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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on April 7, 2017.

Registration No. 333-            

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Biohaven Pharmaceutical Holding Company Ltd.
(Exact name of registrant as specified in its charter)



British Virgin Islands
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  Not applicable
(I.R.S. Employer
Identification Number)



c/o Biohaven Pharmaceuticals, Inc.
234 Church Street
New Haven, Connecticut 06510
(203) 404-0410

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Vlad Coric, M.D.
Chief Executive Officer
Biohaven Pharmaceutical Holding Company Ltd.
234 Church Street
New Haven, Connecticut 06510
(203) 404-0410
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Darren K. DeStefano
Brian F. Leaf
Divakar Gupta
Katie Kazem
Cooley LLP
11951 Freedom Drive
Reston, VA 20190-5656
(703) 456-8000

 

Patrick O'Brien
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199
(617) 951-7000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.     o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.     o



CALCULATION OF REGISTRATION FEE

       
 
TITLE OF SECURITIES
BEING REGISTERED

  PROPOSED MAXIMUM
AGGREGATE OFFERING
PRICE (1)(2)

  AMOUNT OF
REGISTRATION FEE

 

Common Shares, no par value

  $100,000,000   $11,590

 

(1)
In accordance with Rule 457(o) under the Securities Act of 1933, as amended, the number of shares being registered and the proposed maximum offering price per share are not included in this table.

(2)
Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 under the Securities Exchange Act of 1934. (Check one):

Large Accelerated Filer  o   Accelerated Filer  o   Non-accelerated Filer  ý
(do not check if a
smaller reporting company)
  Smaller Reporting Company  o



           The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS (Subject to Completion)
Dated April 7, 2017

Shares

LOGO

COMMON SHARES



Biohaven Pharmaceutical Holding Company Ltd. is offering               of its common shares. This is our initial public offering, and no public market currently exists for our common shares. We anticipate that the initial public offering price of our common shares will be between $               and $               per share.



We have applied to list our common shares on the New York Stock Exchange under the symbol "BHVN".



We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "Prospectus Summary—Implications of Being an Emerging Growth Company."

Investing in our common shares involves risks. Please see "Risk Factors" beginning on page 14.



PRICE $      A SHARE



 
 
Price to
Public
 
Underwriting
Discounts and
Commissions (1)
 
Proceeds,
Before Expenses,
to Biohaven

Per Share

  $        $            $     

Total

  $                     $                     $                  

(1)
We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See "Underwriting" in this prospectus for a description of compensation payable to the underwriters.

We have granted the underwriters an option to purchase up to              additional common shares at the initial public offering price less the underwriting discount. The underwriters can exercise this option at any time within 30 days after the date of this prospectus.

The underwriters expect to deliver the common shares to purchasers on or about                  , 2017.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.



MORGAN STANLEY        PIPER JAFFRAY   BARCLAYS

 

WILLIAM BLAIR   NEEDHAM & COMPANY

   

                  , 2017


Table of Contents

TABLE OF CONTENTS

 
  PAGE

PROSPECTUS SUMMARY

  1

RISK FACTORS

 
14

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

 
76

INDUSTRY AND MARKET DATA

 
77

USE OF PROCEEDS

 
78

DIVIDEND POLICY

 
79

CAPITALIZATION

 
80

DILUTION

 
82

SELECTED CONSOLIDATED FINANCIAL DATA

 
85

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 
87

BUSINESS

 
105

MANAGEMENT

 
165

EXECUTIVE COMPENSATION

 
173

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 
188

PRINCIPAL SHAREHOLDERS

 
192

DESCRIPTION OF SHARE CAPITAL

 
195

SHARES ELIGIBLE FOR FUTURE SALE

 
203

MATERIAL UNITED STATES FEDERAL INCOME CONSIDERATIONS FOR U.S. HOLDERS

 
205

UNDERWRITING

 
211

LEGAL MATTERS

 
217

EXPERTS

 
217

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 
217

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
F-1



        Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of our common shares. Our business, financial condition, results of operations, and prospects may have changed since that date.

         Through and including                , 2017 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

        For investors outside the United States: neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States.


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PROSPECTUS SUMMARY

         This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common shares. You should carefully consider, among other things, our financial statements and the related notes and the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Unless the context otherwise requires, we use the terms "Biohaven," "company," "we," "us" and "our" in this prospectus to refer to Biohaven Pharmaceutical Holding Company Ltd. and, where appropriate, our subsidiaries.

Overview

        We are a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting neurological diseases, including rare disorders. Our product candidates are small molecules based on two distinct mechanistic platforms—calcitonin gene-related peptide, or CGRP, receptor antagonists and glutamate modulators—which we believe have the potential to significantly alter existing treatment approaches across a diverse set of neurological indications with high unmet need in both large markets and orphan indications. The most advanced product candidate from our CGRP receptor antagonist platform is rimegepant, which we are developing for the acute treatment of migraine and for which we intend to initiate two Phase 3 clinical trials in the second half of 2017, with topline results expected in the first half of 2018. The most advanced product candidate from our glutamate modulation platform is trigriluzole, which we are developing for the treatment of ataxias with an initial focus on spinocerebellar ataxia, or SCA. We have received orphan drug designation from the U.S. Food and Drug Administration, or FDA, for trigriluzole in SCA, and we began a Phase 2/3 clinical trial in SCA in December 2016 and expect to report topline results in early 2018. Our second most advanced product candidate from our glutamate modulation platform is BHV-0223, which we are developing for the treatment of amyotrophic lateral sclerosis, or ALS, a neurodegenerative disease that affects nerve cells in the brain and spinal cord. We have received orphan drug designation from the FDA for BHV-0223 in ALS.

        We believe many of our product candidates have the potential to be first-in-class or best-in-class treatment options, while others will potentially represent the first available treatment options for their indications. Based on the data from its Phase 2b clinical trial, we believe rimegepant has the potential to be the best-in-class CGRP receptor antagonist for the acute treatment of migraine, having shown statistically significant improvement on the symptoms of pain, nausea, photophobia and phonophobia associated with migraine attacks. To our knowledge, rimegepant is the only small molecule CGRP receptor antagonist currently in development for the acute treatment of migraine to have achieved statistical significance, meaning there is a low probability, typically less than 5%, that the difference happened by chance, on all of these efficacy measures in a single study. We also believe that trigriluzole has the potential to be the first FDA-approved drug treatment option for ataxias. We intend to expedite development of trigriluzole for SCA using the Section 505(b)(2) regulatory pathway and are currently conducting a Phase 2/3 trial that we believe, if successful, may be sufficient to support our application for regulatory approval of trigriluzole. We believe that BHV-0223 has the potential to be the first-in-class sublingual treatment for ALS. BHV-0223 is designed to deliver the unique pharmacologic, glutamate modulation effects of riluzole, which has shown a survival benefit for ALS patients, and which is currently the only treatment for ALS approved by the FDA. We believe BHV-0223 could also provide best-in-class formulation attributes, such as ease of administration, more predictable pharmacokinetic performance, no food effect, reduced drug load and reduced liver exposure.

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Product Candidates

        The following table summarizes our lead development programs. We hold the worldwide rights to all of our product candidates.

GRAPHIC

Our CGRP Receptor Antagonist Platform: Rimegepant and BHV-3500 Targeting Migraine

        Our CGRP receptor antagonist platform comprises two product candidates: rimegepant for the acute treatment of migraine and BHV-3500 for the prevention of chronic and episodic migraine. Rimegepant, the lead product candidate, is an orally available, selective and potent small molecule CGRP receptor antagonist. Migraine is both widespread and disabling. The Migraine Research Foundation ranks migraine as the world's third most prevalent illness, and the Global Burden of Disease Study 2010 rates migraine as the seventh highest specific cause of disability worldwide. According to the American Migraine Foundation, migraine affects approximately 36 million people in the United States, and treatment of migraine accounted for an estimated market of approximately $1.9 billion in 2012 in the United States. Current treatment approaches, such as triptans, can be limited by headache recurrence, which are headaches that are relieved and then reoccur within 24 hours after taking migraine medication, and cardiovascular contraindications or warnings. We believe rimegepant has the potential to be a best-in-class CGRP receptor antagonist for the acute treatment of migraine with the ability to address important unmet needs, such as durable efficacy across all four traditional migraine symptoms and reduced incidence of headache recurrence, without contraindications or warnings in patients with cardiovascular disease or hypertension, since its CGRP-based mechanism of action does not involve active vasoconstriction, or the constriction of blood vessels.

