onyx company name on the labels,
packaging and package inserts with equal prominence to the extent permitted by law. The Parties
shall grant each other fully-paid licenses under their respective trademarks (and as approved by
the Parties at the time) as necessary to effect the Co-Promotion provided for
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
39
in this Agreement.
All other Collaboration Products shall refer to the fact that the product was developed in
collaboration with Onyx, to the extent permitted by law.
19.3
Commercial Supply of Royalty-Bearing Products.
The Party selling Royalty-Bearing
Products shall be responsible for the manufacture of such Products. If requested by Onyx, Miles
shall consider in good faith any request by Onyx to act at its discretion as manufacturer of
Royalty-Bearing Products being sold by Onyx, on commercially reasonable terms.
19.4
Supply Shortages.
In the event that Miles is unable to manufacture sufficient quantities
of any Product to meet the requirements for Collaboration Products and Miles and Onyx
Royalty-Bearing Products, the Parties shall meet and discuss in good faith how to overcome such
shortage.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
40
CHAPTER 6
INTELLECTUAL PROPERTY RIGHTS
Article
20
Inventions and Patents
20.1
Ownership of Research Products and Inventions.
(a) Except as set forth in Section 20.1(b) below, each Party shall own the entire right, title
and interest in and to all know-how and patentable inventions made solely by the employees or
agents of such Party, and Patents covering such discoveries or inventions, subject to the terms of
this Agreement. Miles and Onyx shall each own an undivided one-half interest in all know-how,
compositions of matter, and inventions made jointly by employees or agents of both Parties under
the Research. Miles and Onyx shall each own an undivided one-half interest in Patents covering
such jointly-made inventions, with inventorship to be determined under the patent laws of the
jurisdiction where the relevant Patent application is filed. Miles and Onyx as joint owners each
shall have the right to grant licenses under such jointly owned Patents, only to the extent as
provided for in this Agreement.
(b) Notwithstanding the foregoing, in the event that (i) a Party
[ * ]
or (ii) a Party
[ * ]
,
and
[ * ]
then the Party
[ * ]
, shall be assigned all right, title and interest in and to all
know-how and patentable inventions associated with such
[ * ]
, subject to the terms of this
Agreement.
20.2
Disclosure of Patentable Inventions.
In addition to the disclosures required under
Sections 10.1 and 11.10, each Party shall submit a written report to the other within 60 days of
the end of each quarter describing any invention arising during the prior quarter in the course of
the collaboration which it believes may be patentable.
Each Party shall provide the other party with drafts of any patent application which discloses
a Collaboration Compound prior to filing, allowing adequate time for review and comment by the
other Party if possible; provided, however, the providing Party shall not delay the filing of any
patent application pursuant to Section 20.3 below.
20.3
Patent Prosecution.
The Parties intend to establish broad patent protection for
Collaboration Compounds and other patentable inventions arising from the Research. Miles shall
supervise and direct patenting of all patentable inventions conceived in the course of and within
the scope of the Research and reduced to practice during the Research Term or within one year
thereafter by employees of both Parties (the Inventions). Miles shall file and prosecute all
patent applications covering Inventions. All internal costs and expenses of prosecuting such
patent applications covering Inventions shall be borne by
[ * ]
. All
[ * ]
, for prosecuting such
applications on Inventions shall be paid by
[ * ]
and be
[ * ]
. Miles shall give Onyx copies of
all such applications and related
correspondence, in sufficient time to allow Onyx reasonably to comment thereon. Miles shall
maintain all Patents that issue on such applications. The external costs and expenses in relation
thereto shall be borne by
[ * ]
and be
[ * ]
.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
41
Each Party may make its own decision regarding filing and prosecuting applications for Patents
on inventions made solely by such Party, except with respect to inventions owned by the other Party
pursuant to Section 20.1(b), for which such other Party shall have the right to file and prosecute
patent applications. All such applications shall be
[ * ]
. Prior to such filing, the Parties will
consult with each other to facilitate uniformity and efficiency in the filing and prosecution of
applications to obtain Patents. Each Party shall be responsible for all costs of prosecuting and
maintaining any applications and patents it files hereunder. If a Party decides not to file or
maintain an application or patent in any country on an invention hereunder, it shall give the other
Party notice to this effect; after that notice, the other Party may, at its expense, file or
maintain such application or patent, and the first Party shall assign to such other Party the
rights in such application or patent.
20.4
Confidential Treatment.
All information disclosed under Sections 20.2 and 20.3 shall be
treated as confidential pursuant to Article 22.
Article
21
Infringement
21.1
Infringement By Third Parties for Collaboration Compound.
Miles and Onyx shall promptly
notify the other in writing of any alleged or threatened infringement of Patents relating to
Collaboration Compounds of which they become aware. The Parties shall determine how best to
prosecute any such infringement. If the Parties do not agree on whether or how to proceed with
enforcement activity within
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(i)
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|
[ * ]
following the notice of alleged infringement or
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(ii)
|
|
[ * ]
before the time limit, if any, set forth in the
appropriate laws and regulations for the filing of such actions, whichever
comes first, then
[ * ]
, may each act in its own name to commence litigation
with respect to the alleged or threatened infringement. In the event a Party
brings an infringement action, the other Party shall cooperate fully,
including, if required to bring such action, the furnishing of a power of
attorney. Neither Party shall have the right to settle any patent
infringement litigation under this Section 21.1 in a manner that diminishes the
rights or interests of the other Party without the consent of such other Party.
The costs of any litigation commenced hereunder,
[ * ]
, but excluding
[ * ]
,
which are incurred after the designation of a Product for Co-Development but
prior to Regulatory Approval, shall be borne in the same manner as if such
costs were Co-Development Costs. Such costs that are incurred following
Regulatory Approval shall be
[ * ]
, reimbursed to the Party
incurring such expense. Any recovery realized as a result of such litigation
shall be
[ * ]
.
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21.2
Infringement by Third Parties for Royalty-Bearing Products.
If any Patent in the Onyx
Patents or the Miles Patents, which covers a Royalty-Bearing Product, is infringed by a Third Party
in the country where such Royalty-Bearing Product is being sold, the Party to this
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
42
Agreement first
having knowledge of such infringement shall promptly notify the other in writing. The notice shall
set forth the facts of that infringement in reasonable detail.
The Party who is selling such Royalty-Bearing Product shall have the primary right, but not
the obligation, to institute, prosecute, and control any action or proceeding with respect to such
infringement of such Patents. If such Party fails to bring an action or proceeding within a period
of
[ * ]
after receiving notice of that infringement, then the other Party may bring and control
any such action. If a Party brings any such action or proceeding, the other Party agrees to be
joined as a party plaintiff and to give the first Party reasonable assistance and authority to file
and prosecute the suit. The other Party also may choose to be represented in any such action by
counsel of its own choice, at its own expense.
The costs and expenses of the Party bringing suit under this Section shall be reimbursed first
out of any damages or other monetary awards recovered in such action. Any remaining damages shall
be retained by the Party that brought the suit, provided that, if the Party selling the relevant
Royalty-Bearing Product brought the suit,
[ * ]
.
No settlement or consent judgement or other voluntary final disposition of a suit under this
Section may be entered into without the joint consent of Onyx and Miles.
21.3
Third Party Claims Against Collaboration Compound.
If a Third Party asserts that a
patent or other right owned by it is infringed by the manufacture, use or sale of any Collaboration
Compound, the Party first obtaining knowledge of such a claim shall immediately provide the other
Party notice of such claim and the related facts in reasonable detail. In such event, the Parties
shall determine how best to control the defense of any such claim with respect to such
Collaboration Compounds. In the event the Parties cannot agree on the defense of any such claim,
[
* ]
shall have the right to control such defense with respect to the Collaboration Compounds in
issue in all countries
[ * ]
;
[ * ]
shall have the right to control such defense. Onyx and Miles
will cooperate in defending all such actions. Each party shall have the right to be represented
separately by counsel of its own choice. The entity that controls the defense of a given claim
with respect to Collaboration Products shall control settlement of such claim; provided, however,
that no settlement shall be entered into without the consent of a Party if such settlement would
adversely affect the interests of such Party.
21.4
Allocation of Expense; Collaboration Compound or Product.
The expenses of patent
defense, settlement and judgements pursuant to Section 21.3, with respect to sales of Collaboration
Products, shall be a shared expense of the Parties. Such costs incurred after the
designation of a Product for Co-Development but prior to Regulatory Approval shall be
[ * ]
. Such
costs incurred following Regulatory Approval shall be
[ * ]
.
21.5
Third Party Claims Relating to Royalty-Bearing Products.
Where use of Patents or
Know-How of one Party results in a claim for patent infringement against the other Party for its
sales of Royalty-Bearing Products, then the selling Party shall have the first right, but not
obligation, to defend such claim, at its own expense, and to control settlement of such claim;
provided, however, that no settlement shall be entered into without the written consent of the
non-selling Party if such settlement would adversely affect its interests. In the event the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
43
selling Party does not undertake such defense within
[ * ]
of notice of such claim, then the other
Party may defend and settle such claim, at its own expense; provided, however, that no settlement
shall be entered into without the written consent of the selling Party if such settlement would
adversely affect its interests.
One-time settlement payments and on-going Third Party Royalties required in respect of the
manufacture, use, or sale of Royalty-Bearing Products hereunder may be offset against royalties
owed the other Party, but only to the extent permitted under Section 16.8.
Article
22
Confidentiality
22.1
Confidentiality; Exceptions.
(a) Except to the extent expressly authorized by this Agreement or otherwise agreed in
writing, the Parties agree that, during the periods set forth in (b), the receiving Party
shall keep confidential and shall not publish or otherwise disclose or use for any purpose,
other than as provided for in this Agreement, any Information, and other materials furnished
to it by the other Party pursuant to this Agreement (collectively, Confidential
Information).
(b) The restrictions in Section 22.1(a) shall apply:
(i) during the Research Term and for seven years thereafter, as to all Confidential
Information except to such Information pursuant to (ii) below; and
(ii) with respect to Confidential Information directly relating to Collaboration
Compounds, Collaboration Products, or Royalty-Bearing Products in research, development or
being marketed, for so long as such products remain in research, development or being
marketed and for 5 years thereafter.
(c) The restrictions under this Section 22.1 shall not apply to the extent that it can
be established by the receiving Party that such Confidential Information:
(i) was already known to the receiving Party, other than under an obligation of
confidentiality, at the time of disclosure by the other Party;
(ii) was generally available to the public or otherwise part of the public domain at
the time of its disclosure to the receiving Party;
(iii) became generally available to the public or otherwise part of the public domain
after its disclosure and other than through any act or omission of the receiving Party in
breach of this Agreement; or
(iv) was disclosed to the receiving Party, other than under an obligation of confidentiality,
by a third party who had no obligation to the disclosing Party not to disclose such information to
others.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
44
22.2
Authorized Disclosure.
Each Party may disclose Confidential Information hereunder to the
extent such disclosure is reasonably necessary in filing or prosecuting patent applications,
prosecuting or defending litigation, complying with applicable governmental regulations or
conducting preclinical or clinical trials, provided that if a Party is required by law or
regulation to make any such disclosure of the other Partys Confidential Information it will,
except where impracticable for necessary disclosures, (for example, in the event of medical
emergency), give reasonable advance notice to the other Party of such disclosure requirement and,
except to the extent inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Confidential Information required to be disclosed
and to minimize the extent of such disclosure. Each Party also may disclose to its collaborators,
under confidentiality obligations,
(i) Confidential Information developed by such Party during the course of this
collaboration, and
(ii) Confidential Information relating to Royalty-Bearing Products being developed
and/or sold by that Party after such time as the other Party no longer has any right
to return such Royalty-Bearing Product to the collaboration as a Collaboration
Product.
22.3
Survival.
This Article 22 shall survive the termination or expiration of this Agreement.
22.4
Termination of Prior Agreement.
This Agreement supersedes all previous confidentiality
agreements between the Parties and their respective Affiliates. All confidential information
exchanged between the Parties and their respective Affiliates under such agreements shall be deemed
Confidential Information and shall be subject to the terms of this Article 22.
22.5
Publications.
Except as required by law, each Party agrees that it shall not publish or
present the results of studies carried out as part of the Research and Co-Development without the
opportunity for prior review by the other Party. Each Party shall provide to the other the
opportunity to review any proposed abstracts, manuscripts or presentations (including information
to be presented verbally) which relate to the Field of Collaborative Research at least 14 days
prior to their intended submission for publication. The
Party receiving such proposed abstract, manuscript or presentation shall respond in writing within
such time period with either approval of the proposed material or a specific statement of concern,
based upon either the need to seek patent protection or concern regarding competitive disadvantage
arising from the proposal. In the event of concern, the submitting Party agrees not to submit such
abstract or manuscript for publication or to make such presentation until the other Party is given
a reasonable period of time (not to exceed 30 days) to seek patent protection for any material in
such publication or presentation which it believes is patentable or to resolve any other issues.
Each Party also agrees to delete from any such abstract or manuscript any Confidential Information
of the other Party upon its reasonable request based upon the commercial value of the secrecy of
such information.
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
45
CHAPTER 7
GENERAL PROVISIONS
Article
23
Federal State Tax Characterization
23.1
Tax Partnership.
(a)
To the extent defined below, the arrangement established by this Agreement shall be
treated by the Parties as a partnership solely for federal and state income tax purposes,
under Subchapter K of Chapter I of Subtitle A of the Internal Revenue Code of 1986, as
amended (the Code), and any similar state statute. Such tax partnership shall hereinafter
be referred to as the Tax Partnership.
(b)
The characterization of the relationship between the Parties as a partnership is
for the tax purposes set forth herein only and not for the purposes of the partnership law
of any state or for any other purpose. The provisions of this Article 23 do not alter or
amend any other provision of this Agreement, but merely establish the income tax accounting
and reporting methods of the arrangement. The provisions of this Article 23 do not create
any additional rights or obligations between the Parties except as expressly provided herein
and do not, and are not intended to, create any rights in third parties against either
Party. This Article 23 shall not be used by either Party to construe the remainder of the
Agreement nor shall either Party seek to introduce this Article 23 into evidence with
respect to any matter arising between them under the remainder of the Agreement except as to
federal and state income tax issues relating to the Tax Partnership activities of the
Parties during the term of this Tax Partnership. In the event of a conflict or
inconsistency between the terms and conditions of this Article 23 and the terms and
conditions of the remainder the Agreement, the terms and conditions of the remainder of the
Agreement shall govern and control, except in respect of federal and state income tax issues
of the Tax Partnership.
(c)
The Tax Partnerships activities shall consist only of Research, Co-Development,
jointly funded work and commercialization under Sections 9.6(b) and 9.6(c) of this
Agreement, and production and marketing of Collaboration Products and Co-Promotion Products,
as the foregoing terms are defined in Article 1 of this Agreement. Independent Development
activities pursued by one Party, under Sections 12.1 through 12.4 of this Agreement, work
performed independently at a Partys own expense after the other Party does not accept a
proposal to perform joint preclinical work under Sections 9.6(b) and 9.6(c) of this
Agreement, production and marketing of Royalty-Bearing Products, and activities under the
licenses described in Sections 4.6, 6.1 and 8.1(c) of this Agreement shall not constitute
Tax Partnership activities.
23.2
Tax Matters Partner.
Miles is designated Tax Matters Partner (TMP), as defined in
Section 6231(a)(7) of the Code. The
TMP shall use its reasonable efforts to comply
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
46
with the responsibilities outlined in this Article
23 and in Sections 6221 through 6233 of the Code (including any Treasury regulations promulgated
thereunder).
23.3
Tax Returns.
(a) TMP shall file all federal and state income tax returns required to be filed by the
Tax Partnership. For purposes of the tax filings contemplated by this Article 23, the Tax
Partnership name shall be Miles-Onyx.
(b) TMP shall prepare and submit drafts of all Tax Partnership returns to the Parties
as soon as reasonably practical in advance of the due date to permit review by the Parties
prior to filing. If a Party disagrees with the proposed treatment of an item on the return
prepared by the TMP, the Parties shall promptly seek to resolve the disagreement through
good faith discussions. If the dispute cannot be so resolved, the Parties shall engage the
services of a mutually agreeable nationally recognized law or accounting firm to resolve the
matter. The firms decision on such matter shall be binding on the Parties. Such firms
fee shall be
[ * ]
. If the dispute has not been resolved by the due date of the particular
return, the TMP shall timely file the particular return and the content of the return as
filed shall be determined by the TMP in its sole discretion. Upon resolution of the dispute
between the Parties, if such resolution provides for the reporting of any item which is
inconsistent with the manner in which such item was reported on the return as filed by the
TMP, the TMP shall prepare and file an amended return using the agreed basis of reporting.
TMP may file such requests for extensions of time to file any returns as it deems
appropriate.
(c) The Parties agree to maintain and provide to the TMP all information necessary for
the preparation and support of all Tax Partnership tax returns. Such information shall be
provided to the TMP within a reasonable time and in a reasonable manner by each Partys
personnel at each Partys separate expense.
23.4
Inconsistent Treatment of Partnership Items.
If either Party intends to file a notice of
inconsistent treatment under Section 6222(b) of the Code, such Party shall, at least thirty (30)
days prior to the filing of such notice, notify the other Party of such intent and the manner in
which the Partys intended treatment of a Tax Partnership item is (or may be) inconsistent with the
treatment of that item by the Tax Partnership, and advise the other Party of the reasons therefor.
23.5
Tax Partnership Elections.
The Parties hereby grant TMP the authority to make all
necessary tax elections for the Tax Partnership. In particular, the TMP is authorized to make the
following elections under the Code and regulations and any similar state statutes:
|
(i)
|
|
[ * ]
|
|
|
(ii)
|
|
Adopt the
[ * ]
accounting;
|
|
|
(iii)
|
|
Compute the allowance for depreciation, if any, under
[ * ]
|
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
47
|
(iv)
|
|
Amortize start-up expenditures, if any, over a
[ * ]
period in
accordance with Code Section 195(b) and any similar state statutes;
|
|
|
(v)
|
|
Amortize organization costs, if any, over a
[ * ]
period in
accordance with Code Section 709(b) and any similar state statutes;
|
|
|
(vi)
|
|
Treat research and experimentation expenditures as a deduction
[ * ]
in accordance with Code Section 174(a)(1); and
|
|
|
(vii)
|
|
Elect to adjust the basis of the
[ * ]
pursuant to Code
Sections 734, 743 and 754.
|
23.6
Characterization of Certain Payments and Activities.
Direct payments made between the
Parties and direct receipt of revenue by one Party shall, when appropriate to effect the intent of
this Article 23, be considered to have been contributed to or received by, as the case may be, and
paid out by, the Tax Partnership. Research activities shall be considered performed by the Parties
as members of the Tax Partnership.
23.7
Capital Accounts.
Tax Partnership capital accounts will be maintained for each Party by
TMP in full compliance with Section 1.704-1(b)(2)(iv) of the Treasury regulations.
23.8
Tax Partnership Allocations.
(a) Except as otherwise provided in this Section, the allocation for income tax
purposes of specific items of income, gain, loss, deduction or credit of the Tax
Partnership, as computed for income tax purposes shall be made to the Party receiving the
economic benefit or bearing the economic burden of such items pursuant to this Agreement.
Pursuant to, but not in limitation of, the application of this principle: (i)
[ * ]
and
(ii)
[ * ]
. The allocations contemplated by this paragraph shall take into account that the
items being allocated must be computed pursuant to applicable income tax principles, while
the profit and loss proportioned under Chapter 5 of this Agreement are determined in certain
respects on a different basis. For example to the extent a Party is able to claim credit
under Chapter 5 for an expense incurred by an Affiliate that is nondeductible by the Tax
Partnership, there may have to be an allocation to that Party of an equivalent amount of
gross income (solely for income tax purposes) to carry out the intent of this Article 23.
Similarly, to the extent revenue is calculated under Chapter 5 to include
[ * ]
that is not
includable in the income of the Tax Partnership, an equivalent amount of gross income
(solely for income tax purposes) may have to be allocated to the other Party.
(b) Notwithstanding paragraph (a) of this Section, all research and experimentation
expenditures, as defined in Code Section 174 and the applicable Treasury regulations, of the
Tax Partnership shall be allocated to
[ * ]
, to the extent
[ * ]
has provided funds under
this Agreement through the end of the year in which the
expenditures were incurred. The credit for increasing research activities under Code
Section 41 available to the Tax Partnership shall be allocated in the same manner as the
expense generating the credit.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
48
(c)
[ * ]
shall be allocated an amount of gross income of the Tax Partnership each year
equal to the amount of distributions received by
[ * ]
under Section 16.3.
(d) In accordance with Section 704(c) of the Code and underlying Treasury Regulations,
income, gain, loss and deduction with respect to any property contributed to the Tax
Partnership by a party shall, solely for tax purposes, be allocated among the Parties so as
to take account of any variation between the adjusted basis of such property to the Tax
Partnership for federal income tax purposes and its fair market value as of the date of
contribution.
(e) Notwithstanding the above paragraphs of this section, the following allocations
shall be made in the following order:
|
(i)
|
|
Such special allocation, if any, shall be made
as is necessary to comply with the minimum gain chargeback requirement
in Section 1.704-2 of the Treasury regulations.
|
|
|
(ii)
|
|
Such special allocation, if any, shall be made
as is necessary to comply with the qualified income offset requirement
in Section 1.704-l(b)(2)(ii)(d) of the Treasury regulations.
|
(f) The provisions of paragraph (e) of this Section 23.8 are intended to comply with
certain requirements of the Treasury regulations. To the extent possible, all allocations
in paragraph (e) of this Section 23.8 shall be offset with other such allocations or with
additional special allocations under this paragraph. TMP shall make such special
allocations under this Section 23.8 so that, to the extent possible, each Partys capital
account equals the amount that would have resulted if no special allocations had been made
under paragraph (e) of this Section 23.8.
(g) In the event that the Internal Revenue Service (IRS) or the tax authority having
jurisdiction under any state income tax statute does not permit allocations of Tax
Partnership tax items in a manner consistent with the intentions of the Parties as reflected
in this Article 23, and such allocations are not so made, as a result thereof, the Parties
agree to make such equitable adjustments as will place each Party in the same or
substantially the same position, on an after tax basis, as if the allocations had been
permitted. Notwithstanding the above, neither Party shall be required to pay the other
Party any amount under this paragraph except to the extent that and until the proposed
paying Party has benefitted (that is, the paying Partys income tax payments have been
reduced or its refunds received have been increased) from the reallocation caused by the IRS
or similar state tax agency, and any payments to be made in equitable adjustment under this
paragraph shall be limited to the after tax benefit received by the paying Party as result
of such reallocation (such payments to be adjusted to recognize the tax benefit or detriment
which results from the payment of an equitable adjustment under this
paragraph). Such payment, before adjustment for tax effect, shall bear interest at the
overpayment rate determined under Section 6621(a)(1) of the Code, compounded daily, from the
due date (determined without regard to extensions of time to file) of the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
49
receiving Partys
corporate income tax return for the taxable year for which reallocation occurs, to the day
immediately preceding the day upon which the payment is made.
23.9
Liquidation.
Upon liquidation of this Tax Partnership pursuant to Code Section 708,
distributions to the Parties shall be made in amounts equal to the positive capital accounts of the
Parties. To the extent necessary to effectuate the economic arrangement established by this
Agreement, transfers effected in connection with any liquidation of the Tax Partnership not
consistent with the Parties respective capital accounts shall be considered to be transfers of
distributed property between the Parties subsequent to all liquidating distributions and shall
occur outside of the Tax Partnership.
23.10
Internal Revenue Service Notices.
(a) The Parties shall furnish TMP with such information (including, without limitation,
information specified in Section 6230(e) of the Code) as it may reasonably request to permit
it to provide the IRS with sufficient information to allow proper notice from the IRS to the
Parties in accordance with Section 6223 of the Code.
(b) TMP shall provide to the Parties within a reasonable time copies of all notices,
correspondence and other communications forwarded by the IRS to the TMP or the Tax
Partnership.
23.11
Tax Partnership Audits and Litigation.
If an audit of any of the Tax Partnerships tax
returns should occur, TMP may, in its reasonable discretion, retain such accountants and tax
lawyers as it deems necessary in response to such audit. The cost of such professionals, as well
as a reasonable charge for the time spent by the TMP on the audit, administrative appeal and, if
necessary, litigation of the issues raised in the audit, shall be borne by
[ * ]
.
Article
24
Term and Termination
24.1
Term of Agreement.
This Agreement shall commence as of the Effective Date and, unless
sooner terminated as provided herein, shall continue in effect until the latest of
(a) the end of the Research Term,
(b) the expiration of the last to expire of the Patents licensed under this
Agreement, or
(c) the date on which the Parties are no longer entitled to receive a share of
Marketing Profit on any Collaboration Product.
24.2
Termination for Breach.
If either party materially breaches this Agreement during the
Research Term, which breach is not cured within 60 days of written notice thereof from the
non-breaching Party, then all licenses and sublicenses granted the breaching Party under this
Agreement shall terminate, and the breaching Party shall grant to the non-breaching Party an
exclusive, worldwide, royalty-free license, with the right to sublicense, under the breaching
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
50
Partys Patents and Know-How, to make, have made, use, have used, sell, and have sold products.
The breaching Party shall deliver to the non-breaching Party such relevant materials relating to
such breaching Partys Know-How as are necessary or useful to the exercise by the non-breaching
Party of the license hereunder. The breaching Party hereby authorizes, transfers and assigns to
the non-breaching Party the right to prosecute, maintain and defend all jointly owned Patents
licensed hereunder, to the exclusion of the breaching Party within the Field, in the event of such
uncured breach. The breaching Party shall be liable for any damages resulting from its breach,
costs and attorneys fees, and the non-breaching Party shall be relieved from its obligations under
this Agreement except as provided in Article 22.
24.3
Termination for Other Reasons.
In the event either Party shall:
(a) become insolvent or bankrupt;
(b) make an assignment for the benefit of its creditors;
(c) appoint a trustee or receiver for itself for all or a substantial part of
its property;
(d) have any case of proceeding commenced or other action taken by or against
itself in bankruptcy;
(e) seek liquidation, dissolution, a winding-up arrangement, composition or
readjustment of its debts;
(f) seek any other relief under any bankruptcy, insolvency, reorganization or
other similar aa or law of any jurisdiction, now or hereafter in effect; or
(g) have issued against itself a warrant of attachment, execution, distraint or
similar process against any substantial part of its property of the other Party;
then within 60 days of the event, the other Party may, at its sole option, either (i) terminate
this Agreement upon thirty (30) days written notice to the other party; or (ii) continue the
performance of this Agreement thereafter.
24.4
Acquisition of Onyx.
(a)
In the event that (i) Onyx is acquired by another entity by reason of merger,
consolidation or sale of all or substantially all of its assets (except for a reorganization
transaction in which the persons who held majority ownership of Onyx prior to the transaction
continue to hold majority ownership of Onyx, directly or through a parent company, after the
transaction) or (ii) a single entity other than Miles or an Affiliate of Miles acquires ownership
of a majority of the outstanding voting stock of Onyx, without the consent of Miles (in either
case, an Onyx Acquisition), then within 60 days after the event, Miles may, at its sole option,
either
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
51
continue this Agreement without change or exercise the rights set forth in subparagraph (b)
below.
(b)
In the event of an Onyx Acquisition, Miles may elect to terminate the Research (which
termination shall be effective 60 days following the occurrence of the Onyx Acquisition), terminate
the co-promotion rights of Onyx (including without limitation termination of any co-marketing
rights or co-promotion rights with respect to Products that Miles may have granted to Onyx outside
of the United States), and, except as set forth below, have exclusive development and marketing
rights with respect to Collaboration Compounds. Thereafter, any Collaboration Compound that is
marketed by Miles as a Product shall be a Royalty-Bearing Product for which royalties will be due
under Sections 16.2(a), (b) or (c), as appropriate. Notwithstanding the characterization of such
Products as Royalty-Bearing Products for all purposes of marketing, Onyx (or the acquiring party as
the case may be) shall continue to have the right to fund Co-Development Costs for Collaboration
Compounds so as to increase the royalty rate payable with respect to the sale of the resulting
Products. In the event that Onyx had commenced independent development of a Collaboration Compound
under Sections 7.3, 9.6 or 12.2 prior to the Onyx Acquisition, then Miles may obtain hereunder the
exclusive marketing rights to such compounds only by exercising, within 60 days, its buy-back
rights in accordance with Sections 7.4 or 9.6 (and only if such rights had not previously lapsed).