        In a Phase 2b, double-blind, randomized, placebo-controlled, dose-ranging clinical trial of 812 patients completed by Bristol-Myers Squibb Company, or BMS, rimegepant dosed at 75 mg was observed to have statistically significant improvement as compared to placebo on all four key migraine symptoms—pain, nausea, photophobia and phonophobia—the four traditional endpoints identified by the FDA for drug approval. To our knowledge based on publicly available information, rimegepant is the only small molecule CGRP receptor antagonist currently in development for the acute treatment of migraine that has achieved statistically significant improvement on all four of the traditional endpoints within a single study. As of December 31, 2016, approximately 687 subjects have received single or multiple doses of rimegepant, no treatment-related serious adverse events have been observed and adverse events have generally been mild and transient in nature. In the second half of 2017, we plan to commence two Phase 3 clinical trials of rimegepant for the acute treatment of migraine, with topline results expected in the first half of 2018. We are advancing the 75 mg dose of rimegepant in our Phase 3 clinical trials, as that dose was the lowest dose

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in the Phase 2b trial at which statistically significant improvements as compared to placebo were observed in the four key migraine symptoms, and there did not appear to be additional benefits of higher doses, which is a general characteristic of the dose-response profile of acute treatments for migraine.

        Based on the results from the Phase 2b trial and earlier-stage development, we believe rimegepant offers the following clinical and product benefits for the acute treatment of migraine:

    Oral Availability.   To our knowledge, rimegepant is one of only two orally available small molecule CGRP receptor antagonists that are currently in late-stage clinical development for the acute treatment of migraine.

    Comprehensive Treatment Effect.   In the Phase 2b trial, the 75 mg dose of rimegepant showed statistically significant improvement as compared to placebo across all four key migraine symptoms: pain, nausea, photophobia and phonophobia. To our knowledge based on publicly available information, rimegepant is the only small molecule CGRP receptor antagonist currently in development that has achieved statistically significant improvement on all four of these key migraine symptoms within a single study.

    Durable Improvement.   In the Phase 2b trial, the 75 mg dose of rimegepant showed statistically significant improvement as compared to placebo on pain freedom at two-to-24 hours and two-to-48 hours after dosing, and on pain relief at two and 24 hours after dosing, showing durability of treatment effect.

    Favorable Safety Profile.   In the Phase 2b trial, rimegepant was generally well tolerated with low rates of adverse events, or AEs, no discontinuations for AEs, no treatment-related serious adverse events and no deaths.

    Low Risk of Cardiovascular Side Effects.   Preclinical and clinical evidence suggests that CGRP receptor antagonists, such as rimegepant, have an absence of vasoconstrictor activity and lack other undesirable cardiovascular side effects, such as changes in the blood pressure or heart rate, that are commonly associated with triptans.

    Potency.   Rimegepant is highly potent with subnanomolar affinity for the human CGRP receptor, which allows for a relatively low dose to provide maximal treatment effect.

        BHV-3500, the second product candidate from our CGRP receptor antagonist platform, is a small molecule, structurally distinct from rimegepant, that we are developing for the prevention of chronic and episodic migraine. BHV-3500 is potent, highly soluble and selective at the human CGRP receptor. In addition, BHV-3500 has demonstrated in nonclinical studies characteristics that we believe will make it particularly well suited for daily preventative treatment of chronic and episodic migraine. In 2017, we plan to commence studies to enable an investigational new drug application, or IND, to ultimately pursue clinical trials of BHV-3500 for the prevention of chronic and episodic migraine.

Our Glutamate Modulation Platform: Trigriluzole, BHV-0223 and BHV-5000 Targeting Orphan Neurological Indications

        Under our glutamate modulation platform, we are currently developing three product candidates, trigriluzole (previously known as BHV-4157) for the treatment of ataxias, BHV-0223 for the treatment of ALS and BHV-5000 for the treatment of symptoms associated with Rett syndrome, including breathing irregularities. These product candidates modulate the glutamate system via two distinct mechanisms—glutamate transporter modulation (trigriluzole and BHV-0223) and glutamate N -methyl-D-aspartate, or NMDA, receptor antagonism (BHV-5000).

        Trigriluzole is a third-generation tripeptide prodrug that converts to the active metabolite riluzole that we are developing for the treatment of ataxias. We believe that trigriluzole will qualify as a new chemical entity, or NCE, if it receives regulatory approval by the FDA. Trigriluzole has the potential to be the first

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drug approved by the FDA for the treatment of ataxias, and we have chosen spinocerebellar ataxia, or SCA, as our lead indication. SCA is one of a group of rare genetic disorders that is characterized by slowly progressive incoordination of gait, speech and hand and eye movements. In general, a person with SCA retains full mental capacity but progressively loses physical control over voluntary muscles. According to a 2016 report by Orphanet cataloging the prevalence and incidence of rare diseases, SCA affects approximately 22,000 individuals in the United States. Other ataxias affect an aggregate of greater than 100,000 individuals in the United States. No approved drug treatments for SCA are currently available. We believe that trigriluzole may be effective in the treatment of SCA based on the results of two prior randomized controlled trials conducted by third parties, in which riluzole was observed to have statistically significant improvements in ataxia-related endpoints, and the results of multiple in vivo and in vitro preclinical studies that suggest that trigriluzole may mitigate the limitations of riluzole. As of December 31, 2016, trigriluzole had been dosed in 58 subjects in a Phase 1 clinical trial and has been generally well tolerated, without evidence of novel, clinically significant safety signals or lab abnormalities compared to the active metabolite riluzole. In May 2016, we received orphan drug designation from the FDA for trigriluzole in SCA, and we intend to develop trigriluzole for SCA under Section 505(b)(2) of the U.S. Federal Food, Drug, and Cosmetic Act. We believe our Phase 2/3 clinical trial, which includes Phase 2 elements, such as an early interim analysis of safety or activity, and Phase 3 elements, such as larger patient populations with less restrictive enrollment criteria, if successful, may be sufficient to support our application for regulatory approval of trigriluzole. The primary outcome measure of our Phase 2/3 clinical trial is the change from baseline in a patient's score on the Scale for the Assessment and Rating of Ataxia, or SARA, which is a validated scale that has been used in a third-party clinical trial for the treatment of hereditary ataxias (including SCA), after eight weeks of treatment. We enrolled the first patient in our Phase 2/3 clinical trial in December 2016, and we expect to report topline results from this trial in early 2018. If the results of this trial are positive, we anticipate submitting a new drug application, or NDA, to the FDA in 2018.

        We believe trigriluzole offers the following potential advantages, compared to orally dosed riluzole:

    Improved Bioavailability.   Trigriluzole is a substrate for the gut transporters (PepT1). This is thought to increase the bioavailability of the drug as compared to orally dosed riluzole, meaning that more of the compound is absorbed by the body into the blood stream and can have an active effect.

    No Negative Food Effect.   Trigriluzole shows no food effect in human studies, meaning that the drug will not be associated with special meal restrictions.

    Lower Overall Drug Burden to the Liver.   As a prodrug that mitigates first-pass liver metabolism, concentrations of the active metabolite riluzole can be achieved with a lower drug dose as compared to riluzole tablets. In addition, release of the active metabolite over time will result in a reduced bolus hepatic concentration. We believe these attributes of trigriluzole will reduce the potential for adverse liver effects.

    Optimized Dosing Regimen and Compliance.   Trigriluzole has been developed as a convenient once-daily dose, which could improve patient compliance. We believe these are important features to optimize long-term health outcomes.

    Potential for Developing Multiple Formulations.   Trigriluzole is highly soluble and does not exhibit the oral numbness associated with riluzole tablets. As such, we believe trigriluzole has the potential to be developed in multiple formulations, including intranasal, subcutaneous, intravenous, sublingual and other forms.

        BHV-0223 is a sublingual, oral disintegrating tablet, or ODT, formulation of riluzole that we are developing for the treatment of ALS. ALS is a progressive neurodegenerative motor neuron disease that affects nerve cells in the brain and the spinal cord. ALS affects up to 20,000 individuals in the United States and typically presents in patients with painless muscle weakness, trouble swallowing and muscle

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atrophy that ultimately progresses to paralysis, impaired breathing and death. Orally administered riluzole, which was approved by the FDA in 1995, remains the only agent shown to extend survival and time to tracheostomy in patients with ALS, although it has significant shortcomings that limit its utility. We believe that BHV-0223 has the potential to significantly improve the treatment of patients with ALS by combining the unique pharmacologic activities of glutamate modulation that are conferred by riluzole with an improved pharmacologic profile that results in easier administration, more predictable pharmacokinetic performance, no food effect, reduced drug load and reduced liver exposure compared to oral riluzole. As of January 31, 2017, BHV-0223 had been dosed in 11 subjects. No treatment-related serious adverse events have been observed and adverse events have generally been mild and transient in nature. In December 2016, we received orphan drug designation from the FDA for BHV-0223 in ALS. In 2017, we plan to commence a bioequivalence study of BHV-0223 40 mg to riluzole 50 mg in healthy volunteers. We plan to subsequently submit an NDA for the use of BHV-0223 in patients with ALS and pursue regulatory approval under the Section 505(b)(2) regulatory pathway.

        BHV-5000 is an orally available, first-in-class, low-trapping, NMDA receptor antagonist prodrug of the intravenous drug lanicemine that we are developing for the treatment of symptoms associated with Rett syndrome, including breathing irregularities. Rett syndrome is a rare and severe genetic neurodevelopmental disorder. After six to 18 months of apparently normal post-natal development, patients with Rett syndrome develop global deceleration of psychomotor function, loss of acquired cognitive skills and brain-mediated episodes of transient respiratory suppression. With intensive care, patients may survive into adulthood, yet they are severely physically and cognitively impaired. Rett syndrome affects approximately 15,000 individuals in the United States. No approved drug therapies for Rett syndrome are currently available and care is supportive. We are studying BHV-5000 in Rett syndrome based on results of ketamine studies in preclinical mouse models that have shown improvement in key clinical features of the disease, including the frequency of episodes of respiratory suppression. These preclinical findings are supported by anecdotal clinical reports regarding the use of ketamine, another NMDA receptor antagonist, in patients with Rett syndrome that have been reported to show clinical improvements. As of December 31, 2016, BHV-5000 had been dosed in approximately 40 healthy subjects in a Phase 1 clinical trial conducted by AstraZeneca AB, or AstraZeneca, and has been observed to be well tolerated with no clinically relevant safety signals. BHV-5000's active metabolite, lanicemine, has been administered to approximately 790 subjects in clinical trials conducted by AstraZeneca, in single or multiple doses, and has been observed to be generally well tolerated with most adverse events being mild and transient in nature. We are in the process of developing a commercial formulation of BHV-5000 with acceptable shelf-life and stability at room temperature. After a confirmatory Phase 1 trial, which we plan to commence in 2017, to bridge pharmacokinetics with a prior formulation, we plan to commence a single Phase 2/3 clinical trial of BHV-5000 for the treatment of breathing irregularities associated with Rett syndrome in 2018 which, if successful, we believe may be sufficient to support our application for regulatory approval.

Our Strategy

        Our goal is to become a leader in the development of innovative therapies for neurological diseases that have the potential to change current treatment paradigms. The key elements of our strategy to achieve this goal include:

    Rapidly advance and commercialize our portfolio of migraine product candidates.   In the second half of 2017, we expect to initiate two Phase 3 clinical trials with rimegepant for the acute treatment of migraine, with topline results expected in the first half of 2018. We are also planning a 12-month, long-term safety study of rimegepant to meet FDA requirements for approval. We are designing our Phase 3 development program to support regulatory approval in the United States, as well as to support regulatory filings in Europe and Japan.

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    Complete the development and commercialization of our novel glutamate modulator trigriluzole as potentially the first FDA-approved drug treatment for patients suffering from ataxias.   We anticipate receiving topline results of our Phase 2/3 clinical trial of trigriluzole in SCA in early 2018 and, if positive, submitting an NDA in 2018. We designed our Phase 2/3 clinical trial to support regulatory approval in the United States as well as to support regulatory filings in Europe and Japan.

    Demonstrate bioequivalence and prepare for commercialization of our low-dose, oral disintegrating sublingual product candidate, BHV-0223, for ALS patients.   We plan to launch a study to compare the bioequivalence of our sublingually absorbed ODT formulation of riluzole, BHV-0223, to orally delivered riluzole tablets and subsequently submit an NDA in 2018.

    Advance BHV-5000 into clinical trials to assess its potential to be the first approved treatment for patients suffering from breathing irregularities associated with Rett syndrome.   After a confirmatory Phase 1 clinical trial to bridge pharmacokinetics with the prior formulation, we plan to initiate a Phase 2/3 clinical trial in Rett syndrome in 2018.

    Maximize the therapeutic and commercial potential of our existing product candidates by exploring their use for multiple indications.   Based on the broad mechanistic potential of our glutamate modulation platform, we believe that our product candidates may have utility in a wide array of conditions. We plan to explore the use of our product candidates in additional therapeutic indications where glutamate plays a central role in the pathophysiology of disease, including anxiety and mood disorders.

    Actively manage our product portfolio and opportunistically enter into strategic collaborations.   We plan to retain our worldwide commercialization rights for some of our key product candidates while for other product candidates we will consider partnership opportunities to maximize returns. Leveraging our management team's deep large pharma relationships and experience will be a key component of this strategy.

Our Team

        We are led by a team of experienced executives who have held senior research and development positions at leading biotech and large pharmaceutical companies. Members of our management team and board of directors have deep experience leading neuroscience research and have been involved in the development and commercialization of numerous drugs, such as Zoloft, Abilify, Opdivo, Yervoy and Soliris. This depth of experience has facilitated our ability to license important product candidates and intellectual property from top-tier pharmaceutical companies and leading academic institutions, such as AstraZeneca, BMS, ALS Biopharma, Rutgers University, the Massachusetts General Hospital (a teaching hospital of Harvard Medical School) and Yale University. Members of our Scientific Advisory Board hold or have held affiliations with Yale University, Harvard Medical School, the National Institutes of Health and the FDA. We also have ongoing academic collaborations with Johns Hopkins University, Columbia University, Rutgers University and Yale University. We believe the strength of our management team and board of directors positions us well to enter into additional license and collaboration arrangements with world-class institutions.

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Risks Associated with Our Business

        Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common shares. These risks are discussed more fully in the "Risk Factors" section of this prospectus. These risks include the following:

    We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.

    Clinical trials are very expensive, time-consuming and difficult to design and implement and involve uncertain outcomes. Furthermore, results of earlier preclinical studies and clinical trials may not be predictive of results of future preclinical studies or clinical trials.

    If we fail to comply with our obligations under our existing and any future intellectual property licenses with third parties, we could lose license rights that are important to our business.

    We rely in part on third parties to conduct our preclinical studies and clinical trials and if these third parties perform in an unsatisfactory manner, our business could be substantially harmed.

    We currently rely on third parties for the production of our clinical supply of our product candidates and we intend to continue to rely on third parties for our clinical and commercial supply.

    We have never commercialized a product candidate and we may lack the necessary expertise, personnel and resources to successfully commercialize any of our products that receive regulatory approval on our own or together with collaborators.

    We currently have no marketing, sales or distribution infrastructure. If we are unable to develop sales, marketing and distribution capabilities on our own or through collaborations, or if we fail to achieve adequate pricing or reimbursement, we will not be successful in commercializing our product candidates, if approved.

    If we are unable to obtain and maintain patent protection for our technology and product candidates, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

    We are dependent on licensed intellectual property. If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing our product candidates, if approved. If we breach any of the agreements under which we license the use, development and commercialization rights to our product candidates or technology from third parties or, in certain cases, we fail to meet certain development deadlines, we could lose license rights that are important to our business.

    There has been no public market for our common shares prior to this offering, and an active market in the shares may not develop or be liquid enough for investors to resell our common shares quickly or at the market price.

    We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common shares less attractive to investors.

    You may have fewer protections as a shareholder of our company, as the rights of shareholders under British Virgin Islands law differ from those under U.S. law.

    Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus.

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    We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common shares.