Otherwise, Onyx shall retain exclusive marketing rights to such Collaboration Compounds as
Royalty-Bearing Products of Onyx.
(c)
In the event of an Onyx Acquisition, the licenses provided for in Section 4.1(a), 4.4(a)
and 4.5 shall survive, and the other licenses provided for in Article 4 shall terminate, except to
the extent necessary for Onyx to develop and market Royalty-Bearing Products of Onyx, as provided
under Section 24.4(b).
24.5
Surviving Rights.
The following provisions of this Agreement shall survive termination
of the Agreement, in addition to any provisions which survive by their terms: Articles 1, 20, 21,
22, 25, 27 and 28.
24.6
Accrued Rights: Surviving Obligations.
Termination, relinquishment or expiration of the
Agreement for any reason shall be without prejudice to any rights which shall have accrued to the
benefit of either party prior to such termination, relinquishment or expiration, including damages
arising from any breach hereunder. Such termination, relinquishment or expiration shall not
relieve either Party from obligations which are expressly indicated to survive termination or
expiration of the Agreement.
Article
25
Dispute Resolution
25.1
Disputes.
The Parties recognize that disputes as to certain matters may from time to
time arise during the term of this Agreement which relate to either Partys rights and/or
obligations hereunder. The Parties shall follow the procedures set forth in this Article 25 to
facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual
cooperation and to attempt to avoid litigation between the Parties.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
52
Any disputes among the members of the JRDC, or other disputes among the Parties, that cannot
be resolved by good faith negotiation, shall be referred, by written notice from either Party to
the other, to the respective officers of the Parties designated below (or their successors).
For Miles: President of the Pharmaceutical Division
For Onyx: Chief Executive Officer
Such executive officers shall negotiate in good faith to achieve a resolution to the dispute
referred to them, within 30 days after such notice is received. In the event the designated
executive officers are not able to resolve such dispute within such 30-day period, either Party may
then invoke any other remedies available to it in law or equity. Any dispute or controversy
arising out of or related to this Agreement which is not resolved between the Parties shall be
submitted to a United States state or federal court of competent jurisdiction and appropriate
venue.
Article
26
Representations and Warranties; Exclusivity
26.1
Representations and Warranties.
Each Party hereby represents and warrants to the other
that this Agreement is a legal and valid obligation binding upon such Party and enforceable in
accordance with its terms. The execution, delivery and performance of and the rights granted under
this Agreement by such Party does not conflict with any agreement, instrument or understanding,
written or oral, to which it is a Party or by which it is bound, nor violate any law or regulation
of any court, governmental body or administrative or other agency having jurisdiction over it.
26.2
Performance By Affiliates.
The Parties recognize that each may perform some or all of
its obligations under this Agreement through Affiliates, provided, however, that each Party shall
remain responsible and be guarantor of the performance by such Affiliates and shall cause such
Affiliates to comply with the provisions of this Agreement in connection with such performance.
Each Party waives any obligation on the other Party to seek performance by such Partys Affiliate
before the other Party may enforce the foregoing guaranty.
26.3
Exclusivity; Noncompetition Within the Field of Collaborative Research.
During the
Research Term, neither Onyx nor Miles shall, directly or indirectly, conduct, have
conducted or fund any research, development, regulatory, manufacturing or commercialization
activity with the Field of Collaborative Research, except pursuant to this Agreement. In addition,
during the Research Term,
(i) each Party shall disclose to the other on an ongoing basis all of its activities
within the Field of Collaborative Research, and
(ii) neither Party shall, without the prior consent of the JRDC, hold any discussions
with any Third Party relating to commercial (as opposed to scientific) activities within the
Field of Collaborative Research. Except as specifically provided
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
53
herein, all activities of
the Parties outside of the Field and the Field of Collaborative Research are outside of the
scope of this Agreement.
During the Research Term, neither Party shall enter into any corporate strategic partner
transaction in which such agreement is in conflict with this Agreement.
Article
27
Products Liability and Indemnification
27.1
Indemnification for Sales of Royalty-Bearing Products.
With respect to each
Royalty-Bearing Product in the countries where such product is sold, each Party selling such
Royalty-Bearing Product hereby agrees to defend, indemnify, and hold harmless the other Party and
its directors, officers, employees, and agents from and against any and all suits, claims, actions,
demands, liabilities, damages, costs, expenses and/or loss, including reasonable legal expenses and
attorneys fees (Losses), resulting directly or indirectly from the manufacture, use, handling,
storage, sale or other disposition of such Royalty-Bearing Products by such Party, or its agents or
sublicensees, except to the extent such Losses result from
(i) the negligence of the other Party, or
(ii) actions or claims referred to under Section 21.5 (which are treated thereunder).
In the event that such other Party seeks indemnification under this Section 27.1, it shall inform
the Party selling the Royalty-Bearing Product of such claim as soon as practicable after it
receives notice of the claim, shall permit such selling Party to assume direction and control of
the defense of the claim (including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested (at the expense of such selling Party) in the
defense of the claim.
27.2
Actions in Respect of Collaboration Products.
With respect to each Collaboration Product
in the countries where such product is sold, the Parties agree that all Losses resulting directly
or indirectly from the manufacture, use, handling, storage, sale or other disposition of such
Collaboration Products (Shared Losses) shall be Allowable Expenses, except to the extent such
Losses result from
(i) the negligence of a Party, or
(ii) actions or claims referred to under Section 21.3 (which are treated
thereunder).
Each Party agrees to notify the other Party promptly upon learning of any claim, action, suit or
demand that may result in a Shared Loss. The JRDC shall determine how to defend any such claim or
action. In the event the JRDC cannot agree on such defense, Onyx shall have the right to defend
all such actions within the United States, and Miles shall have the right to defend all other such
actions.
27.3
Indemnification for Negligence.
Each Party hereby agrees to defend, indemnify, and hold
harmless the other Party and its directors, officers, employees, and agents from and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
54
against any and all Losses resulting directly or indirectly from the indemnifying Partys negligence in the
manufacture, use, handling, storage, sale or other disposition of Collaboration Products.
Article
28
Miscellaneous
28.1
Assignment.
(a) Either Party may assign any of its rights or obligations under this Agreement in
any country to any Affiliates; provided, however, that such assignment shall not relieve the
assigning Party of its responsibilities for performance of its obligations under this
Agreement.
(b) Neither Onyx nor Miles may assign its rights or obligations under this Agreement or
its ownership interest in Onyx Patents or Miles Patents, respectively, or in Patents owned
jointly by Onyx and Miles to a non-Affiliate without the prior written consent of the other
Party, except that (subject to compliance with the provisions of Section 24.4), either Onyx
or Miles may assign this Agreement and its Patents in connection with any merger,
consolidation, or sale of all or substantially all of its assets.
28.2
Consents Not Unreasonably Withheld.
Whenever provision is made in this Agreement for
either Party to secure the consent or approval of the other, that consent or approval shall not
unreasonably be withheld or delayed, and whenever in this Agreement provision is made for one Party
to object to or disapprove a matter, such objection or disapproval shall not unreasonably be
exercised.
28.3
Retained Rights.
Nothing in this Agreement shall limit in any respect the right of
either Party to conduct research and development with respect to and market products outside the
Field using such Partys technology or intellectual property rights.
28.4
Force Majeure.
Neither Party shall lose any rights hereunder or be liable to the other
Party for damages or losses on account of failure of performance by the defaulting Party if the
failure is occasioned by government action, war, fire,
explosion, flood, strike, lockout, embargo, act of God, or any other similar cause beyond the
control of the defaulting Party, provided that the Party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall
a Party be required to settle any labor dispute or disturbance.
28.5
Further Actions.
Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate in order to carry
out the purposes and intent of this Agreement.
28.6
No Trademark Rights.
Except as otherwise provided herein, no right, express or implied,
is granted by the Agreement to use in any manner the name Onyx or Miles, or any other trade
name or trademark of the other Party or its Affiliates in connection with the performance of the
Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
55
28.7
Notices.
All notices hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (receipt verified), telexed, mailed by registered
or certified mail (return receipt requested), postage prepaid, or sent by express courier service,
to the Parties at the following addresses (or at such other address for a party as shall be
specified by like notice; provided, that notices of a change of address shall be effective only
upon receipt thereof):
If to Onyx, addressed to:
ONYX PHARMACEUTICALS, INC.
3031 Research Drive, Bldg. A
Richmond, CA 94806
Attention: Chief Executive Officer
Telephone: (510) 222-9700
Telecopy: (510) 222-9758
With copy to:
COOLEY GODWARD CASTRO HUDDLESON & TATUM
Five Palo Alto Square, 4th Floor
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
Telephone: (415) 843-5000
Telecopy: (415) 857-0663
If to Miles, addressed to:
MILES INC.
Pharmaceutical Division
400 Morgan Lane
West Haven, CT 06516
Attention: Joseph A. DArco, Esq.
Telephone: (203) 937-2401
Telecopy: (203) 937-2795
With a copy to:
JONES, DAY, REAVIS & POGUE
One Mellon Bank Center
31st Floor
500 Grant Street
Pittsburgh, PA 15219
Attention: Charles A. Schliebs
Telephone: (412) 394-7924
Telecopy: (412) 394-7959
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
56
28.8
Waiver.
Except as specifically provided for herein, the waiver from time to time by
either of the Parties of any of their rights or their failure to exercise any remedy shall not
operate or be construed as a continuing waiver of same or of any other of such Partys rights or
remedies provided in this Agreement.
28.9
Severability.
If any term, covenant or condition of this Agreement or the application
thereof to any Party or circumstance shall, to any extent, be held to be invalid or unenforceable,
then
(i) the remainder of this Agreement, or the application of such term, covenant or condition to
Parties or circumstances other than those as to which it is held invalid or unenforceable, shall
not be affected thereby and each term, covenant or condition of this Agreement shall be valid and
be enforced to the fullest extent permitted by law; and
(ii) the Parties hereto covenant and agree to renegotiate any such term, covenant or
application thereof in good faith in order to provide a reasonably acceptable alternative to the
term, covenant or condition of this Agreement or the application thereof that is invalid or
unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to
be effectuated.
28.10
Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.
28.11
Press Releases.
The Parties agree to consult with each other prior to the issuance of
any press releases that discuss aspects of the collaboration and obtain prior consent to any press
release,
provided
that in any event either Party may make press releases required by law,
including without limitation compliance with securities laws (in which case the disclosing Party
shall still consult with the other Party prior to issuance of the press release). Each Party shall
endeavor to comment immediately on any proposed press release submitted to it by the other Party.
28.12
Entire Agreement.
This Agreement sets forth all the covenants, promises, agreements,
warranties, representations, conditions and
understandings between the Parties hereto and supersedes and terminates all prior agreements and
understanding between the Parties. There are no covenants, promises, agreements, warranties,
representations conditions or understandings, either oral or written, between the Parties other
than as set forth herein and therein. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties.
28.13
Governing Law.
Resolution of all disputes arising out of or related to this Agreement
or the performance, enforcement, breach or termination of this Agreement and any remedies relating
thereto, shall be governed by and construed under the substantive laws of the State of California,
as applied to Agreements executed and performed entirely in the State of California by residents of
the State of California, without regard to conflicts of law rules and excluding the United Nations
Convention on Sale of Goods.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
57
* * * *
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
58
In Witness Whereof,
the Parties have executed this Agreement in duplicate originals
by their proper officers as of the date and year first above written.
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Onyx Pharmaceuticals, Inc.
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Miles Inc.
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By:
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/s/ Hollings C. Renton
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By:
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/s/ Horst Wallrabe
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Title: President and Chief Executive Officer
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Title: /s/ blank
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
59
EXHIBIT A
Diagram of Collaboration
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
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PHARMACEUTICALS BG
International Cooperation
and Licensing
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Cooperation with Onyx in Oncology
Structure of Cooperation
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Exhibit A (1)
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[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
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PHARMACEUTICALS BG
International Cooperation
and Licensing
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Cooperation with Onyx in Oncology
Ownership of compounds during
and after the RESEARCH TERM
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Exhibit A (2)
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[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
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PHARMACEUTICALS BG
International Cooperation
and Licensing
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Cooperation with Onyx in Oncology
Ownership of compounds during
and after the RESEARCH TERM
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Exhibit A (3)
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[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
EXHIBIT B
Field of Collaborative Research
Programs
:
[ * ]
Targets
:
[ * ]
Assays
:
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
EXHIBIT C
Research Plan
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
[ * ] Year Research Plan
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
Screening [ * ]
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
Profiles: [ * ]
Compounds
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
EXHIBIT D
Measured Activity Qualifying as ras Positive Inhibition
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
EXHIBIT 10.2
RESEARCH, DEVELOPMENT AND MARKETING
COLLABORATION AGREEMENT
DATED AS OF MAY 2, 1995
BETWEEN
ONYX PHARMACEUTICALS, INC.
AND
WARNER-LAMBERT COMPANY
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
TABLE
OF CONTENTS
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ARTICLE A DEFINITIONS
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1
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Affiliate
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1
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Collaboration Compound(s)
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1
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Collaboration Lead Compound(s)
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1
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Collaboration Product(s)
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1
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Collaboration Product Exclusive Period
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1
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Co-Promotion Country
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1
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Effective Date
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1
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FDA
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1
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Field
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2
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IND
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2
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Invention(s)
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3
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Know-How
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3
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NDA
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3
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Net Sales
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3
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Onyx Know-How
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3
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Onyx Lead Compound(s)
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3
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Onyx Patents
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3
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Onyx Product(s)
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4
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Onyx Product Exclusive Period
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4
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Patent(s)
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4
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Product(s)
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4
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Research Management Committee
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4
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Research Plan
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4
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Term of Co-Promotion
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4
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Term of this Agreement
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4
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Term of the Research Collaboration
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4
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Warner Know-How
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4
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Warner Patents
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4
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ARTICLE I RESEARCH PROGRAM
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5
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1.1 Undertaking and Scope
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5
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1.2 Personnel and Resources
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5
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1.3 Term of the Research Collaboration
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6
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1.4 Rights to Know-How and Patents for Research
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6
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1.5 Collaboration Expenses
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6
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ARTICLE II COMMITTEES
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6
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2.1 Research Management Committee
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6
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2.2 Marketing Committee
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7
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2.3 Meetings
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7
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2.4 SAB Attendance
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7
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ARTICLE III PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS
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7
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3.1 Rights to Inventions
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7
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3.2 Joint Inventions
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8
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3.3 Protection of Patent Rights
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8
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3.4 Allegations of Infringement by Third Parties
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9
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[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
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ARTICLE IV
DESIGNATION OF LEAD COMPOUNDS AND MARKETING RIGHTS
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9
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4.1 Designation of Lead Compound
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9
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4.2 Collaboration Product
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10
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4.3 Independent Development
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10
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4.4 Warners Re-engagement Option
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10
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ARTICLE V LICENSES AND ROYALTIES
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11
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5.1 Grant by Onyx
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11
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5.2 Grant by Warner
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11
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5.3 Royalties Payable by Warner
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11
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5.4 Royalties Payable by Onyx
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12
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5.5 Currency of Payment
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13
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5.6 Payment and Reporting
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13
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5.7 Records
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13
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5.8 Taxes Withheld
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13
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5.9 Computation of Royalties
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13
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5.10 Licenses to Affiliates
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14
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5.11 Restrictions on Payment
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14
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ARTICLE VI CO-PROMOTION OF COLLABORATION PRODUCTS
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14
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6.1 Co-Promotion Rights
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14
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6.2 Election or Revocation of Co-Promotion Right
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14
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6.3 Onyxs Promotional Percentage
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14
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6.4 Marketing and Marketing Plans
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15
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6.5 Promotional Materials
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15
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6.6 No Delegation
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15
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6.7 Returns
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15
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6.8 Orders
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15
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6.9 Samples
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15
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6.10 Completion of Sales
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15
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6.11 Training
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15
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6.12 Exchange of Marketing Information
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16
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ARTICLE VII FDA
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16
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7.1 Side Effects
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16
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7.2 Regulatory and other Inquiries
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16
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7.3 Product Recall
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16
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7.4 Responsibility if not Co-Promoting
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16
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ARTICLE VIII RESEARCH FUNDING AND MILESTONES
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16
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8.1 Research Funding
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16
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8.2 Milestones
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17
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ARTICLE IX CONFIDENTIALITY
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18
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9.1 Confidentiality
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18
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9.2 Publicity
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18
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9.3 Publication
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19
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ARTICLE X JAPAN
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19
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10.1 Japanese Company
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19
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10.2 Japanese Company Agreement
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19
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10.3 Absence of Agreement
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20
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[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
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ARTICLE XI REPRESENTATIONS AND WARRANTIES
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20
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11.1 Legal Authority
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20
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11.2 No Conflicts
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20
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11.3 Others Bound
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20
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11.4 Third Party Rights
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21
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11.5 Survival
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21
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11.6 Disclaimer
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21
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11.7 Exclusivity
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21
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ARTICLE XII
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21
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12.1 Termination for Breach
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21
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12.2 Effect of Bankruptcy
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22
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12.3 Key Personnel
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22
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12.4 Termination of Co-Promotion Rights
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22
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12.5 Remedies
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23
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12.6 Voluntary Termination
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23
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ARTICLE XIII GENERAL PROVISIONS
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23
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13.1 Indemnification
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23
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13.2 Assignment
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24
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13.3 Non-Waiver
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24
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13.4 Research Dispute Resolution
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24
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13.5 Governing Law
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24
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13.6 Partial Invalidity
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24
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13.7 Notice
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24
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13.8 Vaccines and Diagnostics
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25
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13.9 Headings
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25
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13.10 No Implied Licenses or Warranties
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25
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13.11 Force Majeure
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25
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13.12 Survival
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26
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13.13 Entire Agreement
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26
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13.14 Amendments
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26
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13.15 Independent Contractors
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26
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13.16 Counterparts
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26
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[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
RESEARCH, DEVELOPMENT AND MARKETING COLLABORATION AGREEMENT
Research, Development and Marketing Collaboration Agreement, dated as of May 2, 1995, between
Onyx Pharmaceuticals, Inc., a California corporation (Onyx), located at 3031 Research Drive,
Richmond, California 94806, and Warner-Lambert Company, a Delaware corporation (Warner), located
at 201 Tabor Road, Morris Plains, New Jersey 07950.
W I T N E S S E T H:
WHEREAS, Onyx and Warner each has certain expertise in the discovery and development of agents
acting in the field of cell cycle control; and
WHEREAS, Warner and Onyx each wish to enter into a collaborative effort to share such
expertise, to develop new expertise in the field of cell cycle control, to research together
potential applications thereof and, if successful, to market certain of such applications (the
Collaboration);
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, covenants
and conditions contained herein, Onyx and Warner agree as follows:
ARTICLE A
DEFINITIONS
The following capitalized terms shall have the meanings indicated for purposes of this
Agreement:
Affiliate
shall mean any corporation, association or other entity which directly or
indirectly controls, is controlled by or is under common control with the party in question. As
used herein the term control means possession of the power to direct, or cause the direction of,
the management and policies of a corporation, association or other entity.
Collaboration Compound(s)
shall have the meaning set forth in Section 1.1.
Collaboration Lead Compound(s)
shall have the meaning set forth in Section 4.1.
Collaboration Product(s)
shall have the meaning set forth in Section 4.2.
Collaboration Product Exclusive Period
shall have the meaning set forth in Section
5.3.
Co-Promotion Country
shall mean the United States of America and its territories and
possessions, including the Commonwealth of Puerto Rico.
Effective Date
shall mean the date of this Agreement first written above.
FDA
shall mean the United States Food and Drug Administration.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
2
Field
shall mean research, drug discovery and development collaboration aimed at
therapeutic agents to restore control of, or otherwise intervene in, misregulated cell cycle
transitions in tumor cells, vascular smooth muscle cells, or other pathological conditions, in each
case insofar as it relates to the targets listed below. Such agents may restore growth control
and/or result in death of cells with aberrant control.
The Collaboration will seek to identify agents that modulate biological targets within the Field.
The Collaboration will include all therapeutic benefits of such agents.
The Field will consist initially of
[ * ]
. The Field shall also include the
[ * ]
. The Field will
also include the
[ * ]
.
The parties may agree during the Term of the Research Collaboration to expand the Field by
designating additional targets, and it is their intention to do so in the event logical extensions
of the Field are identified and may be accommodated within the resource commitment of the parties.
Such expansion will be in writing signed by all members of the Research Development Committee.
However, neither party shall be obligated to agree to expand the Field.
Notwithstanding the general description of the Field provided above, the Field will exclude:
(a) All molecular entitles that are part of or that regulate
[ * ]
. This includes but is
not restricted to
[ * ]
. This also includes molecules that directly or indirectly regulate
the aforementioned molecules,
[ * ]
. This also includes
[ * ]
. This exception shall not
include (by way of example and not limitation)
[ * ]
IND
shall mean an Investigational New Drug Application.
Invention(s)
shall have the meaning set forth in Section 3.1.
Know-How
shall mean Onyx Know-How and/or Warner Know-How, as the case may be.
NDA
shall mean a New Drug Application.
Net Sales
shall mean the gross amount invoiced by a party hereto or one of its
Affiliates to customers who are not Affiliates of the selling party for all Products sold after
deduction of the following items calculated in accordance with United States generally accepted
accounting principles and Warners (or Onyxs, as the case may be) normal internal accounting
standards consistently applied:
[ * ]
Onyx Know-How
shall mean all technology, inventions, information, data, know-how,
compounds and materials that (i) are not Onyx Patents, (ii) Onyx owns or otherwise has the right to
license to Warner and (iii) relate to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of agents acting in the Field. Excluded from Onyx Know-How are
compounds and information relating to compounds that have been identified by Onyx as candidates for
cGLP/cGMP studies on or before the Effective Date, or are
hereafter so identified without material application of information provided by Warner or
developed by either party pursuant to the Collaboration.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
3
Onyx Lead Compound(s)
shall have the meaning set forth in Section 4.3.
Onyx Patents
shall mean all United States and foreign patents that are owned by Onyx
or that Onyx otherwise has the right to license to Warner and that relate to the discovery, design,
synthesis, delivery, development, testing, use, manufacture or sale of agents acting in the Field,
including, without limitation, all reissues, extensions, substitutions, confirmations,
registrations, revalidations, additions, continuations, continuations-in-part, and divisions
thereof. Excluded from Onyx Patents are compounds and information relating to compounds that
have been identified by Onyx as candidates for cGLP/cGMP studies on or before the Effective Date,
or are hereafter so identified without material application of information provided by Warner or
developed pursuant to the Collaboration.
Onyx Product(s)
shall have the meaning set forth in Section 4.3.
Onyx Product Exclusive Period
shall have the meaning set forth in Section 5.4.
Patent(s)
shall mean, Onyx Patents and/or Warner Patents, as the case may be.
Product(s)
shall mean Collaboration Products and/or Onyx Products, as applicable.
Research Management Committee
shall mean that entity organized and acting pursuant
to Section 2.1.
Research Plan
shall have the meaning set forth in Section 1.1.
Term of Co-Promotion
for a Collaboration Product shall mean the period beginning
upon the first commercial sale of a Collaboration Product in the Co-Promotion Country and
[ * ]
.
Term of this Agreement
shall mean from the Effective Date until the expiration of
all licenses granted pursuant to this Agreement or until this Agreement is otherwise terminated
pursuant to its terms.
Term of the Research Collaboration
shall have the meaning set forth in Section 1.3.
Warner Know-How
shall mean all technology, inventions, information, data, know-how,
compounds and materials that (i) are not Warner Patents, (ii) Warner owns or otherwise has the
right to license to Onyx and (iii) relate to the discovery, design, synthesis, delivery,
development, testing, use, manufacture or sale of agents acting in the Field. Excluded fromWarner
Know-How are (i) Warners high-volume screening technology and (ii) compounds and information
relating to compounds that have been identified by Warner as
candidates for cGLP/cGMP studies on or before the Effective Date, or are hereafter so
identified without material application of information provided by Onyx or developed by either
party pursuant to the Collaboration.
Warner Patents
shall mean all United States and foreign patents that are owned by
Warner or that Warner otherwise has the right to license to Onyx and that relate to the discovery,
design, synthesis, delivery, development, testing, use, manufacture or sale of agents acting in the
Field, including, without limitation, all reissues, extensions, substitutions, confirmations,
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
4
registrations, revalidations, additions, continuations, continuations-in-part, and divisions
thereof. Excluded fromWarner Patents are (i) Warners high volume screen technology and (ii)
compounds and information relating to compounds that have been identified by Warner as candidates
for cGLP/cGMP studies on or before the Effective Date, or are hereafter so identified without
material application of information provided by Onyx or developed pursuant to the Collaboration.
ARTICLE I
RESEARCH PROGRAM
1.1
Undertaking and Scope.
From time to time the Research Management Committee will
agree on the general direction of the research to be performed hereunder. Correspondence and other
material documenting such agreement are collectively referred to herein as the Research Plan.
Each party agrees to use its best efforts to perform the activities detailed in the Research Plan,
in a professional and timely manner. Onyx agrees to use its best efforts at its cost (including
the cost of any royalties or other amounts payable by Onyx to third parties) to (i) develop and
transfer to Warner
[ * ]
screening assays per each year of the Term of the Research Collaboration
for specific targets in the Field selected by the Research Management Committee, (ii) supply
protein required to run such screens and (iii) provide for the testing of substantially all of
Onyxs compound library in such screens. Onyx shall not knowingly provide or perform research on
any compounds the use of which would require a royalty or other payment to any third party, unless
the Research Management Committee agrees that such compound should be provided and the parties
agree in writing how such royalty or other payment will be paid. Warner agrees to use its best
efforts at its cost (including the cost of any royalties or other amounts payable by Warner to
third parties) to (i) screen substantially all of its compound library with such screens provided
by onyx and (ii) conduct medicinal chemistry and animal pharmacology as the Research Management
Committee deems appropriate. Promptly after the Effective Date, Onyx and Warner will disclose to
each other all information possessed by it relevant to the Field and necessary or helpful to
perform the work described in the Research Plan (except to the extent precluded by the pre-existing
confidentiality obligations described on
Schedule 1
hereto). Compounds identified by
either party during the Term of the Research Collaboration (or
[ * ]
thereafter) as showing
sufficient activity against targets identified by the Research Management Committee in assays
contributed to or developed under the Collaboration such that further research on such compound for
such target is pursued, and any analogs or derivatives of such compounds whenever identified, are
referred to herein as Collaboration Compounds. The Research Management Committee and either
party individually may from time to time declare each such compound to be a Collaboration Compound.
Notwithstanding the
foregoing, neither party will be required to offer the other party any compounds or
information relating to compounds that have been identified as candidates for cGLP/cGMP studies on
or before the Effective Date, or are hereafter so identified without material application of
information provided by the other party or developed pursuant to the Collaboration. Neither party
shall be required to screen under this Collaboration or to offer to the other party any information
regarding any compounds identified as having activity in pathways expressly excluded from the
Field, if so identified prior to being designated a Collaboration Compound hereunder.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
5
1.2
Personnel and Resources.