Corporate Information

        We were incorporated as a business company limited by shares organized under the laws of the British Virgin Islands in September 2013. Our registered office is located at P.O. Box 173, Road Town, Tortola, British Virgin Islands and our telephone number is +1 (284) 852-3000. Our U.S. office and the office of our U.S. subsidiary is located at 234 Church Street, New Haven, Connecticut 06510 and our telephone number is (203) 404-0410. Our website address is www.biohavenpharma.com . The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common shares.

        We have three wholly owned subsidiaries, including Biohaven Pharmaceuticals, Inc., a Delaware corporation. Following this offering, we expect to form an additional subsidiary that will be incorporated under the laws of Ireland. We expect that this Irish subsidiary will be the principal operating company for conducting our business and the entity that will hold our intellectual property rights in certain of our product candidates. As a result, we expect that we will become subject to taxation in Ireland in the future.

        We have proprietary rights to a number of trademarks used in this prospectus which are important to our business, including the Biohaven logo. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

Implications of Being an Emerging Growth Company

        As a company with less than $1.0 billion in revenues during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in 2012. As an emerging growth company, we expect to take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

    being permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure in this prospectus;

    not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended;

    reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

    exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

        We may use these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering. However, if certain events occur prior to the end of such five-year period,

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including if we become a "large accelerated filer," our annual gross revenues exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

        We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our shareholders may be different than you might receive from other public reporting companies in which you hold equity interests.

        The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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THE OFFERING

Common shares offered

              shares

Common shares outstanding after this offering

 

            shares (        shares if the underwriters exercise their over-allotment option in full)

Over-allotment option

 

We have granted the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to            additional common shares.

Use of proceeds

 

We expect the net proceeds from this offering to be approximately $            million, based on an assumed initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

We anticipate that the net proceeds from this offering, together with our existing cash, will be used to advance our CGRP receptor antagonist and glutamate modulation platform product candidates; to repay indebtedness under our credit agreement and notes payable to related parties; to satisfy our obligation to purchase shares of capital stock of a privately held preclinical-stage company; and for working capital and other corporate purposes, including satisfaction of any of our milestone payment obligations under our license agreements. See "Use of Proceeds" on page 78 for additional information.

Risk factors

 

See "Risk Factors" beginning on page 14 and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our common shares.

Proposed NYSE symbol

 

BHVN

        The number of common shares that will be outstanding after this offering is based on 24,330,583 common shares outstanding as of February 28, 2017, after giving effect to (i) the conversion of 9,358,560 Series A preferred shares outstanding as of February 28, 2017 into an aggregate of 9,358,560 common shares upon the closing of this offering and (ii) the issuance of an aggregate of 1,883,523 common shares to BMS and AstraZeneca in connection with this offering pursuant to our license agreements with BMS and AstraZeneca, and excludes:

    4,335,344 common shares issuable upon the exercise of stock options outstanding as of February 28, 2017, at a weighted average exercise price of $4.23 per share;

    815,000 common shares issuable upon the exercise of warrants outstanding as of February 28, 2017, at a weighted average exercise price of $6.57 per share;

    563,886 common shares reserved for future issuance under our 2014 Equity Incentive Plan, as amended, or the 2014 Plan, as of February 28, 2017; and

                       common shares reserved for future issuance under our 2017 Equity Incentive Plan, or the 2017 Plan, which will become effective upon the signing of the underwriting agreement related

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      to this offering, as well as any automatic increases in the number of common shares reserved for future issuance under the 2017 Plan.

        Except as otherwise indicated herein, all information in this prospectus, including the number of shares that will be outstanding after this offering, assumes or gives effect to:

    the conversion of all outstanding Series A preferred shares into an aggregate of 9,358,560 common shares upon the closing of this offering;

    the issuance of an aggregate of 1,883,523 common shares to BMS and AstraZeneca in connection with this offering pursuant to our license agreements with BMS and AstraZeneca;

    no exercise of the outstanding options and warrants described above; and

    no exercise of the underwriters' over-allotment option.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        You should read the following summary consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus. We have derived the consolidated statement of operations data for the years ended December 31, 2015 and 2016 and the consolidated balance sheet data as of December 31, 2016 from our audited consolidated financial statements appearing at the end of this prospectus. Our historical results are not necessarily indicative of results that may be expected in any future period.

 
  Year Ended
December 31,
 
 
  2015   2016  
 
  (in thousands, except
per share data)

 

Consolidated Statement of Operations Data:

             

Operating expenses:

             

Research and development

  $ 7,559   $ 55,529  

General and administrative

    2,137     5,109  

Total operating expenses

    9,696     60,638  

Loss from operations

    (9,696 )   (60,638 )

Other income (expense), net

    (370 )   (2,806 )

Loss before provision for income taxes

    (10,066 )   (63,444 )

Provision for income taxes

        90  

Net loss

    (10,066 )   (63,534 )

Less: Net income (loss) attributable to non-controlling interests

    (4 )   143  

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (10,062 ) $ (63,677 )

Net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted (1)

  $ (0.91 ) $ (5.05 )

Weighted average common shares outstanding—basic and diluted (1)

    11,009     12,608  

Pro forma net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted (unaudited) (1)

        $ (4.48 )

Pro forma weighted average common shares outstanding—basic and diluted (unaudited) (1)

          14,215  

(1)
See Note 15 to our consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. and on the calculation of pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.

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  As of December 31, 2016  
 
  Actual   Pro Forma (2)   Pro Forma
As Adjusted (3)
 
 
  (in thousands)
 

Consolidated Balance Sheet Data:

                   

Cash

  $ 23,565   $ 62,200   $               

Working capital (1)

    16,093     54,728        

Total assets

    27,017     65,652        

Notes payable, net of discount

    4,216     4,216        

Notes payable to related parties

    595     595        

Warrant liability

    780     780        

Contingent equity liability

    18,938            

Convertible preferred shares

    43,270            

Total shareholders' equity (deficit)

    (45,033 )   55,810        

(1)
We define working capital as current assets less current liabilities.

(2)
The pro forma balance sheet data give effect to:

our sale of 4,305,182 Series A preferred shares in February 2017 for net cash proceeds of $38.6 million;

our issuance of an aggregate of 105,009 Series A preferred shares in February 2017 to the placement agents for our Series A financing transaction;

our issuance of an aggregate of 1,883,523 common shares to BMS and AstraZeneca in connection with this offering pursuant to our license agreements with BMS and AstraZeneca and the reclassification of the contingent equity liability related to such shares; and

the conversion of all outstanding preferred shares into an aggregate of 9,358,560 common shares upon the closing of this offering.

(3)
The pro forma as adjusted balance sheet data give further effect to (i) our issuance and sale of                common shares in this offering at an assumed initial public offering price of $                per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the repayment of $                         million of aggregate indebtedness under our credit agreement and our notes payable to related parties using a portion of the net proceeds from this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $                per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, working capital, total assets and total shareholders' equity by $                 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, working capital, total assets and total shareholders' equity by $                 million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions. This pro forma as adjusted information is illustrative only and will depend on the actual initial public offering price and other terms of this offering determined at pricing.

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RISK FACTORS

         Investing in our common shares involves a high degree of risk. You should carefully consider the following risks and all other information contained in this prospectus, including our financial statements and the related notes, before making an investment decision regarding our securities. The risks and uncertainties described below are those significant risk factors, currently known and specific to us, which we believe are relevant to an investment in our securities. If any of these risks materialize, our business, financial condition or results of operations could suffer, the price of our common shares could decline and you could lose part or all of your investment.

Risks Related to Our Financial Position and Need for Additional Capital

We have a limited operating history and have never generated any product revenues, which may make it difficult to evaluate the success of our business to date and to assess our future viability.

        We were incorporated in 2013, and our operations to date have been largely focused on organizing and staffing our company, raising capital and in-licensing the rights to, and advancing the development of, our product candidates, including conducting preclinical studies and clinical trials. We have not yet demonstrated an ability to successfully complete later-stage clinical trials, obtain marketing approvals, manufacture products on a commercial scale, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing products.

        We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. We will need to eventually transition from a company with a research and development focus to a company capable of undertaking commercial activities. We may encounter unforeseen expenses, difficulties, complications and delays, and may not be successful in such a transition.

We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.