Each party agrees to commit the personnel, facilities,
expertise and other resources to perform this Agreement in accordance with its terms; provided,
however, that neither party warrants that the Collaboration shall achieve any of the research
objectives contemplated by them. During the Term of the Research Collaboration, Warner and Onyx
will each maintain at its cost an average of 15 full-time equivalents (FTEs) devoted to
cooperative work under the Research Plan. During the first-year of the Term of the Research
Collaboration Warner need maintain only 10 such FTEs; provided however, that Warner will staff at
higher levels in later periods to achieve an average of 15 FTEs during the Term of the Research
Collaboration, unless such term is terminated early as permitted hereunder. The scientific
priorities and direction of such staff of both parties will be determined by the Research
Management Committee. Such staff will include, as appropriate, scientists in the areas of mass
screening, molecular biology, biochemistry, biochemical pharmacology, cancer and cardiovascular
pharmacology, synthetic chemistry (including peptide synthesis), computer-assisted drug design, and
analytical chemistry (e.g., NMR spectroscopy).
1.3
Term of the Research Collaboration.
Work under the Research Plan will commence as
of the date of this Agreement and, unless terminated earlier by either party pursuant to the terms
of this Agreement or extended by mutual agreement of the parties, will terminate on the third
anniversary hereafter (as terminated, expired or extended, the Term of the Research
Collaboration).
1.4
Rights to Know-How and Patents for Research.
Each party hereby grants and agrees
to grant to the other a non-exclusive, royalty-free license to use such partys Know-How and
Patents that are conceived or reduced to practice prior to the
[ * ]
anniversary of the end of the
Term of the Research Collaboration for (a) research and development purposes in the Field and (b),
beginning
[ * ]
after termination of the Term of the Research Collaboration, research and
development outside of the Field; provided, however, that the granting party may terminate such
licenses granted by it immediately upon its termination of this Agreement for cause.
Notwithstanding the foregoing, neither party is granted any interest in the others compounds (or
analogs or derivatives thereof) except as specifically set forth in this Agreement. In the event
that one party does nonetheless conceive or reduce to practice any invention that is comprised of
the other partys compound (or analog or derivative thereof) and if such invention is not in the
Field, such party will promptly assign its entire interest therein exclusively to the other party
without charge and will not be entitled to any milestones, royalties or other consideration in
connection therewith.
1.5
Collaboration Expenses.
[ * ]
the costs and expenses of work done pursuant to the
Collaboration at
[ * ]
.
ARTICLE II
COMMITTEES
2.1
Research Management Committee.
Warner and Onyx will each appoint up to 4
representatives to a research management committee (the Research Management Committee), which
will oversee the operational aspects of performing the Research Plan. The Research
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
6
Management Committee will assure that agendas and minutes are prepared for each of its meetings. The
personnel, facilities, expertise and other resources of each party to be used in performance of the
Research Plan shall be established by the Research Management Committee. The Research Management
Committee will meet quarterly, or more frequently if mutually agreed. Warners and Onyxs initial
representatives to the Research Management Committee will be appointed by each of them promptly
after the date of this Agreement. All actions taken and decisions made by the Research Management
Committee shall be by unanimous agreement. A party may change any of its appointments to the
Research Management Committee at any time upon giving written notice to the other party.
2.2
Marketing Committee.
At the time that Warner appoints a committee to plan the
marketing of a Collaboration Product (the Marketing Committee), it shall promptly inform Onyx and
for so long as Onyx has the right to co-promote such Collaboration Product, Onyx shall have the
authority to appoint one of its employees as a non-voting member of such committee. Onyxs
non-voting member of the Marketing Committee will have the right to attend all meetings of the
Marketing Committee and will be kept current on the plans and proceedings of the Marketing
Committee. All actions taken and decisions made by the Marketing Committee shall be under the
direction and control of Warner. A party may change any of its appointments to the Marketing
Committee at any time upon giving written notice to the other party.
2.3
Meetings.
The Research Management Committee and the Marketing Committee may meet
by telephone or in person at such times as are agreeable to the members of each such committee.
Attendance at meetings shall be at the respective expense of the participating parties. Warner and
Onyx shall alternate the right to determine the location of each meeting of the Research Management
Committee, with Onyx determining the location of the first meeting of such committee. Warner shall
determine the location of all meetings of the Marketing Committee.
2.4
SAB Attendance.
During the Term of this Agreement, Warner will be entitled to
have up to three of its representatives attend all meetings of Onyxs Scientific Advisory Board
that relate to the Field and such other general symposia that do not contain confidential
information outside the Field of Onyx or of any third party to which Onyx owes a duty of
confidentiality that would be breached by Warners attendance. Onyx will provide Warner reasonable
advance notice of all such meetings and will provide Warner copies of all written material given to
the members of the Scientific Advisory Board in connection with such meetings. Attendance at such
meetings by Warners representatives will be at Warners expense. As a condition of such
attendance and access to such written material, Warner will execute
appropriate Confidentiality Agreements with respect to information disclosed at such meetings
and in such written material.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
7
ARTICLE III
PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS
3.1
Rights to Inventions.
(a) Ownership of technology, inventions, information, data,
know-how, compounds and material shall be determined in accordance with United States laws of
inventorship. The owner (the Inventor) of any invention that is discovered or reduced to
practice during the Term of this Agreement or
[ * ]
thereafter and that relates to the discovery,
design, synthesis, delivery, development, testing, use, manufacture or sale of agents acting in the
Field (an Invention) shall have the right, at its option and expense, to prepare, file and
prosecute in its own name any patent applications with respect to any Invention owned by it and to
maintain any patents issued. In connection therewith, the non-Inventor party agrees to cooperate
with the Inventor at the Inventors expense in the preparation and prosecution of all such patent
applications and in the maintenance of any patents issued. This obligation shall survive the
expiration or termination of this Agreement.
(b) The parties will co-own technology, inventions, information, data, know-how, compounds and
materials (whether or not patentable) that relate to
[ * ]
and that are developed in connection
with performance of the Research Plan (
[ * ]
Inventions). The parties will cooperate in the
joint filing of patent applications claiming
[ * ]
Inventions. The parties will negotiate in good
faith regarding the collaborative commercial exploitation of the
[ * ]
Inventions; provided,
however, that each party will retain an undivided ownership interest in the
[ * ]
Inventions and
will be free to exploit the same without obligation to the other party.
3.2
Joint Inventions.
Inventions that are jointly invented by Onyx and Warner will be
jointly owned by them; however,
[ * ]
will have the rights and responsibilities of the Inventor
as described in this Article III in respect of any such patentable, jointly owned Inventions and
[
* ]
shall have the rights and responsibilities of a non-Inventor therein.
[ * ]
shall pay all
expenses in connection with its preparation, filing and prosecution of patent applications that
claim patentable, jointly owned Inventions.
[ * ]
shall from time to time notify
[ * ]
of the
amount of such expenses and
[ * ]
shall promptly thereafter pay
[ * ]
of its out-of-pocket
expenses. As used in the preceding sentence out-of-pocket expenses shall mean direct costs,
excluding internal labor costs. Onyx may elect in writing to disclaim all interest in any jointly
invented Invention, in which case (i) such Invention will be solely owned by Warner and Onyx will
co-operate to assure Warners sole ownership, (ii) Onyx will have no further interest in such
Invention, by ownership, license or otherwise and (iii)
[ * ]
the date that Warner receives Onyxs
written disclaimer. Warner may elect in writing to disclaim all interest in any jointly invented
Inventions, in which case (i) such Invention will be solely owned by Onyx and Warner will
co-operate to assure Onyxs sole ownership, (ii) Warner will have no further interest in such
Invention, by ownership, license or otherwise and (iii)
[ * ]
.
3.3
Protection of Patent Rights.
(a) The Inventor shall keep the other party
currently informed of all steps to be taken in the preparation, prosecution and maintenance of all
of its patents and patent applications which claim an Invention and shall furnish the other
party with copies of patents and application, amendments thereto and other related correspondence
relating to such Invention to and from patent offices and permit the other party to offer its
comments thereon before the Inventor makes a submission to a patent office which could materially
affect
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
8
the scope or validity of the patent coverage that may result. The non-Inventor party shall
offer its comments promptly. Onyx and Warner shall each promptly notify the other of any
infringement and/or unauthorized use of an Invention which comes to its attention.
(b) The non-Inventor party may request in writing that the Inventor take specific, reasonable
actions to (i) prepare, file or prosecute a patent application with respect to an Invention, (ii)
maintain any patents issued with respect to an Invention, (iii) protect against abandonment of a
patent or application which claims an Invention or (iv) obtain a discontinuance of an infringement
or unauthorized use of such patent or application. If such actions are not undertaken within
thirty days of the Inventors receipt of such written request and timely pursued thereafter, the
Inventor shall permit, and the non-Inventor party at its option and expense may undertake, such
actions. The party not undertaking such actions shall fully cooperate with the other party and
shall provide to the other party whatever assignments and other documents that may be needed in
connection therewith. The party not undertaking such actions may require a suitable indemnity
against all damages, costs and expenses and impose such other reasonable conditions as such partys
advisors may require.
(c) If either party commences any actions or proceedings (legal or otherwise) pursuant to this
Section, it shall prosecute the same vigorously at its expense and shall not abandon or compromise
them or fail to exercise any rights of appeal without giving the other party the right to take over
their conduct at its own expense. The party finally conducting legal actions or proceedings
against an alleged infringer or other party shall be entitled to any damages or costs awarded
against such infringer or other party.
3.4
Allegations of Infringement by Third Parties.
In the event that Warner or Onyx
receives notice that any action by either of them under this Agreement is alleged to be a violation
of the patent or other intellectual property rights of a third party, it shall notify the other
party to this Agreement, and they shall jointly determine an appropriate response and course of
action. The costs of such defense, and any damages, costs or expenses resulting from such action,
shall be paid (i) 100% by Warner in the case of a Collaboration Product, (ii) 100% by Onyx in the
case of an Onyx Product and (iii) 50% by Warner and 50% by Onyx if such violation does not relate
to the manufacture, use or sale of a Collaboration Product or an Onyx Product; provided, however,
that each party will pay 100% of all such costs relating to allegations that it was aware of prior
to the Effective Date. The Research Management Committee will decide whether or not to continue
any activity following notice that such activity may be a violation of the patent or other
intellectual property rights of a third party.
ARTICLE IV
DESIGNATION OF LEAD COMPOUNDS AND MARKETING RIGHTS
4.1
Designation of Lead Compound.
From time to time, Warner may formally designate
one or more Collaboration Compounds for further development as a result of work performed under the
Research Plan (each, a Collaboration Lead Compound). Such designation shall be made under
Warners then current standards for declaring one of its own compounds a lead compound. Such
designation generally indicates that Warner has identified such
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
9
compound as a candidate for
cGLP/cGMP studies. Warner will pursue the research and development of each Collaboration Lead
Compound at its own expense and under its sole direction. Warner will provide Onyx quarterly,
written updates regarding the status of each Collaboration Lead Compound.
4.2
Collaboration Product.
Each Collaboration Lead Compound is referred to herein as
a Collaboration Product from and after filing of an IND in respect of such compound with the FDA
or the filing of its equivalent in any foreign country other than Japan. The preparation, filing
and prosecution of INDs, NDAs and other regulatory filings required to be filed with the FDA and
its foreign equivalents (other than in Japan) in regard to any Collaboration Product will be at the
sole expense of, in the name of and under the direction of Warner. Warner does not warrant that
any regulatory filings will actually be filed or, if filed, will be approved.
4.3
Independent Development.
From time to time, Onyx may request Warner in writing to
undertake specific research and development regarding a Collaboration Compound or to declare a
Collaboration Compound to be a Collaboration Lead Compound. Warner will notify Onyx within
[ * ]
of receiving Onyxs written request if it determines before such date that it will not undertake
such specific research and development (or declare such Collaboration Compound to be a
Collaboration Lead Compound) within
[ * ]
of such request (Warners Notice to Decline). If
Warner does not so notify Onyx within such
[ * ]
period, it will periodically review Onyxs request
and if it determines not to undertake such specific research and development (or declare such
Collaboration Compound to be a Collaboration Lead Compound) then it shall promptly so notify Onyx
(also, Warners Notice to Decline). Onyx shall undertake the continued research and development
(including the specific research and development requested by it) of such Collaboration Compound
independently (an Onyx Lead Compound), at its sole cost and under its sole direction, promptly
upon (i) receipt of Warners Notice to Decline or (ii), if Warner does not so notify Onyx and if
Warner does not itself undertake the requested action within
[ * ]
of Onyxs written request, then
[ * ]
after Warners receipt of Onyxs written request. Onyx may not utilize the services of the
personnel committed to the Collaboration pursuant to Section 1.2 in performance of research or
development of an Onyx Lead Compound. Onyx may declare no more than
[ * ]
Onyx Lead Compounds
during the Term of this Agreement. Onyx will keep Warner currently informed of all material
information in its research and development of each Onyx Lead compound and will allow Warner to
comment on the direction of such research and development. Each Onyx Lead Compound is referred to
herein as an Onyx Product from and after filing of an IND in respect of such compound with the
FDA or the filing of its equivalent in any foreign country other than Japan. Onyx will provide
Warner a complete and accurate copy of the proposed filing, together with
any additional information that Warner may request regarding the relevant Onyx Lead Compound,
at least
[ * ]
prior to submitting such filing to the FDA or its foreign equivalent. Onyx will be
entitled to commercialize any Onyx Product at its sole direction, alone or with another partner,
subject to the terms of this Agreement.
4.4
Warners Re-engagement Option.
Warner may elect to resume the research and
development of an Onyx Lead Compound at its own cost and under its sole direction at any time prior
to
[ * ]
in respect of such compound. In such event, such Onyx Lead Compound shall immediately
become a Collaboration Lead Compound for all purposes under this Agreement. Promptly after Warner
makes such election, Warner will pay Onyx
[ * ]
Onyxs costs incurred
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
10
for research and development
of such Onyx Lead Compound. For purposes of this Section, Onyxs cost for research and development
will mean (i) Onyxs Burdened Cost (as defined below) for each professional research and
development FTE (not including the personnel committed to the Collaboration pursuant to Section
1.2) dedicated to the research and development of such Onyx Lead Compounds (with appropriate
adjustment for staff members not fully dedicated to such work or not working a full year) and (ii)
payments made to unaffiliated third parties, each to the extent incurred in connection with the
relevant compound on or after its declaration as an Onyx Lead Compound and to the extent reasonably
supported by invoices, time sheets or other appropriate records. The Burdened Cost for each Onyx
FTE shall mean
[ * ]
for work performed during 1995, and will be revised for work performed during
each succeeding calendar year by the change in the Consumer Price Index (as determined by the
United States of America Department of Labor) during the preceding calendar year (except that the
Burdened Cost for work performed during 1996 will be revised only by the change in the Consumer
Price Index from the Effective date to December 31, 1995).
ARTICLE V
LICENSES AND ROYALTIES
5.1
Grant by Onyx.
Onyx hereby grants and agrees to grant to Warner exclusive,
worldwide (except for Japan) licenses under the Onyx Patents to the extent necessary to make, have
made, use and sell (with the right to sublicense) each compound designated as a Collaboration Lead
Compound or as a Collaboration Product. Such licenses with respect to a Collaboration Lead
Compound are co-exclusive between Onyx and Warner. Such licenses with respect to a Collaboration
Product are exclusive even as to Onyx.
5.2
Grant by Warner.
Warner hereby grants and agrees to grant to Onyx exclusive,
worldwide (except for Japan) licenses under the Warner Patents to the extent necessary to make,
have made, use and sell (with the right to sublicense) each compound designated as an Onyx Lead
Compound or as an Onyx Product. Such licenses with respect to an Onyx Lead Compound are
co-exclusive between Onyx and Warner. Such licenses with respect to an Onyx Product are exclusive
even as to Warner.
5.3
Royalties Payable by Warner.
Warner will pay Onyx
[ * ]
of Net Sales as a royalty
on worldwide sales (except for Japan) of Collaboration Products. If at the time of the first
commercial sale of such Product in such country a Patent exists that is necessary to sell such
Product in such country, or if at any time after such sale a composition of matter Patent
necessary to sell such Collaboration Product issues in such country, such
[ * ]
royalty shall be
payable in respect of sales in such country until the later of (a) the expiration of the last such
Patent to expire and (b) the date such
[ * ]
royalty would expire under the provisions of the
following sentence assuming that such Patent did not exist. Subject to the terms of the preceding
sentence, if at the time of the first commercial sale of such Product in such country no Patent
exists that is necessary to sell such Product in such country, such
[ * ]
royalty will be payable
until the earliest of (x) the later to occur of (i) the
[ * ]
anniversary of such first sale and
(ii) expiration of the last Patent necessary to make or use such Product in such country, which
Patent was in existence on the date of such first commercial sale, (y) the first calendar quarter
in which
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
11
the sale by any one entity (together with its Affiliates), other than Warner or its
Affiliates or licensees, of one or more products containing the same active ingredient as the
Product, constitutes
[ * ]
or more of all units sold in such country containing such active
ingredient and (z) the first calendar quarter in which the sale by any entities (taken in the
aggregate), other than Warner or its Affiliates or licensees, of one or more products containing
the same active ingredient as the Product, constitutes
[ * ]
or more of all units sold in such
country containing such active ingredient (the period from first commercial sale in each country
until the earlier of (x), (y) and (z) above is referred to herein as the Collaboration Product
Exclusive Period). In the case of (y) and (z) above, the
[ * ]
royalty will terminate as to Net
Sales of Product sold on or after the day following the end of the triggering calendar quarter.
Warner will pay Onyx
[ * ]
and
[ * ]
of Net Sales as a royalty on sales of Collaboration Products
in each country (except for Japan) for the
[ * ]
, respectively, following (a) such final Patent
expiration (in the event that the required Patent necessary to sell such Product in such country
existed on the date of first commercial sale or issued thereafter) or (b) the end of the
Collaboration Product Exclusive Period (if no such Patent existed or issued thereafter, and
provided that the Collaboration Product Exclusive Period lasted at least
[ * ]
years); provided,
however, that no such royalty will be payable in respect of Collaboration Products sold without the
use of one or more trademarks developed by Warner for such Product during the time that the
[ * ]
royalty was applicable.
5.4
Royalties Payable by Onyx.
Onyx will pay Warner
[ * ]
of Net Sales as a royalty
on worldwide sales (except for Japan) of Onyx Products. If at the time of the first commercial
sale of such Product in such country a Patent exists that is necessary to sell such Product in such
country, or if at any time after such sale a composition of matter Patent necessary to sell such
Collaboration Product issues in such country, such
[ * ]
royalty shall be payable in respect of
sales in such country until the later of (a) the expiration of the last such Patent to expire and
(b) the date such
[ * ]
royalty would expire under the provisions of the following sentence
assuming that such Patent did not exist. Subject to the terms of the preceding sentence, if at the
time of the first commercial sale of such Product in such country no Patent exists that is
necessary to sell such Product in such country, such
[ * ]
royalty will be payable until the
earliest of (x) the later to occur of (i) the
[ * ]
anniversary of such first sale and (ii)
expiration of the last Patent necessary to make or use such Product in such country, which Patent
was in existence on the date of such first commercial sale, (y) the first calendar quarter in which
the sale by any one entity (together with its Affiliates), other than Warner or its Affiliates or
licensees, of one or more products containing the same active ingredient as the Product,
constitutes
[ * ]
or more of all units sold in such country containing such active ingredient and
(z) the first calendar quarter in which the sale by any entities (taken in the aggregate), other
than Warner or its Affiliates or licensees, of one or more products containing the same active
ingredient as the Product, constitutes
[ * ]
or more of all units sold in such country
containing such active ingredient (the period from first commercial sale in each country until the
earliest of (x), (y) and (z) above is referred to herein as the Onyx Product Exclusive Period).
In the case of (y) and (z) above, the
[ * ]
royalty will terminate as to Net Sales of Product sold
on or after the day following the end of the triggering calendar quarter. Onyx will pay Warner
[ *
]
of Net Sales as a royalty on sales of Onyx Products in each country (except for Japan) for the
[
* ]
, respectively, following (a) such final Patent expiration (in the event that the required
Patent necessary to sell such Product in such country existed on the date of first commercial sale
or issued thereafter) or (b) the end of the Onyx Product Exclusive Period (if no such Patent
existed or issued thereafter, and provided that the Onyx Product Exclusive Period lasted at least
[
* ]
years); provided, however, that no
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
12
such royalty will be payable in respect of an Onyx product
sold without the use of one or more trademarks developed by Onyx for such Product during the time
that the
[ * ]
royalty was applicable.
5.5
Currency of Payment.
All payments to be made under this Agreement shall be made
in United States dollars in the United States to a bank account designated by the party to be paid.
Royalties earned shall first be determined in the currency of the country in which they are earned
and then converted to its equivalent in United States currency. Such conversion shall be based on
the average buying rates of exchange for the currencies involved into the currency of the United
States quoted by Citibank (or its successor in interest) in New York, New York at the close of
business on each business day of the quarterly period in which the royalties were earned.
5.6
Payment and Reporting.
The royalties due under Section 5.3 or Section 5.4 shall
be paid quarterly, within 45 days after the close of each calendar quarter immediately following
each quarterly period in which such royalties are earned, or earlier if practical. With each such
quarterly payment, the payor shall furnish the payee a royalty statement, setting forth on a
country-by-country basis the total number of units and Net Sales of each royalty-bearing Product
made, used and/or sold hereunder for the quarterly period for which the royalties are due. In
addition, the payor shall furnish such a royalty statement on a country-by-country basis for the
first quarter during which payor makes sales of Product for which no royalty payment in respect of
such country is due hereunder, and shall state the basis for such sales then being free of royalty
obligations hereunder. The payor shall thereafter have no further obligation to report the number
of units or Net Sales of such Product made, used and/or sold in such country.
5.7
Records.
The royalty paying party shall keep accurate books and accounts of
record in connection with the manufacture, use and/or sale by or for it of the Products hereunder
in sufficient detail to permit accurate determination of all figures necessary for verification of
royalty obligations set forth in this Article V. Such records shall be maintained for a period of
3 years from the end of each year in which sales occurred. The payee, at its expense, through a
certified public accountant, shall have the right to access such books and records for the sole
purpose of verifying the royalty statements; such access shall be conducted after reasonable prior
notice by the payee to the payor during the payors ordinary business hours and shall not be more
frequent than once during each calendar year. Said accountant shall not disclose to the payee or
any other party any information except that which should properly be contained in a royalty report
required under this Agreement. If such accounting determines that a partys error resulted in the
other party receiving at least 5% less than properly due in respect of any quarter, then the party
in error will reimburse such amount and reimburse the other party
for the costs of such accounting (including the fees and expenses of the certified public
accountant).
5.8
Taxes Withheld.
Any income or other tax that one party hereunder, its Affiliates
or sublicensees is required to withhold (the withholding Party) and pay on behalf of the other
party hereunder (the Withheld Party) with respect to the royalties payable under this Agreement
shall be deducted from and offset against said royalties prior to remittance to the Withheld Party;
provided, however, that in regard to any tax so deducted, the Withholding Party shall give or cause
to be given to the Withheld Party such assistance as may reasonably be necessary to enable the
Withheld Party to claim exemption therefrom or credit therefor, and in each case shall furnish the
Withheld Party proper evidence of the taxes paid on its behalf.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
13
5.9
Computation of Royalties.
All sales of Onyx Products between Onyx and any of its
Affiliates and sublicensees shall be disregarded for purposes of computing royalties under this
Article V, but in such instances royalties shall be payable only upon sales to unlicensed third
parties. Nothing herein contained shall obligate Onyx to pay Warner more than one royalty on any
unit of an Onyx Product. All sales of Collaboration Products between Warner and any of its
Affiliates and sublicensees shall be disregarded for purposes of computing royalties under this
Article V, but in such instances royalties shall be payable only upon sales to unlicensed third
parties. Nothing herein contained shall obligate Warner to pay Onyx more than one royalty on any
unit of a Collaboration Product or a Warner Product.
5.10
Licenses to Affiliates.
Each party shall, at the other partys request, sign
license and/or royalty agreements directly with the other partys Affiliates and sublicensees in
those situations where such agreements would not decrease the amount of royalties which would be
owed hereunder. Such agreements shall contain the same language as contained herein with
appropriate changes in parties and territory. No such license and/or royalty agreement will
relieve Warner or Onyx, as the case may be, of its obligations hereunder, and such party will
guarantee the obligations of its Affiliate or sublicensee in any such agreement. Royalties
received directly from one partys Affiliates and sublicensees shall be credited towards such
partys royalty obligations under Section 5.3 or 5.4 hereof, as applicable.
5.11
Restrictions on Payment.
The obligation to pay royalties under this Agreement
shall be waived and excused to the extent that statutes, laws, codes or government regulations in a
particular country prevent such royalty payments by the seller of Products; provided, however, that
if legally permissible, the seller of Products shall pay the royalties owed to the other party
hereto by depositing such amounts in a bank account in such country that has been designated by the
party owed such royalties.
ARTICLE VI
CO-PROMOTION OF COLLABORATION PRODUCTS
6.1
Co-Promotion Rights.
Onyx will have the right to co-promote each Collaboration
Product in the Co-Promotion Country during the Term of Co-Promotion pursuant to the terms and
conditions hereof.
6.2
Election or Revocation of Co-Promotion Right.
Warner will give Onyx at least
[ *
]
prior written notice of the anticipated first commercial sale of a Collaboration Product in the
Co-Promotion Country. Onyx will notify Warner in writing at least
[ * ]
prior to such anticipated
first commercial sale whether it elects to exercise its right to co-promote such Collaboration
Product in such Co-Promotion Country beginning with the date of first commercial sale. If Onyx
fails timely to give such notice to Warner, it shall be deemed to have waived its rights to
co-promote. Onyx may terminate the Term of Co-Promotion at any time following
[ * ]
months
written notice to Warner. The Term of Co-Promotion can not be reinstated after delivery of such
notice.
6.3
Onyxs Promotional Percentage.
If Onyx elects to exercise its co-promotion rights
pursuant to Section 6.2, the Marketing Committee will meet and determine procedures
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
14
whereby Onyx will supply up to
[ * ]
, but not less than
[ * ]
, of the sales efforts (including details, if
determined to be an appropriate sales activity) for the relevant Collaboration Product in the
Co-Promotion Country. Warner will compensate Onyx for such effort at the lesser of (i)
[ * ]
and
(ii)
[ * ]
. Prior to initiation of the Term of Co-Promotion in the Co-Promotion Country, the
parties will negotiate in good faith and agree on appropriate accounting procedures and payment
terms to (i) confirm each partys performance of its required sales effort, (ii) calculate the
costs for each party to provide its sales effort and (iii) compensate Onyx as required by this
Section.
6.4
Marketing and Marketing Plans.
Each Collaboration Product will be marketed with
one label and will bear one or more trademarks owned by Warner. The Marketing Committee will be
responsible for developing and approving marketing plans and the advertising and other promotional
materials to be used in co-promoting each Collaboration Product. Warner will be responsible for
obtaining acceptance of each Collaboration Product on formularies, if applicable. Warner will keep
Onyx informed of and will solicit and consider in good faith Onyxs opinions regarding strategies
for obtaining formulary acceptance.
6.5
Promotional Materials.
Onyx shall not create any promotional or advertising
materials for Collaboration Products. Onyx shall disseminate only those promotional and
advertising materials which have been provided or approved for Onyxs use by Warner. Warner shall
supply timely to Onyx, at Warners cost, quantities of promotional materials needed by Onyx to
exercise its rights under this Agreement. Onyx shall not, and shall cause its employees,
representatives and agents not, to make any claims or representations in respect of the
Collaboration Products that have not been approved by Warner.
6.6
No Delegation.
Onyx may use only its own employees or the employees of one or
more of its subsidiaries in the course of exercising its co-promotion rights under this Agreement.
6.7
Returns.
Warner shall be responsible for handling all returns relating to
Collaboration Products. Any Collaboration Product returned to Onyx shall be shipped by Onyx to the
address designated by Warner with shipping costs authorized by Warner to be paid by Warner.
6.8
Orders.
All customer orders for Collaboration Products shall be received and
executed by Warner. Onyx shall transmit any such orders that it receives to Warner no later than
the following business day.
6.9
Samples.
Each of the parties will keep accurate records as to the distribution of
samples of Collaboration Products and comply with all applicable laws, rules and regulations
dealing with the distribution of samples.
6.10
Completion of Sales.
All sales of Collaboration Products will be completed,
distributed, accounted for, billed and booked by Warner at prices established by Warner.
6.11
Training.
Consistent with the marketing plans established by the Marketing
Committee, but not less than
[ * ]
prior to the commencement of the Term of Co-Promotion for each
Collaboration Product, Warner shall provide, at Onyxs expense, reasonable access to its sales
training staff and facilities for appropriate, initial training of the Onyx sales force.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
15
6.12
Exchange of Marketing Information.
From time-to-time the Marketing Committee
will develop call lists, schedules, and other appropriate information for the purpose of
determining the physicians and other persons involved in the drug purchase decision-making process
to whom Onyx and Warner, respectively, may detail each Collaboration Product. The parties agree to
cooperate in finding an inexpensive and expeditious way to provide a call list and other
information indicating the identity of those physicians and other persons involved in the
decision-making process regarding the purchase of pharmaceuticals.
ARTICLE VII
FDA
7.1
Side Effects.
Each party shall promptly advise the other by telefax or overnight
delivery service addressed to the attention of its Vice President, Medical Affairs (or, in Onyxs
case, the party with similar responsibilities), of any unexpected side effect, adverse reaction or
injury which has been brought to that partys attention at any place and which is alleged to have
been caused by a Collaboration Product. Warner shall have all rights and responsibility to report
such side effect, adverse reaction or injury to regulatory authorities and others as appropriate.
7.2
Regulatory and other Inquiries.
Upon being contacted by the FDA or any drug
regulatory agency for any regulatory purpose pertaining to this Agreement or to a Collaboration
Product, Onyx and Warner shall immediately notify and consult with one another and Warner shall
provide a response as it deems appropriate. Warner shall have sole responsibility for responding
to all inquiries to Warner or Onyx regarding the benefits, side effects and other characteristics
of Collaboration Products.
7.3
Product Recall.
In the event that Warner or Onyx determines that an event,
incident or circumstance has occurred which may result in the need for a recall or other removal of
any Collaboration Product or any lot or lots thereof from the market, it shall advise and
consult with the other party with respect thereto. Warner shall make the final determination
to recall or otherwise remove the Collaboration Product or any lot or lots thereof from the market
and shall be responsible for the cost and expense of notifying customers and the cost and expense
associated with return of the recalled Collaboration Product from a customer. Onyx shall have no
such rights or responsibilities in respect of territories outside of the Co-Promotion Country.
7.4
Responsibility if not Co-Promoting.
Onyx will have the rights and
responsibilities referred to in this Article 7 only during the Term of Co-Promotion and for
[ * ]
thereafter.
ARTICLE VIII
Research Funding and Milestones
8.1
Research Funding.
Warner will pay Onyx the following amounts on the following
dates during the Term of the Research Collaboration in consideration for work
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
16
performed by Onyx
prior to the Effective Date and to provide support for Onyxs work under the Research Plan:
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The Effective Date
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[ * ]
|
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Three month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Six month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Nine month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Twelve month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Fifteen month anniversary of the Effective Date
|
|
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[ * ]
|
|
Eighteen month anniversary of the Effective Date
|
|
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[ * ]
|
|
Twenty-one month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Twenty-four month anniversary of the Effective Date
|
|
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[ * ]
|
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Twenty-seven month anniversary of the Effective Date
|
|
|
[ * ]
|
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Thirty month anniversary of the Effective Date
|
|
|
[ * ]
|
|
Thirty-three month anniversary of the Effective Date
|
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[ * ]
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[ * ]
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8.2
Milestones.
(a) Warner will pay Onyx the following amounts with respect to the
first Collaboration Product to achieve each stated milestone:
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|
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Commencement of Phase I clinical trials by or on
behalf of Warner anywhere in the world
|
|
$500,000
|
|
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|
Commencement of Phase II clinical trials by or on
behalf of Warner anywhere in the world
|
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[ * ]
|
|
|
|
Commencement of Phase III clinical trials by or on
behalf of Warner anywhere in the world
|
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[ * ]
|
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The FDAs acceptance for filing of an NDA
|
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[ * ]
|
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Acceptance for filing of an MAA applicable to any of
the following countries: (i) United Kingdom, (ii) Spain, (iii) Italy, (iv) France and (v) Germany (each
a Major European Country)
|
|
[ * ]
/country, up to
[ * ]
total
|
|
|
|
Approval by the FDA of an NDA
|
|
[ * ]
|
|
|
|
Approval of an MAA applicable to a Major European
Country
|
|
[ * ]
/country, up to
[ * ]
total
|
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
17
(b) Warner will pay Onyx
[ * ]
upon the approval by the FDA of an NDA for the second and each
subsequent Collaboration Product so approved and
[ * ]
upon the approval of an MAA applicable to
each Major European Country, up to
[ * ]
, for the second and each subsequent Collaboration Product
so approved.
(c) Onyx will pay Warner
[ * ]
upon the approval by the FDA of an NDA for each Onyx Product
and
[ * ]
upon the approval of an MAA applicable to each Major European Country, up to
[ * ]
, for
each Onyx Product.
ARTICLE IX
CONFIDENTIALITY
9.1
Confidentiality.
(a) Except as specifically permitted hereunder, each party
hereby agrees to hold in confidence and not use on behalf of itself or others all data, samples,
technical and economic information (including the economic terms hereof), commercialization,
clinical and research strategies and know-how provided by the other party (the Disclosing Party)
during the Term of this Agreement and all data, results and information developed pursuant to the
Collaboration and solely owned by the other party (collectively the Confidential Information),
except that the term Confidential Information shall not include:
(i) information that is or becomes part of the public domain through no fault of the
non-Disclosing Party or its Affiliates;
(ii) information that is obtained after the date hereof by the non-Disclosing Party or one of
its Affiliates from any third party which is lawfully in possession of such Confidential
Information and not in violation of any contractual or legal obligation to the Disclosing Party
with respect to such Confidential Information;
(iii) Information that is known to the non-Disclosing Party or one or more of its Affiliates
prior to disclosure by the Disclosing Party, as evidenced by the non-Disclosing Partys written
records; and
(iv) information that is necessary to be disclosed to any governmental authorities or pursuant
to any regulatory filings, provided that in such case the non-Disclosing Party notifies the
Disclosing Party reasonably in advance of such disclosure and cooperates with the Disclosing Party
to minimize the scope or content of such disclosure.
(b) The obligations of this Section 9.1 shall survive the expiration or termination of this
Agreement.
9.2
Publicity.
All publicity, press releases and other announcements relating to this
Agreement or the transactions contemplated hereby shall be reviewed in advance by, and subject to
the approval of, both parties; provided, however, that either party may (i) publicize the existence
and general subject matter of this Agreement without the other partys approval and (ii) disclose
the terms of this Agreement insofar as required to comply with applicable securities laws, provided
that in the case of such securities disclosures the disclosing party notifies the other party
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
18
reasonably in advance of such disclosure and cooperates to minimize the scope and content of such
disclosure.
9.3
Publication.
The parties shall cooperate in appropriate publication of the
results of research and development work performed pursuant to this Agreement, but subject to the
predominating interest to obtain patent protection for any patentable subject matter. To this end,
it is agreed that prior to any public disclosure, the party proposing disclosure shall send the
other party a copy of the information to be disclosed, and shall allow the other party
[ * ]
from
the date of receipt in which to determine whether the information to be disclosed contains subject
matter for which patent protection should be sought prior to disclosure. If notification is not
received during the
[ * ]
period, the party proposing disclosure shall be free to proceed with the
disclosure. If due to a valid business reason or a belief by the nondisclosing party that the
disclosure contains subject matter for which a patentable invention should be sought, then prior to
the expiration of the
[ * ]
period, the nondisclosing party shall so notify the disclosing party,
who shall then delay public disclosure of the information for an additional period of up to
[ * ]
to permit the preparation and filing of a patent application on the subject matter to be disclosed
or other action to be taken. The party proposing disclosure shall thereafter be free to publish or
disclose the information. The determination of authorship for any paper shall be in accordance
with accepted scientific practice. In no event may any publication or other disclosure contain a
partys Confidential Information without such partys prior written consent.
ARTICLE X
JAPAN
10.1
Japanese Company.
Neither party may license any of its Patents or Know-How to,
or otherwise collaborate in the Field with, any person or other entity for use in Japan, except
pursuant to an agreement mutually acceptable to Onyx and Warner (the Japanese
Company Agreement). Onyx and Warner will work together to select a Japanese company to
collaborate with (the Japanese Company) and to hold negotiations with the Japanese Company
regarding the terms of the Japanese Company Agreement.
10.2
Japanese Company Agreement.
Warner agrees that it will accept any proposed
Japanese Company Agreement that includes the following provisions: (i)
[ * ]
; provided, however,
that
[ * ]
, (ii)
[ * ]
, (iii)
[ * ]
, (iv)
[ * ]
, (v)
[ * ]
, (vi)
[ * ]
; provided, however, that
this provision shall not apply to (a) any compound identified by the Japanese Company as a
candidate for cGLP/cGMP studies before the effective date of the Japanese Company Agreement, or
analogs or derivatives thereof not identified pursuant to any collaboration between Onyx and the
Japanese Company or (b) any compound identified after the
[ * ]
anniversary of the term of the
research collaboration under such agreement; and further provided that this provision will apply to
compounds identified during the term of the research collaboration under such agreement or
[ * ]
year thereafter, and any derivatives or analogs of such compounds whenever identified, and (vii)
[
* ]
. For purposes of clause (i) of this section, any dispute about the
[ * ]
that cannot be
resolved by good faith negotiations between senior executive officers of Onyx and Warner will be
resolved by the decision of
[ * ]
selected by the parties in good faith agreement, with the cost of
[ * ]
borne
[ * ]
.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
19
10.3
Absence of Agreement.
If Onyx does not execute an agreement in the Field with a
Japanese company pursuant to Sections 10.1 or 10.2, then neither party shall market or license
others to market any Collaboration Compounds in the Field in Japan without the consent of the other
party.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1
Legal Authority.
Each party represents and warrants to the other that it has the
legal power, authority and right to enter into this Agreement and to perform its respective
obligations set forth herein.
11.2
No Conflicts.
Each party represents and warrants that as of the date of this
Agreement it is not a party to any agreement or arrangement with any third party or under any
obligation or restriction, including pursuant to its Certificate of Incorporation or By-Laws, which
in any way limits or conflicts with its ability to fulfill any of its obligations under this
Agreement.
11.3
Others Bound.
Each party represents and warrants that anyone performing services
under this Agreement on its behalf shall be bound by all of the conditions of this Agreement, to
the extent necessary to give full effect to this Agreement.
11.4
Third Party Rights.
Each party represents and warrants that to the best of its
knowledge its performance of the work under the Collaboration as contemplated by this Agreement
will not infringe the patent, trade secret or other proprietary rights of any third party
except insofar as any infringement may relate to technology, data or information provided by
the other party hereunder.
11.5
Survival.
The foregoing representations and warranties shall survive the
execution, delivery and performance of this Agreement, notwithstanding any investigation by or on
behalf of either party.
11.6
Disclaimer.
Except as otherwise expressly stated herein, Warner hereby disclaims
any warranty expressed or implied as to any Onyx Product sold or placed in commerce by or on behalf
of Onyx. Except as otherwise expressly stated herein, Onyx hereby disclaims any warranty expressed
or implied as to any Collaboration Product sold or placed in commerce by or on behalf of Warner.
11.7
Exclusivity.
Except pursuant to the Japanese Company Agreement, during the Term
of the Research Collaboration and
[ * ]
thereafter (i) neither party will conduct any research or
development in the Field except pursuant to this Agreement, (ii) neither party will license (or
otherwise permit access to) any of its Patents or Know-How for research or development in the Field
to (or otherwise collaborate on research or development in the Field with) any other person or
entity and (iii) Onyx will not license (or otherwise permit access to) any assay developed by it
pursuant to the Collaboration to any other person or entity. In respect of (i), above, each party
shall have the right to conduct its own research and development in the
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
20
Field during
[ * ]
following the end of the Term of the Research Collaboration, provided that all results of such work
discovered during such period (including without limitation compounds and assays), and analogs and
derivatives of compounds identified during such period whenever identified, are promptly disclosed
to the other party and are covered by the licenses granted under Sections 1.4, 5.1 and 5.2, as
applicable.
ARTICLE XII
12.1
Termination for Breach.
In the event of a material breach of the provisions of
this Agreement described below, the breaching party shall have 30 days after receipt of written
notice from the non-breaching party to cure such breach.
(a) In the event of an uncured material breach of Article I, the non-breaching party may
terminate the Term of the Research Collaboration.
(b) In the event of an uncured material breach of Section 5.3 by Warner in respect of a
Collaboration Product, Onyx may (i) terminate the licenses granted by it pursuant to Section 5.1 in
respect of such Product and (ii) require Warner to grant it an exclusive (even as to Warner),
worldwide license (with the right to sublicense) under the Patents relating to such Product and
owned or controlled by Warner, to the extent necessary to make, use or sell such Product.
(c) In the event of an uncured material breach of Section 5.4 by Onyx in respect of an Onyx
Product, Warner may (i) terminate the licenses granted by it pursuant to Section 5.2 in respect of
such Product and (ii) require Onyx to grant it an exclusive (even as to Onyx),
worldwide license (with the right to sublicense) under the Patents relating to such Product
and owned or controlled by Onyx, to the extent necessary to make, use or sell such Product.
(d) In the event of an uncured material breach by Onyx of any provision of Article VI, Warner
may immediately terminate the Term of Co-Promotion.
12.2
Effect of Bankruptcy.
If either party files a voluntary petition in bankruptcy,
is adjudicated a bankrupt, makes a general assignment for the benefit of creditors, admits in
writing that it is insolvent or fails to discharge within 15 days an involuntary petition in
bankruptcy filed against it, then the other party will have 60 days to determine whether or not (a)
the Term of the Research Collaboration shall immediately terminate and/or (b) the Term of
Co-Promotion shall immediately terminate.
12.3
Key Personnel.
In the event that on or before the second anniversary of the
Effective Date Frank McCormick (i) is physically and mentally capable of overseeing Onyxs work
under the Research Plan but (ii) for any reason fails to oversee such work, then Onyx shall
immediately notify Warner thereof and Onyx will have up to six months after such failure to hire a
replacement for McCormick (the Search Period). By notice delivered to Onyx during the one week
period after the end of the Search Period, Warner may voluntarily terminate the Term of the
Research Collaboration, effective
[ * ]
after the end of the Search Period, if in its sole opinion
it does not wish to continue the Research Plan with such replacement (or with McCormick if he
becomes available again). Any stock purchases that Warner may be required
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
21
to make pursuant to the Preferred Stock Purchase Agreement dated the date hereof shall be delayed during the Search Period
and during the
[ * ]
thereafter. Warners obligation to purchase such stock and any other stock
under such Purchase Agreement will terminate if it elects to terminate the Term of the Research
Collaboration pursuant to this Section. Warner will, however, be required to make any research
funding payments under Section 8.1 that come due on or before the effective date of such
termination, and Onyx will continue to be obligated under the terms of Section 1.2 during such
period. Onyx and Warner will be released from the provisions of Section 11.7 immediately upon
termination of the Term of the Research Collaboration pursuant to this Section. Upon termination
of the Term of the Research Collaboration under this Section, Warner will promptly pay Onyx (i)
[ *
]
multiplied by the number of full months from the Effective Date until such termination, plus (ii)
[ * ]
, minus (iii)
[ * ]
. Onyx will pay such amount to Warner in the event such amount is
negative.
12.4
Termination of Co-Promotion Rights.
Warner may terminate Onyxs right to
co-promote Collaboration Products hereunder if (i) any entity or person in the pharmaceutical
industry directly or indirectly acquires ownership or control of more than 50% of Onyxs voting
capital stock or substantially all of its assets or (ii) Onyx develops or acquires a financial
interest in any product that could compete with any Collaboration Product as to which product an
NDA has been filed with or approved by the FDA.
12.5
Remedies.
In the event of any breach of any provision of this Agreement, in
addition to the termination rights set forth herein, each party shall have all other rights and
remedies at law or equity to enforce this Agreement.
12.6
Voluntary Termination.
Warner may terminate this Agreement by providing written
notice thereof to Onyx on the eighteen month anniversary of the Effective Date. In such event, the
Term of this Agreement will automatically terminate, and Warners obligation to purchase stock on
the second anniversary of the Effective Date under the Preferred Stock Purchase Agreement dated the
date hereof will also terminate. Notwithstanding the termination of the Term of this Agreement,
(i) Warner will make all research payments to Onyx that are due before the second anniversary of
the Effective Date pursuant to Section 8.1 (payable on the dates that such payments are due) and
shall make a termination payment of
[ * ]
on the second anniversary of the Effective Date, (ii)
Warner will grant Onyx an exclusive (even as to Warner), world-wide, fully-paid, perpetual license
under Warners Patents and Warners Know-How discovered or reduced to practice prior to the
[ * ]
anniversary of the termination of the Term of this Agreement that are necessary to make, use and
sell any Collaboration Compound for therapeutic or diagnostic use in the Field, (iii) the licenses
granted under Section 5.1 will terminate and (iv) the licenses granted to Warner under Section 1.4
will terminate.
ARTICLE XIII
GENERAL PROVISIONS
13.1
Indemnification.
Each of Warner and Onyx agrees to indemnify and hold harmless
the other party and its Affiliates and their respective employees, agents, officers, directors and
permitted assigns (such partys Indemnified Group) from and against any claims,
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
22
judgments, expenses (including reasonable attorneys fees), damages and awards (collectively a Claim)
arising out of or resulting from (i) its negligence or misconduct in regard to any Product, (ii) a
breach of any of its representations or warranties hereunder or (iii) the manufacture, use or sale
of a Collaboration Product (in the case of Warner) or an Onyx Product (in the case of Onyx), except
to the extent that such Claim arises out of or results from the negligence or misconduct of a party
seeking to be indemnified and held harmless or the negligence or misconduct of a member of such
partys Indemnified Group. A condition of this obligation is that, whenever an indemnified party
has information from which it may reasonably conclude an incident has occurred which could give
rise to a Claim, such indemnified party shall immediately give notice to the indemnifying party of
all pertinent data surrounding such incident and, in the event claim is made or suit is brought,
all indemnified parties shall assist the indemnifying party and cooperate in the gathering of
information with respect to the time, place and circumstances and in obtaining the names and
addresses of any injured parties and available witnesses. No indemnified party shall, except at
its own cost, voluntarily make any payment or incur any expense in connection with any such Claim
or suit without the prior written consent of the indemnifying party. The obligations set forth in
this Section shall survive the expiration or termination of this Agreement.
13.2
Assignment.
This Agreement shall not be assignable by either party without the
prior written consent of the other party, such consent not to be unreasonably withheld. In no
event will any assignment relieve the assigning party of its obligations hereunder. This Agreement
shall be binding upon and, subject to the terms of the foregoing sentence, inure to the benefit of
the parties successors, legal representatives and assigns. Notwithstanding the foregoing, Warner
may assign this Agreement to any of its wholly-owned subsidiaries or any entity succeeding to a
majority of its Parke-Davis business, and either party may assign this Agreement to its successor
in connection with any merger, consolidation or sale of all or substantially all of its assets.
13.3
Non-Waiver.
The waiver by either of the parties of any breach of any provision
hereof by the other party shall not be construed to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself.
13.4
Research Dispute Resolution.
The parties recognize that the collaborative
research program under the Research Plan may require the resolution of certain issues or the
negotiation of additional agreements in the future. In the event the Research Management Committee
is unable to resolve a dispute under the Research Plan, either party may have the dispute referred
to the President of Onyx and the senior officer of Warners pharmaceutical business for good faith
resolution.
13.5
Governing Law.
This Agreement shall be construed and interpreted in accordance
with the laws of the State of New York, other than those provisions governing conflicts of law.
13.6
Partial Invalidity.
If and to the extent that any court or tribunal of competent
jurisdiction holds any of the terms or provisions of this Agreement, or the application thereof to
any circumstances, to be invalid or unenforceable in a final nonappealable order, the parties shall
use their best efforts to reform the portions of this Agreement declared invalid to realize the
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
23
intent of the parties as fully as practical, and the remainder of this Agreement and the
application of such invalid term or provision to circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each of the remaining terms and
provisions of this Agreement shall remain valid and enforceable to the fullest extent of the law.
13.7
Notice.
Any notice to be given to a party under or in connection with this
Agreement shall be in writing and shall be (i) personally delivered, (ii) delivered by a nationally
recognized overnight courier or (iii) delivered by certified mail, postage prepaid, return receipt
requested to the party at the address set forth below for such party:
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To Warner:
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To Onyx:
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Senior Vice President, Research
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Hollings Renton
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Parke-Davis Pharmaceutical Research
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President & CEO
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Division,
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Onyx Corporation
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Warner-Lambert Company
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3031 Research Drive
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2800 Plymouth Road
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Building A
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Ann Arbor, MI 48105
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Richmond, CA 94806
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with a copy to:
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with a copy to:
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President, Parke-Davis North America
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Robert L. Jones., Esq.
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Warner-Lambert Company
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Cooley Godward Castro
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201 Tabor Road
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Huddleson & Tatum
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Morris Plains, NJ 07950 5
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Palo Alto Square
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Palo Alto, CA 94306
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4th Floor
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and a copy to:
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Vice President and General Counsel
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Warner-Lambert Company
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201 Tabor Road
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Morris Plains, NJ 07950
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or to such other address as to which the party has given notice thereof. Such notices shall be
deemed given upon receipt.
13.8
Vaccines and Diagnostics.
Pursuant to an Agreement, between Chiron Corporation
(Chiron) and Onyx, dated April 24, 1992, Chiron has certain rights to Vaccines and Diagnostics
developed by Onyx. Warner and Onyx agree that, notwithstanding any other term or provision of this
Agreement to the contrary, neither party shall license to the other any Patents or Know-How to
make, use or sell Vaccines or Diagnostics. Furthermore, each party hereto may make, use or sell
Vaccines and Diagnostics in the Field without obligation to the other party, including as relates
to payment of milestones and royalties. As used in this Section, (i) Vaccines shall mean
[ * ]
and (ii) Diagnostics shall mean
[ * ]
.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
24
13.9
Headings.
The headings appearing herein have been inserted solely for the
convenience of the parties hereto and shall not affect the construction, meaning or interpretation
of this Agreement or any of its terms and conditions.
13.10
No Implied Licenses or Warranties.
No right or license under any patent
application, issued patent, know-how or other proprietary information is granted or shall be
granted by implication. All such rights or licenses are or shall be granted only as expressly
provided in the terms of this Agreement. Neither party warrants the success of any clinical or
other studies undertaken by it.
13.11
Force Majeure.
No failure or omission by the parties hereto in the performance
of any obligation of this Agreement shall be deemed a breach of this Agreement nor shall it create
any liability if the same shall arise from any cause or causes beyond the reasonable control of the
affected party, including, but not limited to, the following, which for purposes of this Agreement
shall be regarded as beyond the control of the party in question: acts of nature; acts or
omissions of any government; any rules, regulations, or orders issued by any governmental authority
or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident; war; rebellion; insurrection; riot; invasion; strikes; and lockouts or the like; provided
that the party so affected shall use its best efforts to avoid or
remove such causes or nonperformance and shall continue performance hereunder with the utmost
dispatch whenever such causes are removed.
13.12
Survival.
The representations and warranties contained in this Agreement as
well as those rights and/or obligations contained in the terms of this Agreement which by their
intent or meaning have validity beyond the term of this Agreement shall survive the termination or
expiration of this Agreement.
13.13
Entire Agreement.
This Agreement constitutes the entire understanding between
the parties with respect to the subject matter contained herein and supersedes any and all prior
agreements, understandings and arrangements whether oral or written between the parties relating to
the subject matter hereof. This Agreement will control in the event of any conflict between this
Agreement and the Research Plan.
13.14
Amendments.
No amendment, change, modification or alteration of the terms and
conditions of this Agreement shall be binding upon either party unless in writing and signed by the
party to be charged.
13.15
Independent Contractors.
It is understood that both parties hereto are
independent contractors and engage in the operation of their own respective businesses, and neither
party hereto is to be considered the agent or partner of the other party for any purpose
whatsoever. Neither party has any authority to enter into any contracts or assume any obligations
for the other party or make any warranties or representations on behalf of the other party.
13.16
Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original and both of which together shall constitute one and the same
instrument.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first above written,
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ONYX PHARMACEUTICALS, INC.
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WARNER-LAMBERT COMPANY
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By:
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/s/ Hollings C. Renton
Name: Hollings C. Renton
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By:
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/s/ M. R. Goodes
Name: M. R. Goodes
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Title: President & CEO
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Title: Chairman and CEO
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[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
26
SCHEDULE 1
Pre-existing Confidentiality Obligations
None.
[ * ]
= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406
OF THE SECURITIES EXCHANGE ACT OF 1933, AS AMENDED.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit 10.31
U.S. CO-PROMOTION AGREEMENT
BAYER PHARMACEUTICALS CORPORATION
and
ONYX PHARMACEUTICALS, INC.
March 6, 2006
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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1
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ARTICLE II
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GRANTS OF RIGHTS
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11
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Section 2.1
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Co-Promotion Rights Relating to the Co-Promotion Collaboration Product
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11
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Section 2.2
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Co-Promotion Rights of other Collaboration Products, if any
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11
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ARTICLE III
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MANAGEMENT
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11
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Section 3.1
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Overview
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11
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Section 3.2
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Joint Marketing Committee
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12
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Section 3.3
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Committee Decision Making
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13
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Section 3.4
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Obligations of the Parties
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13
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ARTICLE IV
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RESPONSIBILITIES OF ONYX
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14
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Section 4.1
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Promotion of the Co-Promotion Collaboration Product by Onyx
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14
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Section 4.2
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CRM System and Sales/Prescriber Data
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15
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Section 4.3
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Onyx Sales Force
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15
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ARTICLE V
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RESPONSIBILITIES OF BAYER
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16
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Section 5.1
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Promotion of the Co-Promotion Collaboration Product by Bayer
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16
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Section 5.2
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CRM System and Sales/Prescriber Data
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17
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Section 5.3
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Bayer Sales Force
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18
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Section 5.4
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Manufacture, Shipment, Booking, Invoicing, etc. of the Co-Promotion Collaboration Product
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18
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ARTICLE VI
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EMPLOYEES; TRAINING AND MARKETING MATERIALS
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19
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Section 6.1
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Compensation of Sales Representatives
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19
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Section 6.2
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Marketing Materials
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20
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Section 6.3
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[ * ] of Employees
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21
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Section 6.4
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Promotion of [ * ]
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21
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ARTICLE VII
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REGULATORY MATTERS
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21
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Section 7.1
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Licenses
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21
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Section 7.2
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Labeling and Marketing Materials
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21
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Section 7.3
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Efficacy and Safety Information
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21
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-i-
Table of Contents
(CONTINUED)
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Page
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Section 7.4
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Recalls
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22
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Section 7.5
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Pharmacovigilance Agreement
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23
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Section 7.6
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Transmittal of Advertisements and Promotional Labeling for Drugs and Biologics for Human Use
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23
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ARTICLE VIII
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ECONOMICS OF CO-PROMOTION; PROFIT SHARING
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23
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Section 8.1
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Overview
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23
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Section 8.2
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Joint Profit and Loss Statement
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23
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Section 8.3
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Reporting Sales
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24
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Section 8.4
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Allowable Expenses
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24
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Section 8.5
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Determination of Marketing Profit and Loss
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25
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Section 8.6
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Allocation of Marketing Profit and Loss and Related Payments
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25
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Section 8.7
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[ * ]
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26
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Section 8.8
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Reimbursement of Development Payments
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26
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Section 8.9
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Budget
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26
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Section 8.10
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Royalties
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26
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Section 8.11
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Federal and State Tax Characterization
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26
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ARTICLE IX
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RECORDKEEPING AND AUDITS
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26
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Section 9.1
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Audits
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26
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Section 9.2
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Maintenance of Books and Records
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27
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Section 9.3
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Compliance Audits
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27
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ARTICLE X
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TERM AND TERMINATION
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27
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Section 10.1
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Term of Agreement
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27
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Section 10.2
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Breaches (General)
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27
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Section 10.3
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Allegations of Material Breach
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28
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Section 10.4
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Termination of Collaboration Agreement
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29
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Section 10.5
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Effects of Termination
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29
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Section 10.6
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Survival
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29
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ARTICLE XI
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CONFIDENTIALITY
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30
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-ii-
Table of Contents
(CONTINUED)
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Page
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ARTICLE XII
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INDEMNIFICATION AND INSURANCE; LIMITATION OF LIABILITY
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30
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Section 12.1
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Indemnification by Onyx
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30
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Section 12.2
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Indemnification by Bayer
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31
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Section 12.3
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Product Liability Claims
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32
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Section 12.4
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Direct Claims
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34
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Section 12.5
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Insurance
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35
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Section 12.6
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Limitation of Liability
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35
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Section 12.7
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Disclaimer of Warranties
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35
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Section 12.8
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Regulatory Compliance
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36
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ARTICLE XIII
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REPRESENTATIONS, WARRANTIES AND COVENANTS
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37
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Section 13.1
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Representations by Onyx
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37
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Section 13.2
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Representations by Bayer
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38
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ARTICLE XIV
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NOTICES
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39
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ARTICLE XV
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DISPUTE RESOLUTION
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40
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ARTICLE XVI
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MISCELLANEOUS PROVISIONS
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40
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Section 16.1
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Assignment
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40
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Section 16.2
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Governing Law
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40
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Section 16.3
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Waiver
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40
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Section 16.4
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Entire Agreement
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41
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Section 16.5
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Severability
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41
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Section 16.6
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Relationship of the Parties
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41
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Section 16.7
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No Implied Licenses
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41
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Section 16.8
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Public Announcements
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42
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Section 16.9
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Counterparts
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42
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Section 16.10
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Force Majeure
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42
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Section 16.11
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Interpretation
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43
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Section 16.12
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Certain Expenses and Commissions
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43
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Section 16.13
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Headings
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|
43
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-iii-
Table of Contents
(CONTINUED)
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Page
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Section 16.14
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Days
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43
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
-iv-
U.S. CO-PROMOTION AGREEMENT
This
U.S. CO-PROMOTION AGREEMENT
(this
Agreement
) is entered into as of this 6th day of
March, 2006 between BAYER PHARMACEUTICALS CORPORATION, a Delaware corporation (
Bayer
) and ONYX
PHARMACEUTICALS, INC., a Delaware corporation (
Onyx
).