        Since our inception, we have incurred significant operating losses. Our net loss was $10.1 million and $63.5 million for the years ended December 31, 2015 and 2016, respectively. As of December 31, 2016, we had an accumulated deficit of $75.5 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. None of our product candidates have been approved for marketing in the United States, or in any other jurisdiction, and may never receive such approval. It could be several years, if ever, before we have a commercialized product that generates significant revenues. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. The net losses we incur may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we:

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        To become and remain profitable, we must develop and eventually commercialize one or more product candidates with significant market potential. This will require us to be successful in a range of challenging activities, including completing clinical trials of our product candidates, developing commercial scale manufacturing processes, obtaining marketing approval, manufacturing, marketing and selling any current and future product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements. We are only in the preliminary stages of most of these activities and, in some cases, have not yet commenced certain of these activities. We may never succeed in any or all of these activities and, even if we do, we may never generate sufficient revenue to achieve profitability.

        Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will obtain marketing approval to commercialize any of our product candidates. If we are required by the U.S. Food and Drug Administration, or FDA, or other regulatory authorities such as the European Medicines Agency, or EMA, to perform studies and trials in addition to those currently expected, or if there are any delays in the development, or in the completion of any planned or future preclinical studies or clinical trials of our current or future product candidates, our expenses could increase and profitability could be further delayed.

        Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.

Even if this offering is successful, we will need substantial additional funding to pursue our business objectives. If we are unable to raise capital when needed or on terms favorable to us, we could be forced to curtail our planned operations and the pursuit of our growth strategy.

        Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to develop our product candidates. Our expenses could increase beyond our current expectations if the FDA requires us to perform clinical trials and other studies in addition to those that we currently anticipate. For example, in our trigriluzole clinical program, we recently enrolled the first patient in our Phase 2/3 clinical trial of trigriluzole for the treatment of SCA, and, given the small number of SCA patients, we believe that, if successful, this Phase 2/3 clinical trial will be the only pivotal trial necessary to support regulatory approval. Likewise, due to the small number of patients with Rett syndrome, we believe that BHV-5000 will require only a single pivotal trial. However, the FDA ordinarily requires two well-controlled clinical trials prior to marketing approval of a product candidate. If the FDA requires us to conduct additional clinical trials of

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trigriluzole or BHV-5000, we would incur substantial additional, unanticipated expenses in order to obtain regulatory approval of those product candidates.

        In addition, our product candidates, if approved, may not achieve commercial success. Our revenue, if any, will be derived from sales of products that we do not expect to be commercially available for a number of years, if at all. Additionally, if we obtain marketing approval for our product candidates, we expect to incur significant expenses related to manufacturing, marketing, sales and distribution. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company.

        As of December 31, 2016, we had cash of $23.6 million, and in February 2017, we received net cash proceeds of $38.6 million from the sale of Series A preferred shares in connection with the second and final closing of our Series A preferred share financing. We expect that our existing cash, together with the net proceeds from this offering, will enable us to repay our indebtedness and to fund our operating expenses and capital expenditure requirements for at least the next        months. This estimate is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect. Changes may occur beyond our control that would cause us to consume our available capital before that time, including changes in and progress of our development activities and changes in regulation. Our future capital requirements will depend on many factors, including:

        Even if this offering is successful, we will require additional capital to complete our planned clinical development programs for our current product candidates to seek regulatory approval. If we receive regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution. Any additional capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our current and future product candidates, if approved.

        In addition, we cannot guarantee that future financing will be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities by us, whether

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equity or debt, or the market perception that such issuances are likely to occur, could cause the market price of our common shares to decline. As a result, once we are a listed company in the United States, we may not be able to access the capital markets as frequently as comparable U.S. companies. See "—Our status as a British Virgin Islands, or BVI, business company means that our shareholders enjoy certain rights that may limit our flexibility to raise capital, issue dividends and otherwise manage ongoing capital needs" for additional information related to our ability to timely raise capital. If we are unable to obtain funding on a timely basis on acceptable terms, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidates, if approved, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus.

        Our report from our independent registered public accounting firm for the year ended December 31, 2016 includes an explanatory paragraph stating that our recurring losses from operations since inception and required additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements, and it is likely that investors will lose all or a part of their investment. After this offering, future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.

We are subject to significant obligations, including to potentially make significant payments under the license agreements by which we acquired the rights to several of our product candidates.

        In July 2016, we acquired the rights to rimegepant and another product candidate, BHV-3500, pursuant to a license agreement with Bristol-Myers Squibb Company, or BMS, and in October 2016, we acquired the rights to BHV-5000 pursuant to a license agreement with AstraZeneca AB, or AstraZeneca. We are subject to significant obligations under these agreements, including payment obligations upon achievement of specified milestones and royalties on product sales, as well as other material obligations. We may be obligated to pay BMS up to $127.5 million in development milestones for rimegepant or a derivative thereof, up to $74.5 million in development milestones for any licensed product other than rimegepant, and up to $150.0 million in commercial milestones for each licensed product. We may also be obligated to pay AstraZeneca up to $30.0 million in development milestones for licensed products for the treatment of Rett syndrome, up to $60.0 million in development milestones for licensed products for indications other than Rett syndrome, and up to $120.0 million in commercial milestones. We are also obligated to pay fixed royalties based on net sales of rimegepant, BHV-3500 and BHV-5000, or any other product that is a licensed product under those agreements. If these payments become due under the terms of our license agreements with BMS and AstraZeneca, we may not have sufficient funds available to meet our obligations and our development efforts may be materially harmed.

        In addition, our license agreements with BMS and AstraZeneca obligate us to use commercially reasonable efforts to develop and commercialize product candidates, to provide BMS and AstraZeneca with development reports documenting our progress, and to provide them with data from certain clinical trials. In addition, such license agreements provide BMS and AstraZeneca with rights of first negotiation, triggered by their receipt of a summary of certain top-line data from certain of our clinical trials, to regain

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the respective rights we have in-licensed from them. If either BMS or AstraZeneca exercises their right of first negotiation, we will be required to negotiate in good faith with BMS or AstraZeneca, as the case may be, for a specified period of time before we can enter into negotiations with third parties to sublicense these rights. BMS's and AstraZeneca's rights of first negotiation may adversely impact or delay our ability to enter into collaborations with third parties for the development of these compounds. Our license agreement with BMS further provides that any sublicense, other than to an affiliate or a third-party manufacturer, requires BMS' prior written consent, not to be unreasonably withheld or delayed. Our license agreement with AstraZeneca further provides that, except with respect to wholly owned subsidiaries, we cannot assign the agreement without their consent, even in the event of a change of control. This could adversely impact or delay our ability to effect certain transactions.

        Moreover, under our agreement with BMS, until 2023, neither we nor our affiliates may, ourselves or through or in collaboration with a third party, engage directly or indirectly in the clinical development or commercialization of competitive compounds related to the CGRP-based mechanism of action of the licensed products. In the event that we are or become non-compliant with this provision due to licensing, collaboration or acquisition activity, we must either divest ourselves of the competitive compound within a certain period of time or negotiate with BMS to have the competitive compound included as a licensed product under our agreement with BMS. The failure to so divest or reach terms with BMS may result in the termination of our license with BMS. These prohibitions could adversely impact or delay our ability to effect certain transactions, such as our ability to acquire or be acquired by a third party.

Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our intellectual property or future revenue streams.

        Until such time as we can generate substantial product revenue, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and license and development agreements in connection with any future collaborations. We do not have any committed external source of funds. In the event we seek additional funds, we may raise additional capital through the sale of equity or convertible debt securities. In such an event, our existing shareholders may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common shares. Debt financing, if available, could result in increased fixed payment obligations and may involve agreements that include restrictive covenants, such as limitations on our ability to incur additional debt, make capital expenditures, acquire, sell or license intellectual property rights or declare dividends, and other operating restrictions that could hurt our ability to conduct our business.

        Further, if we raise additional capital through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us.

Risks Related to the Development of Our Product Candidates

We depend entirely on the success of a limited number of product candidates, which are in clinical development and none of which have completed a pivotal trial. If we do not obtain regulatory approval for and successfully commercialize one or more of our product candidates or we experience significant delays in doing so, we may never become profitable.