RECITALS
WHEREAS, Bayers predecessor, Miles Inc., and Onyx entered into a Collaboration Agreement
dated April 22, 1994, as amended on April 24, 1996, February 1, 1999 and as further amended by this
Agreement (as amended, the
Collaboration Agreement
), pursuant to which the parties agreed to
conduct a collaborative research program intended to discover and develop Ras Function (as defined
by the Collaboration Agreement) modulators for all human and animal therapeutic, prophylactic, and
diagnostic indications;
WHEREAS, in connection with the Collaboration Agreement, Bayer and Onyx have developed BAY
43-9006 (sorafenib), now known as Nexavar, a pharmaceutical compound which is a Co-Promotion
Collaboration Product under the Collaboration Agreement;
WHEREAS, on December 20, 2005 (the
Co-Promotion Effective Date
), the parties obtained United
States Regulatory Approvals to market and sell the Co-Promotion Collaboration Product;
WHEREAS, under Section 13.4 of the Collaboration Agreement, Onyx has exercised its option to
Co-Promote the Co-Promotion Collaboration Product in the United States; and
WHEREAS, Bayer and Onyx desire to Co-Promote the Co-Promotion Collaboration Product in the
United States, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows, with the intent to be legally bound:
AGREEMENT
ARTICLE I
DEFINITIONS
Capitalized terms used herein without definition shall have the meanings specified in this
Article I (such definitions to be equally applicable to both the singular and plural forms of the
terms defined). Unless otherwise specified, all references in this Agreement to Sections are to
Sections of this Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1
ACCME Standards
shall mean the standards set forth by the Accreditation Council for
Continuing Medical Education relating to educating the medical community in the United States.
Act
shall mean the United States Federal Food, Drug and Cosmetic Act, as it may be amended
from time to time.
Advertising and Education
shall have the meaning specified in the Collaboration Agreement.
Affiliate
shall have the meaning set forth in the Collaboration Agreement.
Agreement
shall have the meaning set forth in the Preamble and shall include all appendices,
exhibits and schedules referenced herein or attached hereto, and as the same may be amended or
supplemented from time to time hereafter pursuant to the provisions hereof.
Allowable Co-Promotion Expenses
shall mean those expenses incurred by the parties following
the date of receipt of United States Regulatory Approval that consist of (i)
[ * ]
, (ii)
[ * ]
,
(iii)
[ * ]
, (iv)
[ * ]
, (v)
[ * ]
, (vi)
[ * ]
, (vii)
[ * ]
, (viii)
[ * ]
; (ix)
[ * ]
, (x)
[ * ]
,
(xi)
[ * ]
, (xii)
[ * ]
, (xiii)
[ * ]
; and (xiv)
[ * ]
.
Allocable Co-Promotion Overhead Costs
shall mean all general and administrative overhead
costs of the functions that directly support the promotion of the Co-Promotion Collaboration
Product under this Agreement, including without limitation costs reasonably attributable to
compliance, account administration, accounts payable and receivables management, interest on
working capital associated with inventory and receivables of Co-Promotion Collaboration Product,
and out-of-pocket, Third Party costs incurred for legal and accounting functions. Unless otherwise
agreed to by the Executive Committee, all general and administrative corporate overhead items that
are included in this definition of Allocable Co-Promotion Overhead Costs shall be
[ * ]
for Bayer
at
[ * ]
at the Co-Promotion Effective Date and shall remain at such level pending adjustment in
accordance with this definition by the Executive Committee. Unless otherwise agreed to by the
Executive Committee, Allocable Co-Promotion Overhead Costs for Onyx shall be
[ * ]
.
Allowable Expense Report
shall have the meaning set forth in Section 8.4(a).
Annual Sales Targets
shall mean the aggregate level of Gross Sales each partys sales force
is required to achieve as set forth from time to time in the Budget.
Applicable Laws
shall mean all applicable federal, state and local laws, regulations, rules
or guidelines that govern the Co-Promotion Program and activities and services in the United States
and the other transactions contemplated by this Agreement (including without limitation the Act, as
the same may be amended from time to time).
Asserting Party
shall have the meaning set forth in Section 12.4(a).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2
Bayer
shall have the meaning set forth in the Preamble.
Bayer Indemnified Party
shall have the meaning set forth in Section 12.1(a).
Bayer Marketing Services
shall have the meaning set forth in Section 5.4(d).
Breaching Party
shall have the meaning set forth in Section 10.2(a).
Budget
shall mean the annual budget for Allowable Co-Promotion Expenses to be incurred by
both parties during each Contract Year of the Term in connection with the promotion and marketing
of the Co-Promotion Collaboration Product, as annually prepared by the JMC and approved by the
Executive Committee (or any duly constituted sub-committee thereof charged with such authority by
the Executive Committee).
Call Plan
shall mean the call plan for detailing and implementing the sale of Co-Promotion
Collaboration Product in the relevant territories by the Sales FTEs, which call plan shall be
agreed upon by the JMC not later than
[ * ]
days prior to the introduction of additional products
and the commencement of detailing of such additional products by either partys Sales FTEs into the
marketplace, and which call plan may be amended from time to time by the JMC.
CIA
shall mean the Corporate Integrity Agreement between the Office of Inspector General of
the Department of Health and Human Services and Bayer Corporation dated January 23, 2001.
Claims
shall mean any and all claims, suits, proceedings or causes of action brought against
a party.
Code of Conduct
shall mean the Healthcare Fraud and Abuse Code of Conduct of Bayer.
Collaboration Agreement
shall have the meaning set forth in the Recitals.
Collaboration Revenue
shall mean Co-Promotion Net Sales plus US Sublicense Revenues.
Commercially Reasonable Efforts
shall mean the level of efforts and resources (including the
promptness with which such efforts and resources would be applied) commonly used
[ * ]
with respect
to a product of commercial potential
[ * ]
to the Co-Promotion Collaboration Product at a
[ * ]
,
taking into consideration its
[ * ]
and all other relevant factors.
Committee
shall mean any of the Executive Committee or JMC, or any other committee operating
under delegated authority and formed with the approval of the Executive Committee or JMC.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
3
[ * ] Product
shall mean any product having the
[ * ]
as the Co-Promotion Collaboration
Product and that is intended as a
[ * ]
for, and
[ * ]
for, the Co-Promotion Collaboration Product.
Confidential Information
shall have the meaning set forth in the Collaboration Agreement, as
amended to include any Information (as such term is defined in the Collaboration Agreement)
furnished by one party to another pursuant to this Agreement.
Contract Year
shall mean a 12-month period commencing as of January 1 and ending as of
December 31. For the purposes of this Agreement, the first Contract Year shall commence on the
Co-Promotion Effective Date and end on December 31 of the same calendar year; provided, however,
that for purposes of measuring
[ * ]
under Sections 4.1 and 5.1 hereof, the first Contract Year
shall commence on and as of January 1, 2006.
Controlling Party
shall have the meaning set forth in Section 12.3(e).
Co-Promote
or
Co-Promotion
shall mean the joint promotion of the Co-Promotion
Collaboration Product through Bayer, Onyx and their respective sales forces under a single
trademark in the United States.
Co-Promotion Advertising and Education Expenses
shall mean the costs (excluding Allocable
Co-Promotion Overhead Costs or any other overhead costs) incurred by a party or for its account
which are specifically identifiable to the Advertising and Education of the Co-Promotion
Collaboration Product in the United States consistent with the Co-Promotion Program.
Co-Promotion [ * ]
shall mean the
[ * ]
, as determined in accordance with GAAP on a basis
consistent with Bayers annual audited financial statements.
Co-Promotion Collaboration Product
shall mean any pharmaceutical form or dosage of the
experimental compound designated as Bay 43-9006 (sorafenib).
Co-Promotion Distribution Costs
shall mean the costs incurred by Bayer or for its account in
connection with the freight, transportation, insurance, handling, packaging and distribution of the
Co-Promotion Collaboration Product in the United States, which shall be
[ * ]
of the Co-Promotion
Collaboration Product.
Co-Promotion Effective Date
shall mean the date specified in the Recitals above.
Co-Promotion Marketing Expenses
shall mean the costs and expenses (not otherwise included in
Co-Promotion Advertising and Education Expenses or as Co-Promotion Selling and Promotion Expenses,
and excluding Allocable Co-Promotion Overhead Costs or any other overhead costs) incurred by the
parties in connection with the marketing and support of the Co-Promotion Collaboration Product and
approved by the Executive Committee, including without limitation
[ * ]
.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
4
Co-Promotion Marketing Profit or Loss
shall have the meaning set forth in Section 8.5.
Co-Promotion Net Sales
shall mean Gross Sales less (a) sales returns and accruals for
allowances, including trade, quantity and cash discounts and any other adjustments, including those
granted on account of price adjustments, billing errors, rejected goods, damaged goods, returns,
rebates, chargeback rebates, fees, reimbursements or similar payments granted or given to
wholesalers or other distributors (including specialty pharmaceutical companies who act as
distributors), buying groups, healthcare insurance carriers or other institutions, (b) any payment
in respect of sales to any Governmental or Regulatory Authority in respect of any government
subsidized program, including and without limitation Medicare and Medicaid rebates, and (c) any
item substantially similar in character and/or substance to the above, all as determined in
accordance with GAAP on a basis consistent with Bayers annual audited financial statements. In
addition, Co-Promotion Net Sales by Bayer hereunder are subject to the following:
(1) In the case of any sale or other disposal of a Co-Promotion Collaboration Product
by Bayer to an Affiliate, for resale, the Co-Promotion Net Sales shall be calculated as
above on the value charged or invoiced on the first arms length sale to a Third Party; and
(2)
[ * ]
Co-Promotion Program
shall mean the annual plan for the promotion, marketing and sale of the
Co-Promotion Collaboration Product as developed by the JMC and approved by the Executive Committee.
The Co-Promotion Program shall set forth the manner in which the Co-Promotion Collaboration
Product is to be promoted and marketed in the United States during the period to which the
Co-Promotion Program relates and shall include, at a minimum: (a)
[ * ]
; (b)
[ * ]
; (c)
[ * ]
; (d)
[ * ]
; (e)
[ * ]
; (f)
[ * ]
; (g)
[ * ]
; (h)
[ * ]
; (i)
[ * ]
; (j)
[ * ]
; and (k)
[ * ]
.
Co-Promotion Selling and Promotion Expenses
shall mean all costs (excluding Allocable
Co-Promotion Overhead Costs or any other overhead costs) incurred consistent with the Budget in the
Co-Promotion Program, and specifically identifiable to the sales and/or promotion of the
Co-Promotion Collaboration Product in the United States, including all costs associated with (a)
[
* ]
; (b)
[ * ]
; and (c)
[ * ]
. Co-Promotion Selling and Promotion Expenses shall exclude Sales
Force Expenses and MSL Expenses.
CRM System
shall mean a customer relationship management system utilized in connection with
the tracking of sales activity relating to the Co-Promotion Collaboration Product in the United
States.
Detail or Detailing
shall mean each separate face-to-face contact by a sales
representative with a Target Healthcare Professional during which time the promotional message
involving the Co-Promotion Collaboration Product is presented and is a principal topic of
discussion.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
5
Development Payments
shall mean those payments specified in Section 11.8 of the
Collaboration Agreement.
Direct Claim
shall have the meaning set forth in Section 12.4(a).
Dispute
shall have the meaning set forth in Article XV.
Equivalent Sales FTE
shall mean a Sales FTE equivalent as determined under the standards and
methods adopted by the Executive Committee under Section 3.1(g) hereof, which standards and methods
will establish the means for measuring the performance required of a Sales FTE deployed to market
multiple products in addition to his or her marketing and sale of Co-Promotion Collaboration
Product.
Executive Committee
or
EC
shall mean that committee described and set forth in Section
3.1, which was originally organized as the JRDC under the Collaboration Agreement and which has
been renamed the Executive Committee.
FDA
shall mean the United States Food and Drug Administration or any successor entity
thereto.
Force Majeure Event
shall have the meaning set forth in Section 16.10.
GAAP
shall mean United States generally accepted accounting principles, as may be amended
from time to time.
Good Manufacturing Practices
shall mean the current standards for manufacture, as set forth
in the Act and applicable regulations and guidelines promulgated thereunder or any successor
thereto, as shall be in effect from time to time during the Term.
Governmental or Regulatory Authority
shall mean any court, tribunal, arbitrator, agency,
commission, official or other instrumentality of any government or of any federal, state, county,
city or other political subdivision thereof, including without limitation the FDA.
Gross Sales
shall mean the amount of sales of Co-Promotion Collaboration Product in the
United States invoiced by Bayer, its Affiliates, subcontractors and permitted sublicensees to Third
Parties, in accordance with GAAP. For timing purposes, Gross Sales shall be recognized in
accordance with the revenue recognition policies utilized by Bayer for financial reporting
purposes.
Indemnifiable Losses
shall mean liabilities, losses, damages or other amounts payable to a
Third Party claimant, as well as any reasonable attorneys fees and costs of litigation incurred by
either the Bayer Indemnified Party or the Onyx Indemnified Party, as the case may be, in connection
with any Claim.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
6
Joint Development Committee or JDC
shall mean that joint development Sub-Committee
operating under delegated authority of the Executive Committee under Section 3.3(h) of the
Collaboration Agreement.
Joint Finance Committee or JFC
shall mean that joint finance Sub-Committee operating under
delegated authority of the Executive Committee under Section 3.3(h) of the Collaboration Agreement.
Joint Marketing Committee or JMC
shall mean that committee described and set forth in
Section 3.2.
Joint Profit and Loss Statement
shall have the meaning set forth in Section 8.2.
Limited Recall
shall have the meaning set forth in Section 7.4(a).
Losses
shall mean liabilities, losses, damages, as well as any reasonable attorneys fees
and costs of litigation, incurred by a party.
LMR
shall mean Bayers Legal Medical Regulatory review team.
Marketing Materials
shall have the meaning set forth in Section 6.2(a).
Material Breach
shall have the meaning set forth in Section 10.3(a).
Marketing FTE Expenses
shall mean the aggregate of all salary and benefits expenses for a
full-time equivalent (based on a full-time equivalent year of 2,080 hours, inclusive of vacation
time and holidays) marketing personnel
[ * ]
.
MSL Expenses
shall mean those costs that are identified below and that are incurred by a
party beginning
[ * ]
, in each case consistent with and specifically identifiable to the
establishment and maintenance of medical affairs personnel (including MSLs and medical affairs
field directors) to the extent such personnel are, or will be, assigned to supporting Co-Promotion
Collaboration Product in the United States: (a)
[ * ]
; (b)
[ * ]
; (c)
[ * ]
; (d)
[ * ]
; (e)
[ * ]
;
and (f)
[ * ]
.
MMA
shall have the meaning set forth in Section 12.8(d).
MSLs
shall mean the medical science liaisons to be appointed by each party.
NDA
shall mean (a) the single application or set of applications for the Co-Promotion
Collaboration Product filed by Bayer with the FDA or any successor agency having the administrative
authority to regulate the approval for marketing of new human pharmaceutical products, delivery
systems and devices in the United States, and (b) any related registrations with or notifications
to the FDA.
Non-Publishing Party
shall have the meaning set forth in Section 16.8.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
7
Non-Serious Adverse Event
shall mean any adverse drug experience associated with the use of
the Co-Promotion Collaboration Product in humans, whether or not considered drug-related, which is
not a Serious Adverse Event.
Notice of Termination For Material Breach
shall have the meaning set forth in Section
10.3(c).
Notifying Party
shall have the meaning set forth in Section 10.2(a).
OIG
shall mean the Office of the Inspector General.
Onyx
shall have the meaning set forth in the Preamble of this Agreement.
Onyx Indemnified Party
shall have the meaning set forth in Section 12.2(a).
PDMA
shall mean the Prescription Drug Marketing Act of 1987, Title 21 of the U.S. Code of
Federal Regulations, Parts 203 and 205, as amended, and any final regulations or guidances
promulgated thereunder from time-to-time.
Performance Qualifications
shall mean those qualifications for the Sales FTEs reasonably
established from time to time by the JMC.
Permanent Recall
shall have the meaning set forth in Section 7.4(a).
Person
shall mean an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization, governmental authority, or any other form of entity
not specifically listed herein.
Pharmacovigilance Agreement
shall have the meaning set forth in Section 7.5.
PhRMA Code
shall mean the Pharmaceutical Research and Manufacturers of America Code on
Interactions with Healthcare Professionals, as hereafter amended from time to time.
Product Liability Claim
shall have the meaning set forth in Section 12.3(e).
Product Technical Complaint
shall mean any complaint that questions the purity, identity,
potency or quality of the Co-Promotion Collaboration Product, its packaging or labeling or the
compliance of any batch of the Co-Promotion Collaboration Product with Applicable Laws including
current Good Manufacturing Practices; any complaint that concerns any incident that causes the
Co-Promotion Collaboration Product or its labeling to be mistaken for, or applied to, another
article; any bacteriological contamination or significant chemical, physical or other change or
deterioration in the Co-Promotion Collaboration Product; any failure of one or more batches of the
Co-Promotion Collaboration Product to meet the specifications therefor in the NDA; or any complaint
or evidence of tampering with the Co-Promotion Collaboration Product.
Publishing Party
shall have the meaning set forth in Section 16.8.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
8
Recall
shall have the meaning set forth in Section 7.4(a).
Regulatory Approval Date
shall mean the date of receipt of United States Regulatory Approval
with respect to the Co-Promotion Collaboration Product, December 20, 2005.
Sales Force Expenses
shall mean those costs that are identified below and that are incurred
by a party beginning
[ * ]
, in each case consistent with and specifically identifiable to the
establishment and maintenance of sales personnel (including a field-based sales force and regional
managers) to the extent such personnel are, or will be, assigned to selling Co-Promotion
Collaboration Product in the United States: (a)
[ * ]
; (b)
[ * ]
; (c)
[ * ]
; (d)
[ * ]
; (e)
[ * ]
;
and (f)
[ * ]
.
Sales FTE
shall mean a full-time equivalent (based on a full-time equivalent year of 2,080
hours, inclusive of vacation time and holidays) field-based pharmaceutical sales representative,
district sales manager, or sales trainer who promotes a Co-Promotion Collaboration Product in the
United States during the Term and who satisfies each of the following criteria:
|
(1)
|
|
[ * ]
;
|
|
|
(2)
|
|
[ * ]
;
|
|
|
(3)
|
|
[ * ]
;
|
|
|
(4)
|
|
[ * ]
; and
|
|
|
(5)
|
|
[ * ]
.
|
SEC
shall mean the United States Securities and Exchange Commission.
Serious Adverse Event
shall mean any serious and unexpected adverse drug experience, as
defined in 21 C.F.R. Section 314.80 or Section 312.32, associated with the use of the Co-Promotion
Collaboration Product in humans, whether or not considered drug-related.
Sub-Committees
shall mean the JDC, the JFC and the JMC, and any other sub-committee(s)
appointed by the Executive Committee from time to time pursuant to Section 3.3(h) of the
Collaboration Agreement; any reference to a committee or sub-committee in this Agreement shall
refer to an existing Sub-Committee.
Target Healthcare Professionals
shall mean physicians who are cancer specialists,
radiologists or other prescribers of oncology therapeutics, including persons lawfully influencing
(or in a position to lawfully influence) the opinions of such persons, in each case who are
authorized by Applicable Laws to prescribe the Co-Promotion Collaboration Product.
Term
shall have the meaning set forth in Section 10.1.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
9
Third Party
shall mean any person or entity other than Bayer or Onyx, or an Affiliate of
either of them.
United States
shall mean the United States of America, its territories and possessions.
United States Regulatory Approval
shall mean approval by the FDA or any successor entity of
an NDA or other applicable filing and satisfaction of any related applicable FDA registration and
notification requirements (if any), together with any pricing approvals and labeling approvals.
US COGS
shall mean, for sales of the Co-Promotion Collaboration Product in the United States,
[ * ]
US Sublicense Revenues
shall mean all revenues received from Third Parties as consideration
for the sublicensing of the manufacture, use and/or sale of the Co-Promotion Collaboration Product
in the United States.
US Third Party Royalties
shall mean those royalties payable to a Third Party in respect of
the import, sale, offer for sale, use or manufacture of the Co-Promotion Collaboration Product in
the United States.
Weighted Average
shall mean
X
where
X= [ * ]
÷ m
, and where:
n1
is the number of
[ * ]
;
d1
is the number of
[ * ]
;
n2
is the number of
[ * ]
;
d2
is the number of
[ * ]
;
d1 + d2
shall
[ * ]
; and
m
is the aggregate number of
[ * ]
.
For example
:
If the Co-Promotion Program requires that each party
[ * ]
, the Weighted
Average would equal:
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
10
ARTICLE II
GRANTS OF RIGHTS
Section 2.1 Co-Promotion Rights Relating to the Co-Promotion Collaboration Product.
(a)
Pursuant to Section 13.4 of the Collaboration Agreement, Onyx has exercised its option to
Co-Promote the Co-Promotion Collaboration Product in the United States. Subject only to Onyxs
compliance with the terms and conditions of the Collaboration Agreement relating to payment of
one-half of the Co-Development Costs incurred worldwide for such Co-Promotion Collaboration Product
(excluding Japan), Onyx has the right, on an exclusive basis together with Bayer, to Co-Promote the
Co-Promotion Collaboration Product in the United States during the Term, upon and subject to the
terms and conditions set forth in this Agreement.
(b)
Subject only to Onyxs compliance with the terms and conditions of the Collaboration
Agreement relating to payment of one-half of the Co-Development Costs incurred worldwide for such
Co-Promotion Collaboration Product (excluding Japan), Bayer hereby undertakes its rights to
Co-Promote the Co-Promotion Collaboration Product in the United States together with Onyx during
the Term, upon and subject to the terms and conditions set forth in this Agreement.
Section 2.2 Co-Promotion Rights of other Collaboration Products, if any.
Notwithstanding
anything to the contrary contained herein, Onyx shall retain an option, pursuant to Section 13.4 of
the Collaboration Agreement, to co-promote in the United States any other Collaboration Product (as
such term is defined in the Collaboration Agreement) that receives United States Regulatory
Approval, provided Onyx has paid one-half of the Co-Development Costs incurred worldwide for such
Collaboration Product (excluding Japan). If Onyx exercises its right to co-promote another such
Collaboration Product, the parties shall confer and enter into a separate definitive agreement
substantially similar to this Agreement pertaining to such other Collaboration Product.
ARTICLE III
MANAGEMENT
Section 3.1 Overview.
The parties, by mutual consent, have treated the JRDC (as defined in
the Collaboration Agreement) as the Executive Committee since the first two (2) calendar quarters
of 2004 (the
Executive Committee
or
EC
). The activities of the parties under the Collaboration
Agreement and this Agreement shall also be supervised and managed by the Executive Committee in
accordance with the procedural and governance provisions of the Collaboration Agreement (as it may
be hereafter amended from time to time). Nothing contained in this Agreement shall be construed to
expand the authority of the Executive Committee. The Executive Committee shall perform the
specific functions set forth in the Collaboration Agreement and in this Agreement, including the
following additional general tasks in connection with the management of the Co-Promotion:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
11
(a)
determine the overall strategy for the Co-Promotion in the manner contemplated by this
Agreement;
(b)
review and approve the Co-Promotion Program and Budget and all Co-Promotion Marketing
Expenses;
(c)
assess and determine if any Third Party technology should be acquired or licensed for
purposes of commercialization of the Co-Promotion Collaboration Product;
(d)
establish and delegate duties and responsibilities to other sub-committees on an
as-needed basis to oversee particular projects or activities, including without limitation the
Sub-Committees, by resolution without amending this Agreement or the Collaboration Agreement,
pursuant to its powers under Section 3.3(h) of the Collaboration Agreement;
(e)
oversee and approve the activities of the Sub-Committees;
(f)
address disputes and disagreements arising in the Sub-Committees;
(g)
if either party desires to utilize its Sales FTEs for the marketing and sale of one or
more additional products with the Co-Promotion Collaboration Product, the EC shall determine
[ * ]
the number of Sales FTEs such party would be required to use to promote said multiple products so
that such partys allocation of Sales FTE effort promoting the Co-Promotion Collaboration Product
is equivalent to the number of Sales FTEs for that party as was set by the EC. Notwithstanding the
foregoing, in the event the Executive Committee is unable to reach agreement within
[ * ]
as to
such
[ * ]
, then
[ * ]
within
[ * ]
,
[ * ]
. Such
[ * ]
shall
[ * ]
and shall
[ * ]
. Such party
shall rely on the
[ * ]
to ensure that its allocation of Sales FTE effort promoting the
Co-Promotion Collaboration Product is equivalent to the number of Sales FTEs for that party as set
by the EC; and
(h)
perform any other functions as appropriate to further the purposes of this Agreement as
expressly set forth herein or as otherwise determined by the parties.
Section 3.2 Joint Marketing Committee.
(a) Formation and Membership.
The Joint Marketing Committee (the
JMC
) shall consist of up
to six (6) members, with up to three (3) each appointed by Onyx and Bayer, provided that one (1)
member of each party will be a Vice-President of Sales and/or Marketing, or equivalent thereto, for
such party. In the event the Executive Committee shall decide at any time to disband the JMC, all
powers and delegated authority of the JMC shall automatically revert, without further action, to
the Executive Committee. Notwithstanding anything to the contrary contained herein, the authority
of the JMC shall be limited to the authority conferred upon it by the Executive Committee; nothing
contained in this Agreement shall be construed to permanently fix or establish the powers and
duties of the JMC, and the Executive Committee shall be free to expand or contract the powers
conferred upon the JMC
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24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
12
from time to time. Members of the JMC shall be composed of senior executives of each party
authorized to make decisions with respect to the matters within the scope of the JMCs authority.