        We do not have any products that have received regulatory approval and may never be able to develop marketable product candidates. We expect that a substantial portion of our efforts and expenses over the next few years will be devoted to the development of our product candidates; specifically, the commencement of two Phase 3 trials of rimegepant, the conducting of our ongoing Phase 2/3 trial of trigriluzole, and other preclinical and clinical activities related to BHV-0223, BHV-5000 and BHV-3500. As

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a result, our business currently depends heavily on the successful development, regulatory approval and, if approved, commercialization of these product candidates. We cannot be certain that our product candidates will receive regulatory approval or will be successfully commercialized even if they receive regulatory approval. The research, testing, manufacturing, safety, efficacy, labeling, approval, sale, marketing and distribution of our product candidates are, and will remain, subject to comprehensive regulation by the FDA and similar foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through pre-clinical studies and clinical trials that the product candidate is safe and effective for use in each target indication. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. Failure to obtain regulatory approval for our product candidates in the United States will prevent us from commercializing and marketing our product candidates. The success of our product candidates will depend on several additional factors, including:

        Many of these factors are beyond our control, including the time needed to adequately complete clinical testing, the regulatory submission process, potential threats to our intellectual property rights and changes in the competitive landscape. It is possible that none of our product candidates will ever obtain regulatory approval, even if we expend substantial time and resources seeking such approval. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully complete clinical trials, obtain regulatory approval or, if approved, commercialize our product candidates, which would materially harm our business, financial condition and results of operations.

Clinical trials are very expensive, time-consuming and difficult to design and implement and involve uncertain outcomes. Furthermore, results of earlier preclinical studies and clinical trials may not be predictive of results of future preclinical studies or clinical trials.

        The risk of failure for our product candidates is high. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive regulatory approval. To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe and effective in humans for use in each target indication. Clinical testing is expensive and can take many years to complete, and the outcome is inherently uncertain. Failure can occur at any time during the clinical trial process.

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        In addition, the results of preclinical studies and earlier clinical trials may not be predictive of the results of later-stage preclinical studies or clinical trials. The results generated to date in preclinical studies or clinical trials for our product candidates do not ensure that later preclinical studies or clinical trials will demonstrate similar results. Further, we have limited clinical data for each of our product candidates and have not completed Phase 3 clinical trials for any of our product candidates. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical and earlier stage clinical trials. For example, the favorable results of the Phase 2b trial of rimegepant may not be predictive of similar results in subsequent trials. In particular, we are developing a new dosage form of rimegepant for use in our planned Phase 3 clinical trials of rimegepant. We cannot be certain that we will observe the same results in our Phase 3 trials with the new dosage form as we did in the Phase 2b clinical trial of rimegepant. In later-stage clinical trials, we will likely be subject to more rigorous statistical analyses than in completed earlier stage clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in later-stage clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials, and we cannot be certain that we will not face similar setbacks. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.

        In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in clinical trial procedures set forth in protocols, differences in the size and type of the patient populations, adherence to the dosing regimen and other clinical trial protocols, and the rate of dropout among clinical trial participants. If we fail to produce positive results in our planned pre-clinical studies or clinical trials of any of our product candidates, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business and financial prospects, would be materially adversely affected.

We have limited experience in drug discovery and drug development, and we have never had a drug approved.

        Because we in-licensed rimegepant and BHV-3500 from BMS and BHV-5000 from AstraZeneca, we were not involved in and had no control over the preclinical and clinical development of these product candidates prior to entering into these in-license agreements. In addition, we are relying on BMS and AstraZeneca to have conducted such research and development in accordance with the applicable protocol, legal, regulatory and scientific standards, having accurately reported the results of all clinical trials conducted prior to our acquisition of the applicable product candidate, and having correctly collected and interpreted the data from these studies and trials. To the extent any of these has not occurred, our expected development time and costs may be increased, which could adversely affect our prospects for marketing approval of, and receiving any future revenue from, these product candidates.

Clinical trials may be delayed, suspended or terminated for many reasons, which will increase our expenses and delay the time it takes to develop our product candidates.

        We may experience delays in our ongoing or future preclinical studies or clinical trials, and we do not know whether future preclinical studies or clinical trials will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. The commencement and completion of clinical trials for our clinical product candidates may be delayed, suspended or terminated as a result of many factors, including:

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        We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or Ethics Committees of the institutions at which such trials are being conducted, by the Data Safety Monitoring Board for such trial or by the FDA or other regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA's current Good Clinical Practice, or GCP, regulations, or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

        We will need to take a variety of steps before commencing our two planned Phase 3 clinical trials and 12-month safety study of rimegepant and our planned clinical trials of BHV-0223 and BHV-5000. With

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respect to rimegepant, we had an end of Phase 2 meeting with the FDA in March 2017 at which we reviewed the Phase 2b clinical trial data with the FDA and presented our overall plan for our planned Phase 3 clinical trials and safety study and our proposed path to registration. At the meeting, we agreed to submit our trial protocols to the FDA prior to the commencement of our Phase 3 trials. The FDA could disagree with the proposed design of our planned Phase 3 clinical trials and safety study and could require, in any trial or all trials, a larger number of patients or a longer course of treatment than our current expectations. If the FDA takes such positions, the costs of our planned Phase 3 clinical trials and safety study of rimegepant could increase significantly and the potential commercialization of rimegepant could be delayed. The FDA also may require that we conduct additional clinical, nonclinical or manufacturing validation studies and submit such data before it will consider a NDA.

        In addition, prior to commencing our two planned Phase 3 clinical trials, we will have to:

        In order to commence our planned clinical trials of BHV-0223 and BHV-5000, we will have to complete development of a commercial-grade formulation and obtain sufficient clinical supply of both product candidates.

        If we experience delays in the commencement or completion of any clinical trial of our product candidates, or if any of our clinical trials are terminated, the commercial prospects of our product candidates may be harmed, and our ability to generate product revenue from sales of any of these product candidates will be delayed or not realized at all.

        We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenue from product sales. Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates.

The regulatory approval process of the FDA and comparable foreign jurisdictions is lengthy, time-consuming and unpredictable.

        Our future success is dependent upon our ability to successfully develop, obtain regulatory approval for and then successfully commercialize one or more of our product candidates. The time required to obtain approval by the FDA is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval is generally uncertain, may change during the course of a product candidate's clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval. Neither we nor any future collaborator is permitted to market any of our product candidates in the United States or abroad until we receive regulatory approval of a New Drug Application, or NDA, from the FDA or approval from the EMA or other applicable foreign regulatory agency.

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        Prior to obtaining approval to commercialize a product candidate in any jurisdiction, we must demonstrate to the satisfaction of the FDA, EMA or any comparable foreign regulatory agency, that such product candidates are safe and effective for their intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. The FDA, EMA or any comparable foreign regulatory agency can delay, limit or deny approval of our product candidates or require us to conduct additional preclinical or clinical testing or abandon a program for many reasons, including:

        For example, with respect to our ongoing Phase 2/3 clinical trial for trigriluzole for the treatment of SCA, the FDA has stated that elements of the SARA (i.e., gait, stance, sitting and speech disturbance) appear capable of reflecting a clinically meaningful benefit for patients depending on how the scoring of these items is defined. If the scoring categories are based on clinically important distinctions, use of these items as a primary endpoint in studies intended to support approval could be appropriate. However, the FDA has stated its concern that our use of the SARA scale, as currently constructed, as a primary endpoint is not appropriate in this trial. No drug has been approved for the treatment of SCA and, therefore, a clear regulatory pathway for approval has not previously been established. Although we selected the SARA scale, which is a validated scale that has been used in a third-party clinical trial for the treatment of hereditary ataxias (including SCA), as the primary outcome measure for the trial based on advice of an advisory panel of ataxia experts, we plan to continue to interact with the FDA to discuss its concerns and consider incorporating any feedback in our analysis of the clinical trial data that we collect and measure

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with the SARA. Because we have already begun our Phase 2/3 clinical trial and the FDA has not suggested an alternative scale that it believes would be acceptable to assess clinical benefit in SCA, we have limited options to incorporate an alternate scale that has been validated and is accepted by the field's experts as measuring clinically meaningful changes. As such, we cannot guarantee that the FDA or any future advisory committee will be satisfied with our approach using the SARA. We cannot guarantee that any regulatory agency or future advisory committee would interpret a successful outcome using the SARA as our primary measure in the same fashion that we would.