An alternate member designated by a party may serve temporarily in the absence of a permanent
member designated by such party. Each party shall appoint and replace its representatives to the
JMC, as appropriate during the Co-Promotion.
(b) Functions and Powers of the Joint Marketing Committee.
The Co-Promotion activities of the
parties under this Agreement shall be supervised and managed by the JMC. The JMC shall perform the
specific functions set forth in this Agreement, and in addition shall perform the following general
tasks in managing the Co-Promotion:
(i)
prepare the Co-Promotion Program and Budget for submission to the Executive Committee on
an annual basis not later than
[ * ]
;
(ii)
oversee implementation of the Co-Promotion Program and Budget;
(iii)
direct and oversee all marketing activities concerning the Co-Promotion Collaboration
Product (whether conducted directly by the parties or through Third Party vendors);
(iv)
prepare the sales strategy for the Co-Promotion Collaboration Product, including the
development of the Call Plan (if applicable);
(v)
establish and delegate duties to other Sub-Committees on an as-needed basis for purposes
of advising the JMC as to matters within its responsibilities; and
(vi)
perform any other functions as appropriate to further the purposes of this Agreement as
determined by the provisions hereof or by the Executive Committee.
Section 3.3 Committee Decision Making.
Subject to the terms of Section 3.2 above, the JMC
shall take action by unanimous vote with each party having a single vote, irrespective of the
number of such partys representatives actually in attendance. The members of the JMC shall act in
good faith to cooperate with one another to reach agreement with respect to issues to be decided by
the Sub-Committee. If the JMC is unable to reach unanimous consent on any matter over which the
JMC has authority within
[ * ]
of the first consideration of such matter, the matter shall be
referred to the Executive Committee for decision.
Section 3.4 Obligations of the Parties.
Onyx and Bayer shall provide the Executive Committee
and the Joint Marketing Committee and their authorized representatives with reasonable access
during regular business hours to all records, documents and information relating to this
Co-Promotion which such Committee may reasonably require in order to perform its obligations
hereunder, provided that if such records, documents and information are under a bona fide
obligation of confidentiality to a Third Party, then Onyx or Bayer, as the case may be, may
withhold access thereto to the extent necessary to satisfy such obligation. In addition, the
parties agree to exercise Commercially Reasonable Efforts to provide one another with reasonable
contractual rights of access to all such Third Party records, documents and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
13
information in connection with the execution of new (or amended) Third Party contracts entered
into from time to time during the Term.
ARTICLE IV
RESPONSIBILITIES OF ONYX
Section 4.1 Promotion of the Co-Promotion Collaboration Product by Onyx.
(a)
Throughout the Term, Onyx shall contribute fifty percent (50%) of the overall number of
Sales FTEs required by the Co-Promotion Program as developed by the JMC and approved by the
Executive Committee. Onyx shall use its Commercially Reasonable Efforts to market and promote the
Co-Promotion Collaboration Product to Target Healthcare Professionals in the United States in
accordance with the then-current Co-Promotion Program, and shall perform additional services
assigned to it from time to time by the Executive Committee. Subject to Section 4.1(b), the exact
number of Sales FTEs to be provided by Onyx will be determined by the JMC and approved by the
Executive Committee and established under and pursuant to the Co-Promotion Program.
(b)
(i) Onyx shall provide a minimum Weighted Average of not less than
[ * ]
of all
[ * ]
assigned to Onyx in each
[ * ]
of each
[ * ]
of the Term. In the event that Onyx provides less
than a Weighted Average of
[ * ]
of all
[ * ]
assigned to Onyx for any given
[ * ]
following the
first Contract Year (based on the Weighted Average number of
[ * ]
for each
[ * ]
of the relevant
[
* ]
, on an average basis), then Onyx shall incur a
[ * ]
calculated as follows:
[ * ]
Any
[ * ]
due and payable under this Section will be due to Bayer no later than thirty (30) days
following the expiration of the
[ * ]
that gave rise to the
[ * ]
. In the event that the parties
disagree whether Onyx has satisfied its obligation to provide a Weighted Average of
[ * ]
of all
[
* ]
assigned to Onyx in the given period, the matter shall be reviewed by the JFC for up to
[ * ]
days in an attempt to resolve the matter. In the event the JFC cannot resolve the issue within
such time period, either party shall be entitled to submit the issue to the Executive Committee for
resolution pursuant to Article 25 of the Collaboration Agreement.
(ii) Onyx shall provide at least
[ * ]
of the
[ * ]
for each
[ * ]
period beginning on each
anniversary of commercial launch of the Co-Promotion Collaboration Product. The initial
[ * ]
shall be equal to the
[ * ]
. In each case the Onyx sales force fails to meet
[ * ]
of the
[ * ]
for a
[ * ]
, Onyx shall
[ * ]
of the applicable Sales FTE rate for such year. The determination of
whether the
[ * ]
have been met shall be measured within
[ * ]
days following each anniversary of a
commercial launch, and shall begin on the second anniversary of the commercial launch. For
clarity, the
[ * ]
provided in this Section 4.1(b)(ii) shall be additive to the
[ * ]
set forth in
Section 4.1(b)(i).
(c)
Unless the parties otherwise agree, Onyx shall provide fifty percent (50%) of the overall
number of MSLs required by the Co-Promotion Program to support the Co-
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Promotion Collaboration Product, and Onyx shall be solely responsible for 100% of its own MSL
Expenses, unless otherwise provided under Section 8.4(a) below.
(d)
The MSLs provided by Onyx, together with the MSLs provided by Bayer, shall develop for
approval by the JMC an integrated medical affairs program and policies thereto approved by the MSLs
of each party that includes
[ * ]
from the appropriate MSLs to any query from the field or from
either party.
(e)
In performing its duties hereunder, Onyx shall, and shall cause its employees to: (i)
[ *
]
; and (ii)
[ * ]
. No employee of Onyx shall make any representation, statement, warranty or
guaranty with respect to the Co-Promotion Collaboration Product that is not consistent with current
labeling of the Co-Promotion Collaboration Product or Marketing Materials developed in conformity
with Section 6.2(a) hereof, that is deceptive or misleading or that disparages the Co-Promotion
Collaboration Products or the good name, goodwill and reputation of Bayer. Onyx shall use
Commercially Reasonable Efforts to ensure that its services delivered pursuant to this Agreement
will be provided in a professional, ethical and competent manner.
Section 4.2 CRM System and Sales/Prescriber Data.
Bayer shall
[ * ]
exercise Commercially
Reasonable Efforts to
[ * ]
to the CRM System with
[ * ]
to include Onyx as a licensee and
subscriber. Such
[ * ]
shall provide that Bayer and Onyx shall be
[ * ]
to the CRM System and to
[
* ]
related to the Co-Promotion Collaboration Product. Notwithstanding the foregoing, each partys
sales representatives shall be responsible for providing information on an ongoing basis as
requested in the CRM System, including without limitation
[ * ]
information. Information contained
in the CRM System pertaining to Onyx shall be treated as Confidential Information of Onyx and shall
not be used or disclosed to Third Parties without Onyxs prior written approval or direction,
unless otherwise required by Applicable Laws.
Section 4.3 Onyx Sales Force.
(a)
The parties agree, for purposes of this Agreement, that each Sales FTE shall initially be
assigned a Sales FTE rate of
[ * ]
, which rate is based upon Bayers and Onyxs
[ * ]
. The Sales
FTE rate shall be adjusted annually by the Executive Committee in connection with the approval of
the Budget and shall be
[ * ]
;
provided
,
however
, that in the event the Executive
Committee is unable to adjust the Sales FTE rate by
[ * ]
of the calendar year preceding the
adjustment year due to any deadlock of the Executive Committee, the Sales FTE rate shall be
adjusted to reflect any
[ * ]
. Onyx shall be solely responsible for all of its own Sales Force
Expenses in promoting the Co-Promotion Collaboration Product, unless otherwise provided under
Section 8.4(a) below. Each Sales FTE of Onyx shall be an employee of Onyx and shall remain under
the direct and exclusive authority, supervision and control of Onyx at all times during the Term.
Onyx shall supervise and maintain such competent and qualified sales representatives as may be
required to promote the Co-Promotion Collaboration Product as provided herein and in the
Co-Promotion Program and shall cause the sales force to meet the Performance Qualifications. In
the event that Onyx commences sales of another product using the same sales force as used to
promote the Co-Promotion Collaboration Product, Onyx shall still
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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be obligated to satisfy its obligations hereunder, including without limitation to provide its
minimum number of Equivalent Sales FTEs required to promote the Co-Promotion Collaboration Product.
Onyx shall not
[ * ]
without the prior approval of the Executive Committee. For the period
commencing on the Co-Promotion Effective Date and for
[ * ]
thereafter, Onyx shall
[ * ]
;
provided
,
however
, that (subject to Section 4.1(a)) Sales FTEs may be added or
removed at the discretion of Onyx.
(b)
Subject to Section 6.2(a), all written, electronic and visual communications provided to
any of Onyxs sales representatives regarding strategy, positioning or selling messages for the
Co-Promotion Collaboration Product will be subject to review and approval by the
[ * ]
to ensure
uniform messaging and execution. The costs and expenses of providing such written, electronic and
visual communications shall be considered Allowable Co-Promotion Expenses.
ARTICLE V
RESPONSIBILITIES OF BAYER
Section 5.1 Promotion of the Co-Promotion Collaboration Product by Bayer.
(a)
Throughout the Term, Bayer shall contribute fifty percent (50%) of the overall number of
Sales FTEs required by the Co-Promotion Program as developed by the JMC and approved by the
Executive Committee. Bayer shall use its Commercially Reasonable Efforts to market and promote the
Co-Promotion Collaboration Product to Target Healthcare Professionals in the United States in
accordance with the then-current Co-Promotion Program, and shall perform additional services
assigned to it from time to time by the Executive Committee. Subject to Section 5.1(b), the exact
number of Sales FTEs to be provided by Bayer will be determined by the JMC and approved by the
Executive Committee and established under and pursuant to the Co-Promotion Program.
(b)
(i) Bayer shall provide a minimum Weighted Average of not less than
[ * ]
of all
[ * ]
assigned to Bayer in each
[ * ]
of
[ * ]
of the Term. In the event that Bayer provides less than a
Weighted Average of
[ * ]
of all
[ * ]
assigned to Bayer for any given
[ * ]
following the first
Contract Year (based on the Weighted Average number of
[ * ]
for each
[ * ]
of the relevant
[ * ]
on an average basis), then Bayer shall incur a
[ * ]
calculated as follows:
[ * ]
Any
[ * ]
due and payable under this Section will be due to Onyx no later than thirty (30) days
following the expiration of the
[ * ]
that gave rise to the
[ * ]
. In the event that the parties
disagree whether Bayer has satisfied its obligation to provide a Weighted Average of
[ * ]
of all
[
* ]
assigned to Bayer in the given period, the matter shall be reviewed by the JFC for up to
[ * ]
days in an attempt to resolve the matter. In the event the JFC cannot resolve the issue within
such time period, either party shall be entitled to submit the issue to the Executive Committee for
resolution pursuant to Article 25 of the Collaboration Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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(ii) Bayer shall provide at least
[ * ]
of the
[ * ]
for each
[ * ]
period beginning on each
anniversary of commercial launch of the Co-Promotion Collaboration Product. The initial
[ * ]
shall be equal to the
[ * ]
. In each case the Bayer sales force fails to meet
[ * ]
of the
[ * ]
for a
[ * ]
, Bayer shall
[ * ]
of the applicable Sales FTE rate for such year. The determination
of whether the
[ * ]
have been met shall be measured within
[ * ]
following each anniversary of a
commercial launch, and shall begin on the second anniversary of the commercial launch. For
clarity, the
[ * ]
provided in this Section 5.1(b)(ii) shall be additive to the
[ * ]
set forth in
Section 5.1(b)(i).
(c)
Unless the parties otherwise agree, Bayer shall provide fifty percent (50%) of the overall
number of MSLs required by the Co-Promotion Program to support the Co-Promotion Collaboration
Product, and Bayer shall be solely responsible for 100% of its own MSL Expenses, unless otherwise
provided under Section 8.4(a) below.
(d)
The MSLs provided by Bayer, together with the MSLs provided by Onyx, shall develop for
approval by the JMC an integrated medical affairs program and policies thereto approved by the MSLs
and the Regional Sales Manager of each party that includes
[ * ]
from the appropriate MSLs to any
query from the field or from either party.
(e)
In performing its duties hereunder, Bayer shall, and shall cause its employees to: (i)
[ *
]
; and (ii)
[ * ]
. No employee of Bayer shall make any representation, statement, warranty or
guaranty with respect to the Co-Promotion Collaboration Product that is not consistent with current
labeling of the Co-Promotion Collaboration Product or Marketing Materials developed in conformity
with Section 6.2(a) hereof, that is deceptive or misleading or that disparages the Co-Promotion
Collaboration Products or the good name, goodwill and reputation of Onyx. Bayer shall use
Commercially Reasonable Efforts to ensure that its services delivered pursuant to this Agreement
will be provided in a professional, ethical and competent manner.
(f)
In the event the Executive Committee decides to promote the Co-Promotion Collaboration
Product to healthcare professionals in the
[ * ]
field,
[ * ]
shall be included in such promotion
activities. The Executive Committee shall determine the appropriate weighting of such sales
effort, taking into consideration the
[ * ]
. Under such circumstances, other promotion activities
undertaken by Bayer and Onyx related to the Co-Promotion Collaboration Product shall then be
adjusted in order to maintain equality in overall sales efforts by each party.
Section 5.2 CRM System and Sales/Prescriber Data.
As set forth in Section 4.2 above, Bayer
shall
[ * ]
exercise Commercially Reasonable Efforts to
[ * ]
to the CRM System with
[ * ]
to
include Onyx as a licensee and subscriber. Such
[ * ]
shall provide that Bayer and Onyx shall be
[
* ]
to the CRM System and to
[ * ]
related to the Co-Promotion Collaboration Product.
Notwithstanding the foregoing, each partys sales representatives shall be responsible for
providing information on an ongoing basis as requested in the CRM System, including without
limitation
[ * ]
information. Information contained in the CRM System pertaining to Bayer shall be
treated as Confidential Information of Bayer and shall not be used or disclosed to
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Third Parties without Bayers prior written approval or direction, unless otherwise required
by Applicable Laws.
Section 5.3 Bayer Sales Force.
(a)
The parties agree, as specified in Section 4.3 above, each Sales FTE shall initially be
assigned a Sales FTE value of
[ * ]
, which rate is based upon Bayers and Onyxs
[ * ]
. The Sales
FTE rate shall be adjusted annually by the Executive Committee in connection with the approval of
the Budget and shall be the
[ * ]
;
provided
,
however
, that in the event the
Executive Committee is unable to adjust the Sales FTE rate by
[ * ]
of the calendar year preceding
the adjustment year due to any deadlock of the Executive Committee, the Sales FTE rate shall be
adjusted to reflect any
[ * ]
. Bayer shall be solely responsible for all of its own Sales Force
Expenses in promoting the Co-Promotion Collaboration Product, unless otherwise provided under
Section 8.4(a) below. Each Sales FTE of Bayer shall be an employee of Bayer and shall remain under
the direct and exclusive authority, supervision and control of Bayer at all times during the Term.
Bayer shall supervise and maintain such competent and qualified sales representatives as may be
required to promote the Co-Promotion Collaboration Product as provided herein and in the
Co-Promotion Program and shall cause the sales force to meet the Performance Qualifications. In
the event that Bayer commences sales of another product using the same sales force as used to
promote the Co-Promotion Collaboration Product, Bayer shall still be obligated to satisfy its
obligations hereunder, including without limitation to provide its minimum number of Equivalent
Sales FTEs required to promote the Co-Promotion Collaboration Product. Bayer shall not
[ * ]
without the prior approval of the Executive Committee. For the period commencing on the
Co-Promotion Effective Date and for
[ * ]
months thereafter, Bayer shall
[ * ]
;
provided
,
however
, that (subject to Section 5.1(a)) Sales FTEs may be added or removed at the
discretion of Bayer.
(b)
Subject to Section 6.2(a), all written, electronic and visual communications provided to
any of Bayers sales representatives regarding strategy, positioning or selling messages for the
Co-Promotion Collaboration Product will be subject to review and approval by the
[ * ]
to ensure
uniform messaging and execution. The costs and expenses of providing such written, electronic and
visual communications shall be considered Allowable Co-Promotion Expenses.
Section 5.4 Manufacture, Shipment, Booking, Invoicing, etc. of the Co-Promotion Collaboration
Product.
(a)
Bayer (and/or its Affiliates) shall have the sole responsibility for the manufacture,
shipment, distribution, warehousing, sale, invoicing, order entry and acknowledgement with regard
to sales of the Co-Promotion Collaboration Product, for the collection of receivables resulting
from sales of the Co-Promotion Collaboration Product in the United States, and for recording of
Collaboration Revenue in Bayers electronic sales activity tracking system. If for any reason Onyx
receives orders for Co-Promotion Collaboration Products, Onyx shall immediately and accurately
forward such orders to Bayer (or, if so directed by Bayer, to Bayers wholesalers) as soon as
practicable.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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(b)
Bayer shall manufacture and supply all Co-Promotion Collaboration Product for the United
States pursuant to Article 19 of the Collaboration Agreement. Bayer shall manufacture such
Co-Promotion Collaboration Product in accordance with Good Manufacturing Practices and any other
applicable regulatory or legal requirements. All Co-Promotion Collaboration Products supplied by
Bayer shall conform to all then-applicable specifications set forth in the United States Regulatory
Approval for the Co-Promotion Collaboration Products. Bayer shall annually review the fixed and
variable unit costs of such Co-Promotion Collaboration Product and shall advise the Executive
Committee of
[ * ]
.
(c)
Onyx may make recommendations to the Executive Committee from time to time regarding
pricing strategies for the Co-Promotion Collaboration Product in the United States during the Term.
The Executive Committee may make recommendations to Bayer from time to time regarding pricing
strategies for the Co-Promotion Collaboration Product during the Term. Notwithstanding
recommendations received from the Executive Committee, Bayer shall have the sole, exclusive and
final authority to determine the price of the Co-Promotion Collaboration Product during the Term,
including price increases and decreases and the timing thereof. Notwithstanding the foregoing,
nothing contained in this Section 5.4(c) shall be construed to modify or amend Bayers general
obligations as set forth in the last sentence of Section 13.12 of the Collaboration Agreement.
(d)
In addition to the foregoing, Bayer will use Commercially Reasonable Efforts during the
Term to provide the following services in relation to the parties marketing and sale of the
Co-Promotion Collaboration Product: (i)
[ * ]
; (ii)
[ * ]
; (iii)
[ * ]
; (iv)
[ * ]
; (v)
[ * ]
;
(vi)
[ * ]
; (vii)
[ * ]
; (viii)
[ * ]
; (ix)
[ * ]
; (x)
[ * ]
; and (xi)
[ * ]
(collectively, the
Bayer Marketing Services
). As further set forth in Section 8.9, the Budget for each Contract
Year shall provide for the
[ * ]
for each of the components of the Bayer Marketing Services (as
described in subclauses (i) through (xi) above), and Bayer agrees to charge, as compensation for
the Bayer Marketing Services,
[ * ]
of the annual amount specified by the Budget for such Bayer
Marketing Services during the Contract Year in question. Any disputes regarding the allocation
methodology or the amount to be budgeted for the Bayer Marketing Services in connection with the
marketing and sale of the Co-Promotion Collaboration Product shall be resolved by the Executive
Committee (and, in the absence of such resolution, in the manner specified by Article XV hereof);
provided, however, that Bayer reserves the right to
[ * ]
of the Bayer Marketing Services in the
[
* ]
as to the
[ * ]
. Onyx covenants and agrees that (except as expressly provided in this Section
5.4(d)), unless otherwise agreed by the parties, Onyx will
[ * ]
.
ARTICLE VI
EMPLOYEES; TRAINING AND MARKETING MATERIALS
Section 6.1 Compensation of Sales Representatives.
The Executive Committee (or any duly
constituted sub-committee thereof) shall adopt an annual plan providing for incentive compensation
awards and performance metrics attributable to the sale of the Co-Promotion Collaboration Product.
Such annual incentive compensation plans shall be applicable to
[ * ]
. Notwithstanding the
foregoing, each party shall
[ * ]
to its own sales representatives, and each
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BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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party may,
[ * ]
, provide additional
[ * ]
offered to sales representatives in the
pharmaceutical industry. Either party may also provide
[ * ]
to its sales representatives.
(a)
Each of the parties agrees to make its sales representatives and MSLs available for
Co-Promotion Collaboration Product training with respect to the marketing and sale of the
Co-Promotion Collaboration Product. Bayer and Onyx shall
[ * ]
on the content and curriculum of
Co-Promotion Collaboration Product training programs for each of Onyxs and Bayers sales forces
and MSLs subject
[ * ]
to
[ * ]
of all training program content and materials and separately to
[ *
]
prior to implementation of such training programs. Bayer and Onyx shall
[ * ]
in Co-Promotion
Collaboration Product training materials developed hereunder;
provided
,
however
,
that such training materials may not be used by either party in any manner inconsistent with the
express terms and conditions of this Agreement without the consent of the other party.
(b)
Each of the parties shall conduct such Co-Promotion Collaboration Product training of its
own sales force and of its own MSLs. If the parties decide to conduct joint training of their
sales forces and MSLs, then such Co-Promotion Collaboration Product training shall be carried out
at such time(s) and location(s) as agreed upon by the parties from time to time. As additional
members are added to the parties respective sales forces and MSL teams responsible for marketing
and supporting the Co-Promotion Collaboration Product, training will be given to groups of the
newly added members. Unless the parties otherwise agree, the costs of
[ * ]
for the parties
personnel for all such Co-Promotion Collaboration Product-specific training shall be a Sales Force
Expense and/or MSL Expense, with each party solely responsible for its own expenses related
thereto.
(c)
Each of Bayer and Onyx agrees to provide regular healthcare compliance training to its
employees involved in the sales, marketing, promotion of, or price reporting for, the Co-Promotion
Collaboration Product as appropriate and necessary that meets the training requirements and
standards established by the JMC, and that will, at a minimum, cover the content and frequency of
the training required by the
[ * ]
.
Section 6.2 Marketing Materials.
(a)
The JMC shall direct and approve the development of all sales, promotion and advertising
materials, regardless of form (
Marketing Materials
), relating to the Co-Promotion Collaboration
Product;
provided
,
however
, that the form and content of said marketing materials
shall be subject to
[ * ]
. The parties shall jointly own all right, title and interest in all
Marketing Materials. Notwithstanding the foregoing, nothing contained in this Section 6.2(a) shall
be construed to override, amend, modify or restate Bayers right to determine the global marketing
strategy and message for the Co-Promotion Collaboration Product under Sections 13.1 and 13.2 of the
Collaboration Agreement.
(b)
Whenever Marketing Materials are presented and described to the medical community
(including, for example, the physician, pharmacy, governmental, reimbursement and hospital
sectors), the parties will be presented and described as joining in the promotion of the
Co-Promotion Collaboration Product in the United States. All Marketing Materials will state this
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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arrangement and will display the names and logos of the parties with
[ * ]
, as and to the
extent permitted by Applicable Laws.
(c)
Each party will exercise Commercially Reasonable Efforts to ensure that its Sales FTEs and
MSLs: (i) do not modify, alter, amend, adjust or mask any portion of the Marketing Materials in any
way, and (ii) do not use or distribute any marketing materials other than the Marketing Materials
approved by the parties for use in connection with the marketing and sale of the Co-Promotion
Collaboration Product hereunder. Each party will promptly notify the other party and take all
necessary corrective action in the event a party learns that any such modification, alteration,
amendment, adjustment or masking, or any such use or distribution of unapproved marketing materials
has taken place. In addition, each party reserves the right to
[ * ]
who cause such party to
[ * ]
of this Agreement.
(d)
Each party will exercise Commercially Reasonable Efforts to follow all plans and
directives of the Executive Committee (or any duly constituted Sub-Committee thereof) concerning
marketing, and any and all related activities, including without limitation any such plans and
directives related to the Call Plan (if applicable) and the appropriate Target Healthcare
Professionals in connection with the marketing and sale of the Co-Promotion Collaboration Product.
Section 6.3 [ * ] of Employees.
The parties hereby agree that,
[ * ]
neither will, directly
or indirectly,
[ * ]
;
provided
,
however
, that the
[ * ]
shall not be deemed to
violate the foregoing provision.
Section 6.4 Promotion of [ * ].
The parties respective sales forces responsible for
marketing the Co-Promotion Collaboration Product shall not market a
[ * ]
without the prior written
consent of the other party.
ARTICLE VII
REGULATORY MATTERS
Section 7.1 Licenses.
Each party hereto shall, at its sole cost and expense, maintain in full
force and effect all necessary licenses, permits and other authorizations required by contract
and/or by Applicable Laws to carry out its duties and obligations under this Agreement.
Section 7.2 Labeling and Marketing Materials.
No Co-Promotion Collaboration Product labeling,
package inserts, monographs, packaging for the Co-Promotion Collaboration Product or Marketing
Materials may be used or distributed by the parties unless such labeling, package inserts,
monographs, packaging for the Co-Promotion Collaboration Products or Marketing Materials have been
approved in advance in accordance with Section 6.2(a) hereof.
Section 7.3 Efficacy and Safety Information.
Bayer shall furnish Onyx with efficacy and
safety information reasonably requested by Onyx to assist Onyx in promoting the Co-Promotion
Collaboration Product to Target Healthcare Professionals in the United States, including without
limitation relevant clinical and safety data included in the NDA for the Co-
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
21
Promotion Collaboration Product and additional information, if any, related to the efficacy
and safety profile of the Co-Promotion Collaboration Product.
Section 7.4 Recalls.
(a)
Each party shall promptly notify the other party in writing if it determines that any
event, incident or circumstance has occurred which may result in the need for a recall or market
withdrawal, as such terms are defined in 21 C.F.R. Part 7.3, of the Co-Promotion Collaboration
Product in the United States (
Permanent Recall
) or a recall or market withdrawal, as such
terms are defined in 21 C.F.R. Part 7.3, of the Co-Promotion Collaboration Product in the United
States that is limited in territory or as to any lot(s) or batches of the Co-Promotion
Collaboration Product (
Limited Recall
and collectively with Permanent Recall, a
Recall
).
(b)
If either party gives a notice described in Section 7.4(a), and
[ * ]
, the Executive
Committee will immediately meet and confer regarding the advisability of a Recall (which conference
may be in the form of a telephone conference or video conference). If
[ * ]
, the Executive
Committee may provide its recommendation to
[ * ]
on the course of action preferred by that
Committee. Notwithstanding the foregoing, nothing contained herein shall be construed to imply any
right of
[ * ]
, to consent to any decision by
[ * ]
to discontinue, temporarily or permanently or
on a limited basis, the distribution and sale of the Co-Promotion Collaboration Product.
[ * ]
will have sole responsibility for and will make all decisions with respect to any recall, market
withdrawal, or any other corrective action of similar nature related to the Co-Promotion
Collaboration Product.
[ * ]
shall be solely responsible for interactions with the FDA or other
Governmental and Regulatory Authorities with regard to any such corrective action, except that
[ *
]
may take such actions as may be required of it by Applicable Laws. In all matters subject to this
Section 7.4(b): (i)
[ * ]
shall notify and consult with
[ * ]
as promptly as reasonably practicable
taking into account all relevant circumstances, and (ii) if
[ * ]
decides that a Recall is
necessary, it will notify the
[ * ]
by telephone or in writing in advance of initiating or publicly
announcing such Recall.