        Any of our current or future product candidates could take a significantly longer time to gain regulatory approval than expected or may never gain regulatory approval. This could delay or eliminate any potential product revenue by delaying or terminating the potential commercialization of our product candidates.

        Of the large number of drugs in development, only a small percentage successfully complete the FDA or foreign regulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

        FDA guidance regarding the approval of drugs for the treatment of acute migraine has recently changed. No drug has been approved under the new guidance, and it is not certain how such guidance will be interpreted and applied by the FDA. We intend to seek advice and guidance from the FDA including, at a minimum, requesting a pre-NDA meeting with the FDA prior to the submission of an NDA for any of our product candidates. If the feedback we receive is different from what we currently anticipate, this could delay the development and regulatory approval process for these product candidates.

        We generally plan to seek regulatory approval to commercialize our product candidates in the United States, the European Union and other key global markets. To obtain regulatory approval in other countries, we must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical trials, commercial sales, pricing and distribution of our product candidates. Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdiction. Failure to obtain approval in one jurisdiction may negatively impact our ability to obtain approval elsewhere. Failure to obtain marketing authorization for our product candidates will result in our being unable to market and sell such products. If we fail to obtain approval in any jurisdiction, the geographic market for our product candidates could be limited. Similarly, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates or may grant approvals for more limited patient populations than requested.

        Even if we eventually complete clinical testing and receive approval of an NDA or foreign marketing application for our product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials or the implementation of a Risk Evaluation and Mitigation Strategy, or REMS, which may be required to ensure safe use of the drug after approval. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would adversely impact our business and prospects.

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Our product candidates may fail to demonstrate safety and efficacy in clinical trials, or may cause serious adverse or unacceptable side effects that could prevent or delay regulatory approval and commercialization, limit the commercial profile of an approved label, increase our costs, necessitate the abandonment or limitation of the development of some of our product candidates or result in significant negative consequences following marketing approval, if any.

        Before obtaining regulatory approvals for the commercial sale of our product candidates, we must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use in each target indication, and failures can occur at any stage of testing. Clinical trials often fail to demonstrate efficacy or safety of the product candidate studied for the target indication.

        For example, in its Phase 2b clinical trial, rimegepant dosed at 75 mg showed statistically significant improvement as compared to placebo on all four key migraine symptoms—pain, nausea, photophobia, phonophobia—which are inherently subjective endpoints that are difficult to measure. Patients in the trial were provided with an electronic data capturing device, or an electronic subject diary, which they used to record and rank their assessments of pain, nausea, photophobia and phonophobia at specified time points after they had taken the study medication following the occurrence of a moderate to severe migraine headache. The measurements from the trial were based on subjective patient feedback as recorded on their electronic subject diary, which can be influenced by factors outside of our control, and can vary widely from day to day for a particular patient, and from patient to patient and site to site within a clinical study. The placebo effect also tends to have a more significant impact on clinical trials involving subjective measures such as pain.

        Moreover, undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label, the limitation of commercial potential or the delay or denial of regulatory approval by the FDA. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Accordingly, we may need to abandon their development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective. Prior to any regulatory approval of rimegepant, we would need to complete a 12-month safety study as well as longer-term nonclinical toxicology and carcinogenicity studies. If any of these studies identify safety issues, we may need to complete additional studies, or abandon development of rimegepant. Many compounds that initially showed promise in preclinical or early-stage testing have later been found to cause side effects that restricted their use and prevented further development of the compound in the tested indication.

        In animal studies, at very high doses, rimegepant was observed to have a negative effect on the liver. We observed elevated liver enzymes in one patient that received very high doses of rimegepant in a drug-drug interaction study. In the completed Phase 2b trial of rimegepant conducted by BMS, one patient dosed with rimegepant experienced an asymptomatic and mild increase in certain hepatic enzymes, which are a type of liver enzyme measured in a liver function test to detect damage and inflammation to the liver. Even though no patient treated with rimegepant in the Phase 2b trial had liver enzyme elevation that exceeded the level that is considered by the FDA to be a potentially meaningful indicator of severe drug-induced liver injury, we cannot guarantee that these safety and tolerability results will be replicated in our Phase 3 trials, and it is possible that rimegepant may be observed to cause unacceptable levels of adverse effects or serious adverse effects.

        In addition, at our end of Phase 2 meeting, the FDA stated its desire to see a safety study in which patients received daily or near-daily dosing of rimegepant for at least three months. This desire stems from the FDA's concern about a potential liver signal with the class of CGRP antagonists. The FDA stated that any risk of liver injury has to be very low and that exposure with the drug has to be sufficient to cap the risk of liver injury at a level acceptable for the migraine population. We believe the design of our long-term

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safety study may adequately address this concern by providing for the enrollment of approximately 600 patients who experience eight or more migraine days per month, who will, in the study, be allowed to use rimegepant on a daily basis, which we believe will generate safety data with respect to long-term, frequent use of rimegepant. However, the FDA may determine that our trial design or the data we collect is insufficient to address their concerns, in which case we could be required to conduct additional trials.

        Occurrence of serious treatment-related side effects could impede subject recruitment and clinical trial enrollment or the ability of enrolled patients to complete the trial, require us to halt the clinical trial, and prevent receipt of regulatory approval from the FDA. They could also adversely affect physician or patient acceptance of our product candidates or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

If any of our product candidates receives marketing approval and we, or others, later discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, our ability to market the drug could be compromised.

        Clinical trials of our product candidates are conducted in carefully defined subsets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If one or more of our product candidates receives regulatory approval, and we, or others, later discover that they are less effective than previously believed, or cause undesirable side effects, a number of potentially significant negative consequences could result, including:

        Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, financial condition, and results of operations.

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Our clinical drug development program may not uncover all possible adverse events that patients who use our products may experience. The number of subjects exposed to treatment and the average exposure time in the clinical development program may be inadequate to detect rare adverse events, or chance findings, that may only be detected once our products are administered to more patients and for greater periods of time.

        Clinical trials by their nature utilize a sample of the potential patient population. However, with a limited number of subjects and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered when a significantly larger number of patients are exposed to the product.

        Although we have monitored the subjects in our studies for certain safety concerns and we have not seen evidence of significant safety concerns in our clinical trials, patients treated with our product candidates, if approved, may experience adverse reactions. If safety problems occur or are identified after one of our products reaches the market, the FDA or comparable foreign regulatory authorities may require that we amend the labeling of our product, recall our product, or even withdraw approval for our product. Serious adverse events deemed to be caused by our product candidates, either before or after receipt of marketing approval, could have a material adverse effect on the development of our drug candidates and our business as a whole.

We depend on enrollment of patients in our clinical trials for our product candidates. If we are unable to enroll patients in our clinical trials, our research and development efforts could be adversely affected.

        Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. Successful and timely completion of clinical trials will require that we enroll a sufficient number of patients who remain in the study until its conclusion. If we are unable to enroll a sufficient number of patients in our clinical trials, our timelines for recruiting patients, conducting clinical trials and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology or termination of our clinical trials altogether.

        We cannot predict how successful we will be at enrolling patients in future clinical trials. Patient enrollment is affected by other factors including:

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        In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

        Delays in the completion of any clinical trial of our product candidates will increase our costs, slow down our product candidate development and approval process, and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that may lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

        We have limited financial and managerial resources. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

We may become exposed to costly and damaging liability claims, either when testing our product candidates in the clinic or at the commercial stage, and our product liability insurance may not cover all damages from such claims.

        We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing, and use of pharmaceutical products. We currently have no products that have been approved for commercial sale. However, the current and future use of product candidates by us in clinical trials, and the sale of any approved products in the future, may expose us to liability claims. These claims might be made by patients that use the product, healthcare providers, pharmaceutical companies, or others selling such products. In addition, we have agreed to indemnify the licensors of the intellectual property related to our product candidates against certain intellectual property infringement claims. Any claims against us, or with respect to which we are obligated to provide indemnification, regardless of their merit, could be difficult and costly to defend or settle, and could compromise the market acceptance of our product candidates or any prospects for commercialization of our product candidates, if approved.

        Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a drug, even after regulatory approval, may exhibit unforeseen side effects. If any of our product candidates were to cause adverse side effects during clinical trials or after approval of the product candidate, we may be exposed to substantial liabilities. Physicians and patients may not comply with any warnings that identify known potential adverse effects and patients who should not use our product candidates.