(c)
If
[ * ]
makes a determination that a Limited Recall of the Co-Promotion Collaboration
Product is necessary but
[ * ]
disagrees with such determination,
[ * ]
may initiate a joint
discussion by the parties of such issue with
[ * ]
within
[ * ]
days of such determination, and
such
[ * ]
shall make its decision within a reasonable period of time not to exceed
[ * ]
days of
the
[ * ]
receipt of notice of the determination. If such
[ * ]
advises the parties that
[ * ]
believes there should be a Limited Recall, the parties shall voluntarily implement a Limited Recall
of the Co-Promotion Collaboration Product.
(d)
If
[ * ]
makes a determination that a Permanent Recall of the Co-Promotion Collaboration
Product is necessary but
[ * ]
disagrees with such determination,
[ * ]
shall have the right to
[ *
]
with respect to the Co-Promotion Collaboration Product and to
[ * ]
with respect to the
Co-Promotion Collaboration Product. In such case,
[ * ]
in the
[ * ]
.
[ * ]
shall thereafter have
exclusive authority and control over the commercialization of Co-Promotion Collaboration Product in
the
[ * ]
.
[ * ]
shall thereafter receive
[ * ]
realized from the
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
22
sale of Co-Promotion Collaboration Product
[ * ]
. Such
[ * ]
arrangement shall continue until
[ * ]
, and the provisions of Sections 16.7 through 16.13 of the Collaboration Agreement shall apply
to such payments.
(e)
Any documented, direct, out-of-pocket costs paid or accrued by a party with respect to
participating in such Recall, market withdrawal, or other corrective action will be an
[ * ]
;
provided
,
however
that if such recall, market withdrawal or other corrective action
was caused by (i) a partys negligence, malfeasance, or willful misconduct occurring while the
Co-Promotion Collaboration Product was under such partys control, or (ii) a Material Breach, such
party will reimburse the other for such costs and they will not be deemed
[ * ]
.
Section 7.5 Pharmacovigilance Agreement.
Promptly after the Co-Promotion Effective Date, the
parties shall exercise Commercially Reasonable Efforts to execute a
[ * ]
pharmacovigilance
agreement (the
Pharmacovigilance Agreement
). The Pharmacovigilance Agreement shall provide for,
but not be limited to, the exchange of (i)
[ * ]
; (ii)
[ * ]
; (iii)
[ * ]
; (iv)
[ * ]
; (v)
[ * ]
;
(vi)
[ * ]
; and (vii)
[ * ]
.
Section 7.6 Transmittal of Advertisements and Promotional Labeling for Drugs and Biologics for
Human Use.
Bayers LMR will be solely responsible for submitting, recording and storing all FDA
2253 submissions.
ARTICLE VIII
ECONOMICS OF CO-PROMOTION; PROFIT SHARING
Section 8.1 Overview.
Pursuant to this Agreement, Onyx and Bayer shall share equally in the
Co-Promotion Marketing Profit or Loss, as the case may be, generated by the promotion of
Co-Promotion Collaboration Products in the United States. As described more fully below, the
Co-Promotion Marketing Profit or Loss shall be determined pursuant to a Joint Profit and Loss
Statement, as described in Section 8.2, that will detail the Allowable Co-Promotion Expenses to be
deducted from Co-Promotion Net Sales in calculating Co-Promotion Marketing Profit or Loss.
Following such calculation, Co-Promotion Marketing Profit or Loss shall be allocated fifty percent
(50%) to each party. As further described in (and subject to) Section 8.8 below, following the
allocation of Co-Promotion Marketing Profit between Bayer and Onyx and the subsequent deduction of
one-half of the aggregate Sales Force Expenses, MSL Expenses and Co-Development Costs incurred by
Onyx and Bayer, Bayer shall continue to be entitled to reduce payments of Co-Promotion Marketing
Profit otherwise due Onyx hereunder by the amount of any special distribution as repayment of
Development Payments made by Bayer to Onyx under the Collaboration Agreement.
Section 8.2 Joint Profit and Loss Statement.
The reporting and determination (subject to the
provisions of this Article VIII) of Co-Promotion Marketing Profit or Loss under this Agreement
shall be governed by a joint profit and loss statement (the
Joint Profit and Loss Statement
) to
be prepared by
[ * ]
. Such Joint Profit and Loss Statement shall be prepared and delivered
consistent with the provisions of Sections 8.3, 8.4 and 8.5 hereof, and all other relevant terms
and conditions of this Agreement, and shall be approved by the Executive Committee.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
23
Section 8.3 Reporting Sales.
Bayer shall report to Onyx and to the Executive Committee sales
of Co-Promotion Collaboration Products in the following manner:
(a) [ * ]
, Bayer shall report Gross Sales of Co-Promotion Collaboration Product made in the
United States for
[ * ]
;
(b)
Within
[ * ]
days of the end of each of the
[ * ]
of each Contract Year, Bayer shall
report Co-Promotion Net Sales accrued in the United States for Co-Promotion Collaboration Product
for the preceding
[ * ]
; and
(c)
Within
[ * ]
days of the end of the
[ * ]
of each Contract Year, Bayer shall report
Co-Promotion Net Sales accrued in the United States for Co-Promotion Collaboration Product for the
[ * ]
.
Section 8.4 Allowable Expenses.
(a)
Commencing for the Contract Year that begins on the Co-Promotion Effective Date, and
within
[ * ]
days of the end of each calendar month thereafter and within
[ * ]
days of the end of
each Contract Year thereafter, each party shall provide the other party with a
[ * ]
report of that
partys Allowable Co-Promotion Expenses incurred (each, an
Allowable Expense Report
) setting
forth the following information relating to the
[ * ]
and comparisons of such information to the
then-current Co-Promotion Program and Budget: the partys Allowable Co-Promotion Expenses showing
each specific type of cost included in the definition of Allowable Co-Promotion Expenses separately
and listing the project relating to each such cost, if applicable. Each party shall be solely
responsible for its own Sales Force Expenses and MSL Expenses in promoting the Co-Promotion
Collaboration Product, unless otherwise approved by the Executive Committee and each of the parties
agree that the parties have been solely responsible for their own Sales Force Expenses and MSL
Expenses since
[ * ]
. Notwithstanding the foregoing, if the parties decide to reallocate
responsibility for providing Sales FTEs and/or MSLs so that one party provides less than fifty
percent (50%) of the overall number of Sales FTEs and/or MSLs required, then the party providing
fewer than half of the overall Sales FTEs and/or MSLs shall
[ * ]
(
provided
,
however
, that nothing contained in this Section 8.4(a) shall be construed to entitle either
party to
[ * ]
of Sales FTEs or MSLs at a
[ * ]
that established from time to time by the Executive
Committee). The
[ * ]
made pursuant to the foregoing sentence with respect to Sales FTEs shall
[ *
]
: (i)
[ * ]
and (ii)
[ * ]
. The
[ * ]
made pursuant to the foregoing sentence with respect to
MSLs shall
[ * ]
: (i)
[ * ]
and (ii)
[ * ]
.
(b)
Each such Allowable Expense Report shall be delivered in a mutually-agreeable electronic
format to the extent possible or in hard copy form. Each Allowable Expense Report shall be treated
as Confidential Information of the reporting party and, subject to Applicable Laws, shall not be
disclosed to Third Parties without such partys prior written approval or direction.
Notwithstanding the foregoing, nothing contained in this Agreement shall prevent either party from
using the data in any Allowable Expense Reports in connection with its compliance with its price
reporting obligations under Applicable Laws (provided, however, that each party shall use
Commercially Reasonable Efforts to protect Confidential Information of the other party).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
24
(c)
The expenses included in the Joint Profit and Loss Statement and submitted by each party
shall
[ * ]
or
[ * ]
, and all such expenses shall be incurred pursuant to and consistent with the
Co-Promotion Program and Budget or as otherwise determined by the Executive Committee.
Notwithstanding the foregoing, nothing contained herein shall be construed to imply that either
party shall
[ * ]
.
Section 8.5 Determination of Marketing Profit and Loss.
Within
[ * ]
days following the end
of each of the
[ * ]
of each Contract Year and
[ * ]
days following the end of the
[ * ]
of each
Contract Year, Bayer shall determine and allocate Co-Promotion Marketing Profit or Loss, according
to the Joint Profit and Loss Statement to be approved by the Executive Committee under Section 8.2,
by subtracting from Collaboration Revenue the Allowable Co-Promotion Expenses.
The result of such calculation shall be deemed
Co-Promotion Marketing Profit or Loss
.
In the
event of any dispute regarding these items, the matter shall be reviewed by the JFC for up to
[ * ]
days in an attempt to resolve the matter. In the event the JFC cannot resolve the issue within
such time period, either party shall be entitled to submit the issue for resolution pursuant to
Article 25 of the Collaboration Agreement.
Section 8.6 Allocation of Marketing Profit and Loss and Related Payments.
(a)
The Co-Promotion Marketing Profit or Loss, as the case may be, shall be divided equally
between Bayer and Onyx.
(b)
If there is a Co-Promotion Marketing Profit for such quarter, then Bayer shall make
payment to Onyx within
[ * ]
days of the end of each quarter and within
[ * ]
days of the end of
each Contract Year so that each party will receive an equal share of the Co-Promotion Marketing
Profit for such quarter, after giving effect to the Co-Promotion Net Sales invoiced by Bayer, any
US Sublicense Revenue, and the Allowable Co-Promotion Expenses borne by each party. By way of
example, if in a particular calendar quarter there was a Co-Promotion Marketing Profit of
[ * ]
,
and during such quarter Onyx incurred Allowable Co-Promotion Expense of
[ * ]
, the balancing
payment pursuant to this Section 8.6(b) would be a payment by
[ * ]
which represents reimbursement
of Onyxs Allowable Co-Promotion Expense plus Onyxs fifty percent share (50%) of the Co-Promotion
Marketing Profit.
(c)
If there is a Co-Promotion Marketing Loss for such quarter, then one party shall make a
payment to the other party within
[ * ]
days of the end of each quarter and within
[ * ]
days of
the end of each Contract Year so that each party will bear an equal share of the Co-Promotion
Marketing Loss for such quarter after giving effect to the Co-Promotion Net Sales invoiced by
Bayer, any US Sublicense Revenues, and the Allowable Co-Promotion Expenses borne by each party. By
way of example, if in a particular calendar quarter there was a Co-Promotion Marketing Loss of
[ *
]
, and during such quarter Onyx incurred Allowable Co-Promotion Expenses of
[ * ]
, the balancing
payment pursuant to this Section 8.6(c) would be a payment by
[ * ]
, which represents Onyxs fifty
percent (50%) share of the Co-Promotion Marketing Loss, less reimbursement of Onyxs Allowable
Co-Promotion Expenses.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
25
Section 8.7 [ * ].
On a periodic basis as
[ * ]
available to Bayer, Bayer shall
[ * ]
included within Co-Promotion Net Sales, US Sublicense Revenues, and/or Allowable Co-Promotion
Expenses to reflect the
[ * ]
then available.
Section 8.8 Reimbursement of Development Payments.
Pursuant to Section 16.3 of the
Collaboration Agreement, within
[ * ]
days after the end of the relevant calendar quarter, Bayer
shall be entitled to receive a special distribution from Onyx as reimbursement for Development
Payments made by Bayer to Onyx under the Collaboration Agreement. The amount of such special
distribution, including the mechanics of its calculation and payment, shall be governed by Section
16.3 of the Collaboration Agreement;
provided
,
however
, that a) Marketing Profit
(as calculated pursuant to the terms of the Collaboration Agreement) shall be calculated instead on
the basis of Co-Promotion Marketing Profit or Loss of Co-Promotion Collaboration Product in the
United States (as determined under this Agreement)
[ * ]
, shall still apply. Bayer shall be
entitled to offset any payment due Onyx under Section 8.6 of this Agreement against any Development
Payment due from Onyx under Section 16.3 of the Collaboration Agreement.
Section 8.9 Budget.
The Budget for each Contract Year (including the first Contract Year)
shall be prepared by the JMC and a first draft thereof shall be submitted to the Executive
Committee (or any duly constituted sub-committee thereof charged with such authority by the
Executive Committee) by
[ * ]
of the preceding Contract Year. In the event the Executive
Committee, following review and deliberation, cannot agree upon the relevant Budget prior to
[ * ]
in respect of the next Contract Year, the Executive Committee shall
[ * ]
for which agreement is
achieved and shall
[ * ]
for which agreement was not achieved, except that the parties shall
[ * ]
an amount equal to the
[ * ]
.
Section 8.10 Royalties.
The parties agree that nothing contained in this Agreement shall be
construed to affect the parties respective royalty rights and obligations set forth in Section
16.2 of the Collaboration Agreement.
Section 8.11 Federal and State Tax Characterization.
The parties agree that nothing contained
in this Agreement shall be construed to affect the parties respective rights and obligations set
forth in Article 23 of the Collaboration Agreement. The tax characterization, procedures,
calculations, documentation, filings and other requirements provided for in Article 23 of the
Collaboration Agreement shall be applied and carried out, mutatis mutandis, with respect to this
Agreement.
ARTICLE IX
RECORDKEEPING AND AUDITS
Section 9.1 Audits.
The parties recognize that audits and reviews of records are in the best
interests of both parties. The parties shall have the audit rights in respect of any and all
calculations and accounting function provided for in this Agreement under and in conformity with
the provisions of Section 17.2 of the Collaboration Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
26
Section 9.2 Maintenance of Books and Records.
Each party shall maintain complete and accurate
books and records in sufficient detail, in accordance with GAAP and all Applicable Laws, to enable
verification of the performance of such partys obligations under this Agreement. Such records
shall be maintained for a period of
[ * ]
years after the creation or generation of such records,
or longer if required by Applicable Laws.
Section 9.3 Compliance Audits.
In addition to the access and audit rights of Bayer and Onyx
provided for in Section 17.2 of the Collaboration Agreement, upon reasonable prior notice from the
other party and no more than
[ * ]
during any Contract Year during the Term, each party shall
afford to the other party reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to inspect and audit the relevant books, records and other
information of such party in order to monitor such partys compliance with such partys call
activity and other relevant obligations under the Co-Promotion Program and the terms of this
Agreement, to the extent such party is responsible for the relevant function as directed by the
Executive Committee or the terms of this Agreement, and for the purposes of determining compliance
with Applicable Laws and the terms of this Agreement. Any inspection conducted by either party
pursuant to this Section 9.3 shall be at the sole cost and expense of such party.
ARTICLE X
TERM AND TERMINATION
Section 10.1 Term of Agreement.
This Agreement shall commence as of the Co-Promotion
Effective Date and, unless sooner terminated as provided herein or in the Collaboration Agreement,
shall continue in effect until the first to occur of the following: (i) the date that Co-Promotion
Collaboration Products are no longer sold by either party in the United States due to a permanent
product withdrawal or recall or a voluntary decision by the parties to abandon the Co-Promotion of
the Co-Promotion Collaboration Products in the United States, or (ii) the effective date of any
termination of the Collaboration Agreement under Article 24 thereof (the
Term
).
Section 10.2 Breaches (General).
(a)
If either party (the
Breaching Party
) shall have committed a breach of this Agreement,
the other party (the
Notifying Party
) shall provide written notice of such breach to the
Breaching Party. For all allegations of breach other than an allegation of Material Breach (as
defined below in Section 10.3), the parties hereby agree that they shall seek to resolve the matter
during the notice and cure period provided in Section 10.2(b) and may thereafter invoke other
remedies available to it in law or equity as provided for in Section 12.4 below and in Article 25
of the Collaboration Agreement.
(b)
Upon receipt of a notice of breach other than a Material Breach, the alleged Breaching
Party shall have
[ * ]
days within which to cure such breach following receipt of such notice;
provided, however, if the breach is capable of being cured but cannot be reasonably cured in such
[
* ]
-day period, then the alleged Breaching Party shall have such additional time as necessary to
cure the breach if the alleged Breaching Party (i) during such
[ *
]
-day
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
27
period has submitted a plan that, if successfully carried out, would be effective in
curing such breach, and has commenced its execution of such plan, and (ii) diligently pursues such
plan thereafter. If the matter is not resolved to the satisfaction of the Notifying Party during
the foregoing cure period, then the Notifying Party may invoke the provisions of Article 25 of the
Collaboration Agreement with respect to claims for damages, attorneys fees and court costs and
requests for equitable relief, but the Notifying Party shall have no right to terminate this
Agreement for such breach.
(c)
The Notifying Party may, at its discretion, resort to the dispute resolution mechanisms of
Article 25 of the Collaboration Agreement, and may invoke all available remedies in law or equity
other than termination of this Agreement, without invoking the mechanisms of Section 10.3.
Section 10.3 Allegations of Material Breach.
(a)
The parties intend that this Agreement shall survive breaches not constituting Material
Breaches, and shall not be terminable for breaches unless the breach in question: (i)
[ * ]
; or
(ii)
[ * ]
(each, a
Material Breach
). In the event there is a dispute as to whether a Material
Breach has occurred, this Agreement shall survive pending a determination pursuant to Article 25 of
the Collaboration Agreement that a Material Breach has occurred.
(b)
If a party believes that a Material Breach has occurred (or will occur in the event such
breach is determined to exist), it shall give written notice to the Breaching Party of the nature
of the breach and the reason the Notifying Party believes it is a Material Breach. The alleged
Breaching Party shall then have a period of
[ * ]
days following receipt of such notice in which to
cure the breach; provided, however, if the Material Breach is capable of being cured but cannot be
reasonably cured in such
[ * ]
-day period, then the alleged Breaching Party shall have such
additional time as necessary to cure the breach if the alleged Breaching Party (i) during such
[ *
]
-period has submitted a plan that, if successfully carried out, would be effective in curing such
Material Breach, and has commenced its execution of such plan, and (ii) diligently pursues such
plan thereafter. Any such notice of alleged Material Breach by the Notifying Party shall include a
reasonably detailed description of all relevant facts and circumstances demonstrating, supporting
and/or relating to each such alleged Material Breach by the Breaching Party.
(c)
If the alleged Material Breach is not cured within the cure period specified in Section
10.3(b), the Notifying Party may give notice of termination (
Notice of Termination For Material
Breach
). If the Breaching Party agrees that a Material Breach has occurred and was not cured
within the cure period, then the Parties shall proceed to terminate this Agreement. If the
Breaching Party does not agree that a Material Breach has occurred and was not cured within the
cure period, then this Agreement shall survive, and the parties shall continue to perform their
obligations hereunder, until the issue of whether there has been an uncured Material Breach by the
Breaching Party is resolved in accordance with Article 25 of the Collaboration Agreement. In lieu
of bringing a separate action, either party may elect to petition the court under Article 25 of the
Collaboration Agreement for an advance declaration that a
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
28
breach, if found, constitutes a Material Breach hereunder, and the parties agree to waive any
procedural objection to such declaratory petition and action by the relevant court.
(d)
If the Notifying Party gives Notice of Termination For Material Breach, and it is later
determined by a court pursuant to Article 25 of the Collaboration Agreement that in fact there has
not been an uncured Material Breach by the Breaching Party, then this Agreement shall continue in
full force and effect.
Section 10.4 Termination of Collaboration Agreement.
This Agreement shall automatically
terminate, without notice to or from any party, upon any termination of the Collaboration Agreement
under any of the conditions set forth therein;
provided
however
, if there is a
dispute as to whether a party has the right to terminate the Collaboration Agreement, such dispute
shall be resolved in the same manner as any other claim of material breach thereof.
Notwithstanding anything to the contrary contained herein, the parties expressly agree that Section
24.4 of the Collaboration Agreement will continue in full force and effect.
Section 10.5 Effects of Termination.
(a)
Neither the termination nor expiration of this Agreement shall release or operate to
discharge either party from any liability or obligation that may have accrued prior to such
termination or expiration. Any termination of this Agreement as provided herein shall not be an
exclusive remedy but shall be in addition to any remedies whatsoever that may be available to the
terminating party.
(b)
Notwithstanding the giving of any notice of termination pursuant to this Article X, each
party shall continue to fulfill its obligations under this Agreement at all times until the
effective date of any such termination.
(c)
In the event of any termination of this Agreement in conformity with its terms, the
termination shall have following effect:
Section 10.6 Survival.
The representations, warranties, covenants and agreements of the
parties in Article I, Article IX, Section 10.5, Section 10.6 and Articles XI through XVI hereof,
and all provisions relating to Confidential Information shall survive any expiration or termination
of this Agreement. In addition, any provision of this Agreement that, either from the express
language or the context thereof, is intended to survive any termination or expiration of this
Agreement shall survive any such expiration or termination.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
29
ARTICLE XI
CONFIDENTIALITY
All Confidential Information provided by one party to the other under and pursuant to this
Agreement shall be considered, and shall be protected under, the provisions of Article 22 of the
Collaboration Agreement.
ARTICLE XII
INDEMNIFICATION AND INSURANCE; LIMITATION OF LIABILITY
Section 12.1 Indemnification by Onyx.
(a)
In each case, other than with respect to Product Liability Claims (the treatment of which
is governed exclusively by Section 12.3 of this Agreement) and Claims of infringement (the
treatment of which is governed exclusively by Article 21 of the Collaboration Agreement), Onyx
shall defend, indemnify and hold harmless Bayer and its Affiliates and each of their officers,
directors, shareholders, employees, successors and assigns (each a
Bayer Indemnified Party
) from
and against all Claims of Third Parties, and all associated Indemnifiable Losses, incurred or
suffered by any of them to the extent resulting from or arising out of:
(i)
the breach by Onyx or any of its Affiliates of any of its representations, warranties or
covenants in this Agreement; and
(ii)
the negligent acts or negligent omissions or willful misconduct by Onyx or any of its
Affiliates in the performance of any of their obligations under this Agreement.
Notwithstanding the foregoing, no Bayer Indemnified Party shall be entitled to any
indemnification pursuant to this Section 12.1, to the extent the Indemnifiable Loss for which
indemnification is being sought is caused by the negligent acts or negligent omissions or willful
misconduct or willful violation of Applicable Laws of any Bayer Indemnified Party.
(b)
Bayer shall give Onyx prompt written notice of any Claim for which it seeks to be
indemnified under this Section 12.1, but the omission of such notice shall not relieve Onyx from
its obligations under this Section 12.1, except to the extent Onyx can establish actual prejudice
and direct damages as a result thereof. Onyx shall have no obligation under this Section 12.1 with
respect to any Claim unless:
(i)
Onyx is granted full authority and control over the defense, including, without
limitation, settlement, of such Claim, and
(ii)
Bayer cooperates fully with Onyx and its agents in defense of such Claim.
(c)
Bayer shall have the right to participate in the defense of any such Claim utilizing
attorneys of its choice, at its own expense. Subject to the remainder of this subsection,
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
30
Onyx shall have full authority and control to handle the Claim for which Bayer seeks
indemnification under this Section 12.1. Any settlement of the Claim that would admit liability on
the part of any Bayer Indemnified Party, or that would involve any relief (including the payment of
money damages), shall be subject to Bayers prior written approval, such approval not to be
unreasonably withheld or delayed.
(d)
In the event of the institution of any Claim by a Third Party against Bayer or any of its
Affiliates arising out of the alleged violation by Onyx of any
[ * ]
, Onyx shall defend, indemnify
and hold harmless each of the Bayer Indemnified Parties from and against such Claim, and all
associated Indemnifiable Losses to the extent arising out of such alleged violation by Onyx.
Section 12.2 Indemnification by Bayer.
(a)
In each case, other than with respect to Product Liability Claims (the treatment of which
is governed exclusively by Section 12.3 of this Agreement) and Claims of infringement (the
treatment of which is governed exclusively by Article 21 of the Collaboration Agreement), Bayer
shall defend, indemnify and hold harmless Onyx and its Affiliates and each of their officers,
directors, shareholders, employees, successors and assigns (each an
Onyx Indemnified Party
) from
and against all Claims of Third Parties, and all associated Indemnifiable Losses, incurred or
suffered by any of them to the extent resulting from or arising out of:
(i)
the breach by Bayer or any of its Affiliates of any of its representations, warranties or
covenants in this Agreement;
(ii)
the negligent acts or negligent omissions or willful misconduct by Bayer or any of its
Affiliates in the performance of any of their obligations under this Agreement; and
(iii)
any liability, costs, or expense to the extent arising out of or related to the
calculation by Bayer of the sales price for the Co-Promotion Collaboration Products.
Notwithstanding the foregoing, no Onyx Indemnified Party shall be entitled to any
indemnification pursuant to this Section 12.2 to the extent the Indemnifiable Loss for which
indemnification is being sought is caused by the negligent acts or negligent omissions or willful
misconduct or willful violation of Applicable Law of any Onyx Indemnified Party.
(b)
Onyx shall give Bayer prompt written notice of any Claim for which it seeks to be
indemnified under this Section 12.2, but the omission of such notice shall not relieve Bayer from
its obligations under this Section 12.2, except to the extent Bayer can establish actual prejudice
and direct damages as a result thereof. Bayer shall have no obligation under this Section 12.2
with respect to any Claim unless:
(i)
Bayer is granted full authority and control over the defense, including, without
limitation, settlement, of such Claim, and
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
31
(ii)
Onyx cooperates fully with Bayer and its agents in defense of such Claim.
(c)
Onyx shall have the right to participate in the defense of any such Claim utilizing
attorneys of its choice, at its own expense. Subject to the remainder of this subsection, Bayer
shall have full authority and control to handle the Claim for which Onyx seeks indemnification
under this Section 12.2. Any settlement of the Claim that would admit liability on the part of any
Onyx Indemnified Party, or that would involve any relief (including the payment of money damages),
shall be subject to Onyxs prior written approval, such approval not to be unreasonably withheld or
delayed.
(d)
In the event of the institution of any Claim by a Third Party against Onyx or any of its
Affiliates arising out of the alleged violation by Bayer of any
[ * ]
, Bayer shall defend,
indemnify and hold harmless each of the Onyx Indemnified Parties from and against such Claim, and
all associated Indemnifiable Losses to the extent arising out of such alleged violation by Bayer.
Section 12.3 Product Liability Claims.
(a)
Bayer shall be solely responsible for all Indemnifiable Losses arising out of or relating
to all Claims of Third Parties for personal injury, death or other Co-Promotion Collaboration
Product liability, and all associated Indemnifiable Losses, to the extent Onyx can establish that
such personal injury, death or other Co-Promotion Collaboration Product liability and all
associated Indemnifiable Losses were caused by (i) Bayers negligent acts or omissions, or willful
misconduct (including, without limitation, any willful breach of this Agreement), or (ii) the
manufacturing, marketing, promotion or other commercialization of the Co-Promotion Collaboration
Product by Bayer in a manner that is unlawful or inconsistent with the approved Co-Promotion
Collaboration Product labeling for such Co-Promotion Collaboration Product; provided, however, that
in no event shall Bayer be liable hereunder to the extent any such Claim arises out of Bayers
promotion of the Co-Promotion Collaboration Product in accordance with approved Co-Promotion
Collaboration Product labels and such Claim is based on a theory of failure to warn.
(b)
Onyx shall be solely responsible for all Indemnifiable Losses arising out of or relating
to all Claims of Third Parties for personal injury, death or other Co-Promotion Collaboration
Product liability, and all associated Indemnifiable Losses, to the extent Bayer can establish that
such personal injury, death or other Co-Promotion Collaboration Product liability and all
associated Indemnifiable Losses were caused by (i) Onyxs negligent acts or omissions, or willful
misconduct (including, without limitation, any willful breach of this Agreement), or (ii) the
marketing, promotion or other commercialization of the Co-Promotion Collaboration Product by Onyx
in a manner that is unlawful or inconsistent with the approved Co-Promotion Collaboration Product
labeling for such Co-Promotion Collaboration Product; provided, however, that in no event shall
Onyx be liable hereunder to the extent any such Claim arises out of Onyxs promotion of the
Co-Promotion Collaboration Product in accordance with approved
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
32
Co-Promotion Collaboration Product labels and such Claim is based on a theory of failure to
warn.
(c)
In addition to the obligations set forth in Section 12.2, Bayer shall defend, indemnify
and hold harmless each of the Onyx Indemnified Parties from and against all Claims of Third Parties
for personal injury, death or other Co-Promotion Collaboration Product liability, and all
associated Indemnifiable Losses, for which Bayer is responsible under Section 12.3(a).
(d)
In addition to the obligations set forth in Section 12.1, Onyx shall defend, indemnify and
hold harmless each of the Bayer Indemnified Parties from and against all Claims of Third Parties
for personal injury, death or other Co-Promotion Collaboration Product liability, and all
associated Indemnifiable Losses, for which Onyx is responsible under Section 12.3(b).
(e)
Each of Bayer and Onyx shall give the other prompt written notice of any Claims within the
scope of Sections 12.3(c) or 12.3(d) (each a
Product Liability Claim
), but the omission of such
notice shall not relieve any party from its obligations under this Section 12.3, except to the
extent the other party can establish actual prejudice and direct damages as a result thereof. With
respect to each Product Liability Claim, the party who is responsible for indemnifying the other
party against such Product Liability Claim pursuant to Section 12.3(c) or Section 12.3(d), as
applicable, shall assume the lead role in the defense of such Product Liability Claim (the
Controlling Party
). The Controlling Party shall consult with the other party on all material
aspects of the defense, including, without limitation, settlement, of such Product Liability Claim,
and the other party shall have a full opportunity to participate in decision-making with respect to
the strategy of such defense, and both parties shall cooperate fully with each other in connection
therewith. The non-defending party shall also have the right to participate in the defense of any
Product Liability Claim, utilizing attorneys of its choice, at its own expense. In furtherance of
the parties cooperation, the Controlling Party will consult with the other party regarding
strategic decisions, including, without limitation, the retention of counsel and defense of each
Product Liability Claim. The Controlling Party will otherwise keep the other party fully informed
of the status and progress of the defense and any settlement discussions concerning the Product
Liability Claim. The settlement of a Product Liability Claim that would admit liability on the
part of any party or its Affiliates, that would involve any relief other than the payment of money
damages within a budget previously agreed to by the parties, or that would not include a full and
unconditional release of the parties subject thereto shall be subject to the prior written approval
of such parties, such approval not to be unreasonably withheld or delayed.
(f)
Losses arising out of or relating to Claims of Third Parties for personal injury, death or
other Co-Promotion Collaboration Product liabilities that are not covered by Sections 12.3(a) or
12.3(b) (such as Losses arising from a failure to warn) shall be shared by the parties as Allowable
Co-Promotion Expenses (or, in the event of any termination of this Agreement under Sections 7.4(d)
or 10.5(c)(i) or (ii) hereof, deducted by the party paying the royalties or payments described
thereunder).
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
33
Section 12.4 Direct Claims.
(a)
Any Claim made directly by a party (the
Asserting Party
) against a Breaching Party
following the date hereof on account of Losses that do not result from a Claim of a Third Party but
do result from or arise out of a breach by the Breaching Party of its representations and
warranties or covenants under this Agreement (a
Direct Claim
) may be asserted at any time prior
to the expiration of the statute of limitations related to such Claim, by giving the Breaching
Party written notice thereof. Such notice by the Asserting Party will describe the basis of the
Direct Claim (including reasonable detail of the particulars of the alleged breach) and will
indicate the estimated amount, if reasonably practicable, of Losses that have been or may be
sustained by the Asserting Party. Thereafter, the Asserting Party shall deliver to the Breaching
Party, as promptly as reasonably practicable, such materials as the Asserting Party reasonably
believes provides the underlying support for the Direct Claim; it being understood that in no event
will the Asserting Party be required to provide information which is subject to attorney-client
privilege or other applicable privilege or that is the subject of a written obligation of
confidentiality to a Third Party in existence at the time of the Asserting Partys Claim. The
Breaching Party shall respond in writing to a Direct Claim within
[ * ]
calendar days of receipt of
the Asserting Partys notice. If the Breaching Party does not so respond within such
[ * ]
day
period, the Breaching Party will be deemed to have rejected such Direct Claim. If the Breaching
Party rejects such Claim, in whole or in part, or is deemed to have rejected such Direct Claim, the
Asserting Party will be free to pursue such remedies as may be available to the Asserting Party on
the terms and subject to the provisions of this Agreement. Notwithstanding the foregoing, a
failure by a party to give timely notice or response or to include any specified information in any
notice or response as provided in this Section 12.4 shall not relieve any other party from its
obligations hereunder, except to the extent the other party can establish actual prejudice and
direct damages as a result thereof.
(b)
In no event will Bayer be entitled to recover Losses arising out of Direct Claims from
Onyx or any of its Affiliates arising out of a breach by Onyx or any of its Affiliates of any of
its representations and warranties or covenants contained in this Agreement until
[ * ]
amount of
all Claims for Losses under this Section 12.4 for breaches of representations and warranties or
covenants
[ * ]
, in which event Onyx will be liable to the full extent of such Losses.
(c)
In no event will Onyx be entitled to recover Losses arising out of Direct Claims from
Bayer or any of its Affiliates arising out of a breach by Bayer or any of its Affiliates of any of
its representations and warranties or covenants contained in this Agreement until
[ * ]
amount of
all Claims for Losses under this Section 12.4 for breaches of representations and warranties or
covenants
[ * ]
, in which event Bayer will be liable to the full extent of such Losses.
(d)
The parties hereby agree that, unless resulting from a partys fraudulent behavior, the
sole and exclusive remedies available to an Asserting Party arising out of a Direct Claim shall be
such remedies available under the law of contracts. The parties further agree that neither Onyx
nor Bayer shall be entitled to pursue, and hereby expressly waive, any and all rights that may
otherwise be available under the law of torts.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
34
Section 12.5 Insurance.
From and after the Co-Promotion Effective Date and for a period of
[
* ]
years after the expiration of this Agreement or the earlier termination of this Agreement,
Bayer and Onyx shall each obtain and/or maintain, respectively, at its sole cost and expense,
product liability insurance (including any self-insured arrangements) in amounts, respectively,
which are reasonable and customary in the pharmaceutical industry in the United States for
companies of comparable size and activities at the respective place of business of such party.
Such product liability insurance or self-insured arrangements shall insure against all liability,
including, without limitation, personal injury, physical injury, or property damage arising out of
the manufacture, sale, distribution, or marketing of the Co-Promotion Collaboration Products. Each
party shall provide to the other, upon request of the other party, a certificate of insurance
verifying the existence of such insurance.
Section 12.6 Limitation of Liability.
NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN,
[
* ]
, IN NO EVENT SHALL BAYER, ON THE ONE HAND, OR ONYX, ON THE OTHER HAND, BE LIABLE TO THE OTHER
OR ANY OF THE OTHER PARTYS AFFILIATES FOR ANY
[ * ]
DAMAGES SUFFERED OR INCURRED BY SUCH OTHER
PARTY OR ITS AFFILIATES IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT OR THE
COLLABORATION AGREEMENT. IN ADDITION, DAMAGES SHALL
[ * ]
BY A PARTY OR ITS AFFILIATES FOR LOSS
THAT THE OTHER PARTY OR ITS AFFILIATES
[ * ]
AND IN NO EVENT SHALL BAYER, ON THE ONE HAND, OR ONYX,
ON THE OTHER HAND, BE LIABLE TO THE OTHER OR ANY OF THE OTHER PARTYS AFFILIATES FOR ANY DAMAGES
ARISING FROM CLAIMS BROUGHT BY
[ * ]
. IT IS UNDERSTOOD THAT THE FOREGOING SENTENCES SHALL NEITHER
(A) LIMIT THE OBLIGATIONS OF BAYER, ON THE ONE HAND, OR ONYX, ON THE OTHER HAND, TO INDEMNIFY THE
OTHER FROM AND AGAINST THIRD PARTY CLAIMS UNDER THIS ARTICLE XII, NOR (B) AFFECT EITHER PARTYS
RIGHTS AND OBLIGATIONS UNDER SECTIONS 4.1(b) AND 5.1(b) OF THIS AGREEMENT.
Section 12.7 Disclaimer of Warranties.
Except as expressly set forth in Article XIII of this
Agreement, no party has made, and nothing in this Agreement shall be construed as, a warranty or
representation (a) that any Co-Promotion Collaboration Products imported, sold, offered for sale,
manufactured or otherwise disposed of under this Agreement are or will be free from infringement of
patents, copyrights, trademarks, industrial design or other intellectual property rights of any
Third Party, or (b) regarding the effectiveness, value, prospects for success (whether financial,
regulatory or otherwise), safety, non-toxicity, or patentability of the Co-Promotion Collaboration
Products or related technology or any information or results provided by any party pursuant to this
Agreement.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE COLLABORATION AGREEMENT, EACH
PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY CAUSE OF ACTION BASED ON ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED EITHER IN FACT OR BY OPERATION OF LAW,
BY STATUTE OR OTHERWISE, WHETHER WRITTEN OR ORAL, OR ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
35
WITH RESPECT TO ANY FUTURE EVENTS, PROSPECTS OR PROJECTIONS, TO NONINFRINGEMENT, VALUE,
ADEQUACY, FREEDOM FROM FAULT, QUALITY, EFFICIENCY, SUITABILITY, CHARACTERISTICS OR USEFULNESS, OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 12.8 Regulatory Compliance.
(a) Each of Onyx and Bayer shall reasonably cooperate with the other party in its efforts
toward ensuring that all government price and gift reporting, sales, marketing and promotional
practices in respect of the Co-Promotion Collaboration Product meet the standards required by
Applicable Laws, including without limitation, state and federal laws and regulations, as well as
applicable guidelines concerning the advertising of prescription drug products, the Office of the
Inspector Generals (OIG) Compliance Guidance Program, the American Medical Association (the
AMA) Guidelines on Gifts to Physicians, the PhRMA Code, and the ACCME Standards.
(b) In accordance with Section 6.1, each of Onyx and Bayer shall provide its employees and its
contract sales force, if any, involved in sales, marketing, promotion, or price or gift reporting
for the Co-Promotion Collaboration Product appropriate training on proper marketing and sales
techniques. Such training will include, among other topics, FDA requirements and other state and
federal regulations and guidelines concerning the advertising of prescription drug products, the
OIG Compliance Guidance Program, the AMA Guidelines on Gifts to Physicians, the PhRMA Code, and the
ACCME Standards. If requested by the other party, each of Onyx and Bayer shall provide a written
description of the training to the other party no less frequently than on an annual basis.
(c) Onyx shall provide to Bayer upon request copies of all Onyx documents that are related to
[ * ]
and other
[ * ]
under Applicable Laws. This will include, but is not necessarily limited to,
[ * ]
, and
[ * ]
.
(d) Each of Onyx and Bayer shall reasonably cooperate with the other party to provide the
other party access to any and all information, data and reports required by the other in order to
comply with the relevant provisions of the Medicare Modernization Act (
MMA
) and any other
Applicable Laws, including without limitation reporting requirements, in a timely and appropriate
manner. Onyx shall
[ * ]
with respect to any sales of the Co-Promotion Collaboration Products by
Onyx
[ * ]
is
[ * ]
such that
[ * ]
can
[ * ]
. Bayer shall
[ * ]
related to the Co-Promotion
Collaboration Products is
[ * ]
; provided however, that Bayer shall
[ * ]
.
(e) Onyx shall
[ * ]
any data or other information covered by this Section 12.8
[ * ]
, and
shall advise Bayer if
[ * ]
. If Onyx has a question about whether a
[ * ]
needs to be
[ * ]
,
Onyxs obligation shall be satisfied by
[ * ]
.
(f) Bayer shall provide to Onyx
[ * ]
that Bayer proposes
[ * ]
. Bayer further agrees to seek
confidential treatment of any such information related to Onyx that it submits to any governmental
entity
[ * ]
.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
36
(g) Onyx and Bayer shall
[ * ]
. In the event that the parties
[ * ]
or of the
[ * ]
, then the
parties shall
[ * ]
.
ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 13.1 Representations by Onyx.
Onyx represents and warrants to Bayer that:
(a)
the execution, delivery and performance of this Agreement by Onyx does not conflict with,
or constitute a breach of or under, any order, judgment, agreement or instrument to which Onyx is a
party;
(b)
the execution, delivery and performance of this Agreement by Onyx does not require the
consent of any Person or the authorization of (by notice or otherwise) any Governmental or
Regulatory Authority;
(c)
there are no actions, suits, proceedings or claims pending against Onyx, any of its
Affiliates or, to the best of Onyxs knowledge, Third Parties from whom Onyx has obtained any
intellectual property rights covering the Co-Promotion Collaboration Product, or, to the best of
Onyxs knowledge, threatened against Onyx, any of its Affiliates or any Third Party from whom Onyx
has obtained any intellectual property rights covering the Co-Promotion Collaboration Product, at
law or equity, or before or by any court or by any Governmental or Regulatory Authority relating to
the Co-Promotion Collaboration Product, or any matter contemplated herein;
(d)
Onyx holds all right, title and interest to the Onyx Trademarks (as defined in the
Collaboration Agreement) and such trademarks are in full force and from the Co-Promotion Effective
Date Onyx will use its Commercially Reasonable Efforts to maintain such trademarks;
(e)
all of its employees who are involved in the contracting for, or marketing, selling or
reporting the price of Co-Promotion Collaboration Products that are reimbursed by Medicare,
Medicaid and all other federal healthcare programs (as defined in 42 U.S.C. Section 1320(a)7(b)(f))
have received appropriate training (or will, prior to deployment, receive appropriate training) on
proper marketing and sales techniques consistent with the obligations of Bayer pursuant to the CIA
and as directed by the Executive Committee; and
(f)
it has not and has never been, nor have any of its employees, agents or subcontractors who
may provide services under this Agreement ever been debarred or, to the best of its knowledge, (i)
convicted of a crime for which a person or entity can be debarred under Section 306(a) or 306(b) of
the United States Generic Drug Enforcement Act of 1992 or under 42 U.S.C. Sections 1320-7; or (ii)
sanctioned by, or suspended, excluded or otherwise ineligible to participate in any federal health
care program, including Medicare and Medicaid or in Federal Procurement or non-procurement
programs.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
37
Section 13.2 Representations by Bayer.
Bayer represents and warrants to Onyx that:
(a)
the execution, delivery and performance of this Agreement by Bayer does not conflict with,
or constitute a breach of or under, any order, judgment, agreement or instrument to which Bayer is
a party;
(b)
the execution, delivery and performance of this Agreement by Bayer does not require the
consent of any Person or the authorization of (by notice or otherwise) any Governmental or
Regulatory Authority;
(c)
there are no actions, suits, proceedings or claims pending against Bayer, any of its
Affiliates or, to the best of Bayers knowledge, Third Parties from whom Bayer has obtained any
intellectual property rights covering the Co-Promotion Collaboration Product, or, to the best of
Bayers knowledge, threatened against Bayer, any of its Affiliates or any Third Party from whom
Bayer has obtained any intellectual property rights covering the Co-Promotion Collaboration
Product, at law or equity, or before or by any court or by any Governmental or Regulatory Authority
relating to the Co-Promotion Collaboration Product, or any matter contemplated herein;
(d)
Bayer and its Affiliates or, to the best of Bayers knowledge, Third Parties from whom
Bayer has obtained any intellectual property rights covering the Co-Promotion Collaboration
Product, have all the rights in all intellectual property covering the Co-Promotion Collaboration
Product required to enable Bayer to make, use, sell and offer to sell the Co-Promotion
Collaboration Product and to grant to Onyx the rights granted herein;
(e)
Bayer holds all right, title and interest to the Bayer Trademarks (as defined in the
Collaboration Agreement) and Product Trademark, and such trademarks are in full force and from the
Co-Promotion Effective Date Bayer will use its Commercially Reasonable Efforts to maintain such
trademarks; and
(f)
the Co-Promotion Collaboration Product to be distributed by Bayer will, at the time of
shipment by or on behalf of Bayer, not be misbranded or adulterated under the terms of the Act or
comparable state laws.
(g)
all of its employees who are involved in the contracting for, or marketing, selling or
reporting the price of Co-Promotion Collaboration Products that are reimbursed by Medicare,
Medicaid and all other federal healthcare programs (as defined in 42 U.S.C. Section 1320(a)7(b)(f))
have received appropriate training (or will, prior to deployment, receive appropriate training) on
proper marketing and sales techniques consistent with its obligations pursuant to the CIA; and
(h)
it has not and has never been, nor have any of its employees, agents or subcontractors who
may provide services under this Agreement ever been debarred or, to the best of its knowledge, (i)
convicted of a crime for which a person or entity can be debarred under Section 306(a) or 306(b) of
the United States Generic Drug Enforcement Act of 1992 or under 42 U.S.C. Sections 1320-7; or (ii)
sanctioned by, or suspended, excluded or otherwise ineligible
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
38
to participate in any federal health care program, including Medicare and Medicaid or in
Federal Procurement or non-procurement programs.
ARTICLE XIV
NOTICES
Except as otherwise specifically provided herein, any notice or other document to be given
under this Agreement shall be in writing and shall be deemed to have been duly given if sent by
nationally recognized overnight courier or confirmed facsimile transmission to a party (followed by
hard copy by mail) or delivered in person to a party at the address or facsimile number set out
below for such party or such other address as the party may from time to time designate by written
notice to the other in accordance with this Article XIV:
If to Bayer
:
Bayer Pharmaceuticals Corporation
400 Morgan Lane
West Haven, CT 06516
Attention: Senior Vice President, Global Licensing
Telephone: (203) 812-2000
Facsimile: (203) 812-6311
With a copy to:
Bayer Pharmaceuticals Corporation
400 Morgan Lane
West Haven, CT 06516
Attention: Vice President and General Counsel
Telephone: (203) 812-6081
Facsimile: (203) 812-2795
If to Onyx
:
Onyx Pharmaceuticals, Inc.
2100 Powell Street
Emeryville, CA 94608
Attention: Chief Executive Officer
Telephone: (510) 597-6500
Facsimile: (510) 597-6600
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
39
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
Telephone: (650) 843-5034
Facsimile: (650) 849-7400
Any such notice or other document shall be deemed to have been received by the addressee
simultaneously with the transmission or delivery thereof.
ARTICLE XV
DISPUTE RESOLUTION
The parties recognize that disputes under this Agreement may arise from time to time arise
(other than matters for which decisions or approvals are reserved to Bayer under this Agreement)
(
Dispute(s)
). It is the objective of the parties to establish procedures to facilitate the
resolution of Disputes in an expedient manner by mutual cooperation and without resort to
litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in
Article 25 of the Collaboration Agreement if and when a Dispute arises under this Agreement.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Assignment.
The parties agree that the assignment of this Agreement shall be
covered by Section 28.1 of the Collaboration Agreement. Additionally, except upon the prior
written consent of the other party, this Agreement shall not be assigned to any person or entity
other than a permitted assignee of the Collaboration Agreement in conjunction with an assignment of
the Collaboration Agreement.
Section 16.2 Governing Law.
This Agreement shall be governed by and interpreted in accordance
with the substantive and internal laws of the State of California without regard to its or any
other jurisdictions choice of law rules. Any disputes under this Agreement shall be brought in
the state or federal courts located in California. The parties irrevocably accept the exclusive
jurisdiction of such courts solely and specifically for the purpose of adjudicating disputes
arising out of or in connection with this Agreement and any other agreement entered into pursuant
hereto or in connection herewith, and in no event shall any party be deemed to have consented to
such jurisdiction for any other purpose. Each party further agrees that such courts provide a
convenient forum for any such action, and waives any objections or challenges to venue with respect
to such courts.
Section 16.3 Waiver.
Except as specifically provided for herein, the waiver from time to time
by either of the parties of any of their rights or their failure to exercise any remedy shall
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
40
not operate or be construed as a continuing waiver of same or of any other of such partys
rights or remedies provided in this Agreement.
Section 16.4 Entire Agreement.
This Agreement and any and all documents or agreements
referenced herein contain all of the terms agreed to by the parties regarding the subject matter of
this Agreement and shall supersede any prior oral or written agreements, understandings or
arrangements between them as to the subject matter hereof;
provided
,
however
, that
(except as specified in the following sentence) the Collaboration Agreement shall remain an
independent agreement between the parties and continue to govern the parties development and
collaboration activities pursuant to the terms thereof unless specifically modified by the terms of
this Agreement. The parties hereby expressly agree that this Agreement shall supersede any and all
provisions of the Collaboration Agreement concerning any Co-Promotion activities in the United
States involving the Co-Promotion Collaboration Product, including without limitation Section 13.6
(Co-Promotion Program), Section 13.7 (Co-Promotion Sales Efforts), Section 13.8 (Co-Promotion
Costs), Section 13.9 (Training Program), Section 13.10 (Advertising and Promotional Materials),
Section 13.12 (Price Setting in the United States, but only the first sentence contained in such
section), Article 14 (Sales Responsibility) and Article 27 (Products Liability and
Indemnification). This Agreement refers to the following provisions of the Collaboration Agreement
which are not superseded and which will continue in full force and effect: Section 13.12 (Price
Setting in the United States, only the last sentence contained in such section), Section 16.1 (as
it relates to activities outside the United States), Section 17.2 (Records), Article 18
(Trademarks), Article 19 (Manufacturing and Supply), Article 22 (Confidentiality), Article 23
(Federal State Tax Characterization) with the exception that the amortization periods referenced in
Sections 23.5(iv) and 23.5(v) shall read 180 months instead of 60 months, Article 25 (Dispute
Resolution), Section 28.1 (Assignment) and Section 28.9 (Severability). This Agreement may not be
amended, modified, altered or supplemented except by means of a written agreement or other
instrument executed by both of the parties hereto. No course of conduct or dealing between the
parties shall act as a modification or waiver of any provisions of this Agreement.
Section 16.5 Severability.
If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any extent, be held to be invalid or
unenforceable, then the parties agree to be bound by the provisions of Section 28.9 of the
Collaboration Agreement.
Section 16.6 Relationship of the Parties.
The parties hereto are acting and performing as
independent contractors, and nothing in this Agreement creates the relationship of partnership,
joint venture, sales agency or principal and agent, except as set forth in Article 23 of the
Collaboration Agreement. Neither party is the agent of the other, and neither party may hold
itself out as such to any other Person. All financial obligations associated with each partys
business shall be the sole responsibility of such party.
Section 16.7 No Implied Licenses.
Each of the parties hereby acknowledges and agrees that,
except as otherwise explicitly provided in this Agreement, such party shall not by
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
41
entering into this Agreement have, assert or acquire any right, title or interest in or to any
intellectual property or other proprietary rights of the other party.
Section 16.8 Public Announcements.
During the Term, each party (the
Publishing Party
) shall
submit to the other party (the
Non-Publishing Party
) for review and approval all proposed press
releases, public filings with the SEC, academic, scientific and medical publications and public
presentations relating to the Co-Promotion Collaboration Product or the terms of this Agreement.
Such review and approval shall be conducted for the purposes of preserving intellectual property
protection and the confidentiality of trade secrets and business terms contained in this Agreement
and determining whether any portion of the proposed publication or presentation containing the
Confidential Information of the Non-Publishing Party should be modified or deleted, and (in the
case of a disclosure that Onyx wishes to make) to determine whether such disclosure is in the best
interests of the parties in connection with the promotion of the Co-Promotion Collaboration Product
(such determination to be made in Bayers reasonable discretion). Written copies of such proposed
publications and presentations (other than press releases or SEC filings) shall be submitted to the
Non-Publishing Party no later than
[ * ]
days before submission for publication or presentation.
Subject to Applicable Laws, written copies of proposed press releases and SEC filings containing
information regarding the Co-Promotion Collaboration Product or this Agreement shall be submitted
to the Non-Publishing Party no later than
[ * ]
before release or filing. In the event that either
party is required to file a Form 8-K describing this Agreement and the transactions contemplated
hereby, written copies of the Form 8-K shall be submitted to the Non-Publishing Party no later than
[ * ]
before filing, together with a form of the Agreement intended to be filed and a copy of the
confidential treatment request to be submitted with such filing. The Publishing Party shall seek
confidential treatment of Confidential Information which may be contained in the Agreement, as
shall be mutually determined between the parties, and shall use its best efforts to obtain
confidential treatment thereof. The Publishing Party shall promptly notify the Non-Publishing
Party of any determination made by the SEC with respect to such confidential treatment request.
The Non-Publishing Party shall provide its comments, if any, and (if it so chooses) its approval
within (a)
[ * ]
, in the case of a press release or SEC filings, and (b)
[ * ]
of its receipt of
any other written copy. With respect to matters other than press releases or SEC filings, the
review period may be extended for an additional
[ * ]
days in the event the Non-Publishing Party
can demonstrate reasonable need for such extension. This period may be further extended by mutual
written agreement of the parties. Onyx and Bayer will each comply with standard academic practice
regarding authorship of scientific publications and recognition of contribution of other parties in
any publications.
Section 16.9 Counterparts.
This Agreement shall become binding when any one or more
counterparts hereof, individually or taken together, shall bear the signatures of each of the
parties hereto. This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original as against the party whose signature appears thereon, but all of which taken
together shall constitute but one and the same instrument.
Section 16.10 Force Majeure.
Neither party shall be liable or responsible to the other party
for loss or damages, nor shall it have any right to terminate this Agreement for any default
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
42
or delay attributable to any event beyond its reasonable control and without its fault or
negligence, including but not limited to acts of God, acts of government (including injunctions),
fire, flood, earthquake, strike, lockout, labor dispute, breakdown of plant, shortage of critical
equipment, loss or unavailability of manufacturing facilities or material, casualty or accident,
civil commotion, acts of public enemies, acts or terrorism or threat of terrorist acts, blockage or
embargo and the like (a
Force Majeure Event
);
provided
,
however
, that in each
such case the party affected shall use Commercially Reasonable Efforts to avoid such occurrence and
to remedy it promptly. The party affected shall give prompt notice of any such cause to the other
party. The party giving such notice shall thereupon be excused from such of its obligations
hereunder as it is thereby disabled from performing for so long as it is so disabled and the party
receiving notice shall be similarly excused from its respective obligations which it is thereby
disabled from performing;
provided
,
however
, that such affected party commences and
continues to take reasonable and diligent actions to cure such cause.
Section 16.11 Interpretation.
The parties hereto acknowledge and agree that: (a) each party
and its representatives have reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its preparation; and (b) the terms and provisions of this Agreement shall be
construed fairly as to each party hereto and not in favor of or against either party, regardless of
which party was generally responsible for the preparation or drafting of this Agreement.
Section 16.12 Certain Expenses and Commissions.
Except as otherwise expressly set forth in
this Agreement, the parties hereto shall each pay all their costs and expenses, including
reasonable attorneys fees, court costs and accounting fees, incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement, respective brokerage fees,
commissions and finders fees, if any, and shall indemnify and hold the other harmless from and
against any and all other claims or liabilities for such costs and expenses, brokerage fees,
commissions and finders fees incurred by reason of any action taken by any such broker, commission
agent or finder.
Section 16.13 Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 16.14 Days.
Except as expressly stated otherwise, all references to days in this
Agreement shall mean calendar days.
IN WITNESS WHEREOF, the parties have duly executed this U.S. Co-Promotion Agreement.
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BAYER PHARMACEUTICALS
CORPORATION
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ONYX PHARMACEUTICALS, INC.
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By:
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/s/ Paolo Pucci
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By:
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/s/ Hollings C. Renton
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Paolo Puccci
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Hollings C. Renton
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Sr. VP and President
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Chairman, President, and CEO
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Global Specialty Business Unit
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Bayer Healthcare LLC
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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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EXHIBIT A
FORM PROFIT AND LOSS STATEMENT
P&L Statement
Sales
Gross Sales
[ * ]
Co-Promotion Net Sales
[ * ]
[ * ]
US Sublicense Revenue
[ * ]
Gross Profit
[ * ]
[ * ]
[ * ]
Co-Promotion Marketing Profit/Loss excluding R&D and Sales Force Expenses and MSL Expenses
Co-Development Costs (R&D)
Split of Profit/Loss excluding Sales Force Expenses and MSL Expenses
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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