        Although we maintain product liability insurance coverage, such insurance may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage each time we commence a clinical trial and if we successfully commercialize any product candidate. As the expense of insurance coverage is increasing, we may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired.

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If serious adverse events or other undesirable side effects are identified during the use of our product candidates in investigator-sponsored trials, it may adversely affect our development of such product candidates.

        Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt nonclinical studies and clinical trials, or could make it more difficult for us to enroll patients in our clinical trials. If serious adverse events or other undesirable side effects or unexpected characteristics of our product candidates are observed in investigator-sponsored trials, further clinical development of such product candidate may be delayed or we may not be able to continue development of such product candidate at all, and the occurrence of these events could have a material adverse effect on our business. Undesirable side effects caused by our product candidates could also result in the delay or denial of regulatory approval by the FDA or other regulatory authorities or in a more restrictive label than we expect.

Risks Related to Commercialization of Our Product Candidates

We have never commercialized a product candidate and we may lack the necessary expertise, personnel and resources to successfully commercialize any of our products that receive regulatory approval on our own or together with collaborators.

        We have never commercialized a product candidate. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring the rights to our product candidates and undertaking preclinical studies and clinical trials of our product candidates. We currently have no sales force, marketing or distribution capabilities. To achieve commercial success of our product candidates, if any are approved, we will have to develop our own sales, marketing and supply capabilities or outsource these activities to a third party.

        Factors that may affect our ability to commercialize our product candidates on our own include recruiting and retaining adequate numbers of effective sales and marketing personnel, obtaining access to or persuading adequate numbers of physicians to prescribe our product candidates and other unforeseen costs associated with creating an independent sales and marketing organization. Developing a sales and marketing organization requires significant investment, is time-consuming and could delay the launch of our product candidates. We may not be able to build an effective sales and marketing organization in the United States, the European Union or other key global markets. If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may have difficulties generating revenue from them.

We operate in a highly competitive and rapidly changing industry.

        Biopharmaceutical product development is highly competitive and subject to rapid and significant technological advancements. Our success is highly dependent upon our ability to in-license, acquire, develop and obtain regulatory approval for new and innovative products on a cost-effective basis and to market them successfully. In doing so, we face and will continue to face intense competition from a variety of businesses, including large, fully integrated, well-established pharmaceutical companies who already possess a large share of the market, specialty pharmaceutical and biopharmaceutical companies, academic institutions, government agencies and other private and public research institutions in the United States, the European Union and other jurisdictions.

        With respect to our CGRP receptor antagonists, rimegepant and BHV-3500, we face competition from other companies that market or are developing migraine treatments. These include products in the class of products known as triptans, including the 5-HT1F receptor antagonist lasmiditan being developed by CoLucid Pharmaceuticals, as well as other small molecule CGRP receptor antagonists such as ubrogepant, being developed by Allergan. These products are more advanced in their clinical development than rimegepant and BHV-3500, and therefore may receive marketing approval before our migraine product candidates receive marketing approval, if at all, which could make it more difficult for our products to achieve commercially reasonable market acceptance. In addition, we expect that our migraine

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product candidates will also compete with opioids and other analgesics, monoclonal antibodies in development and Botox and other treatments that have been approved by the FDA for migraine.

        With respect to BHV-0223, which we are developing for the treatment of ALS, we believe our primary competition is Covis Pharmaceuticals, which sells Rilutek, the brand name for riluzole, and the six approved generic versions of Rilutek, which is currently the only approved drug for the treatment of ALS in the United States. We are aware of at least two other companies marketing or planning to market new formulations of riluzole. MonoSol Rx has filed an IND with the FDA to conduct clinical trials for a riluzole oral soluble film, and Italfarmaco SpA, or Italfarmaco, a private Italian company, markets an oral liquid suspension formulation of riluzole in the United Kingdom and elsewhere in Europe under the brand name Teglutik. To our knowledge, no other companies are marketing sublingual formulations of riluzole. Other companies of which we are not aware may also be developing formulations using the API riluzole; if such companies pursued regulatory approval of such product candidates using the Section 505(b)(2) regulatory pathway, those product candidates would potentially compete with BHV-0223. For example, Italfarmaco has obtained orphan designation for Teglutik, and is eligible to obtain orphan exclusivity subject to a showing of clinical superiority to riluzole. If Teglutik is shown to be clinically superior to Rilutek and receives marketing approval before BHV-0223, then BHV-0223 may need to demonstrate clinical superiority to Teglutik to receive marketing approval.

        With respect to trigriluzole, which we are currently developing for the treatment of ataxias, with SCA as our initial indication, there are currently no approved drug treatments for spinocerebellar ataxias in the United States. With respect to BHV-5000, which we are developing for the treatment of Rett syndrome, there are currently no approved treatments for Rett syndrome in the United States.

        If we expand our development of trigriluzole, BHV-0223 or BHV-5000 into additional neuropsychiatric or other indications, we would face substantial competition from companies that develop or sell products that treat those indications.

        Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Mergers and acquisitions in the biopharmaceutical industry could result in even more resources being concentrated among a small number of our competitors.

        Competition may further increase as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, products that are more effective or less costly than any product candidate that we may develop.

        Established biopharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make our product candidates less competitive. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. Accordingly, our competitors may succeed in obtaining patent protection, discovering, developing, receiving FDA approval for or commercializing drugs before we do, which would have an adverse impact on our business and results of operations.

        The availability of our competitors' products could limit the demand and the price we are able to charge for any product candidate we commercialize, if any. The inability to compete with existing or subsequently introduced drugs would harm our business, financial condition and results of operations.

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The successful commercialization of certain of our product candidates will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage, reimbursement levels and pricing policies. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.

        The availability and adequacy of coverage and reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford products such as our product candidates, if approved. Our ability to achieve acceptable levels of coverage and reimbursement for products by governmental authorities, private health insurers and other organizations will have an effect on our ability to successfully commercialize, and attract additional collaboration partners to invest in the development of our product candidates. Coverage under certain government programs, such as Medicare, Medicaid and Tricare, may not be available for certain of our product candidates. Assuming we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. We cannot be sure that coverage and reimbursement in the United States, the European Union or elsewhere will be available for any product that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future.

        Third-party payors increasingly are challenging prices charged for pharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider our product candidates and other therapies as substitutable and only offer to reimburse patients for the less expensive product. Even if we show improved efficacy or improved convenience of administration with our product candidates, pricing of existing drugs may limit the amount we will be able to charge for our product candidates. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our product candidates, and may not be able to obtain a satisfactory financial return on products that we may develop.

        There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs and biologics will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs and biologics. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse health care providers who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidates.

        Obtaining and maintaining reimbursement status is time-consuming and costly. No uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases at short notice, and we believe that changes in these rules and regulations are likely.

        Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale

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of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may adversely affect:

Even if we obtain regulatory approval for our product candidates, they will remain subject to ongoing regulatory oversight.

        Even if we obtain regulatory approval for any of our product candidates, they will be subject to extensive and ongoing regulatory requirements for manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, sampling and record-keeping. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practices, or cGMP, regulations and good clinical practices, or GCPs, for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such products. In addition, any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require a REMS as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

        The FDA's and other regulatory authorities' policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability. Moreover, if there are changes in the application of legislation or regulatory policies, or if problems are discovered with a product or our manufacture of a product, or if we or one of our distributors, licensees or co-marketers fails to comply with regulatory requirements, the regulators could take various actions. These include:

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        If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantial additional expense to comply with regulatory requirements, which could adversely affect our business, financial condition and results of operations.

Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

        Even if the FDA approves the marketing of any product candidates that we develop, physicians, patients, third-party payors or the medical community may not accept or use them. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful. If any of our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue or any profits from operations. The degree of market acceptance of our product candidates that are approved for commercial sale will depend on a variety of factors, including:

        Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our products, if approved, may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness of our product candidates. Because we expect sales of our product candidates, if approved, to generate substantially all of our product revenue for the foreseeable future, the failure of our product candidates to find market acceptance would harm our business and could require us to seek additional financing.

        In addition, the potential market opportunity for our product candidates is difficult to estimate precisely. Our estimates of the potential market opportunity are predicated on several key assumptions such as industry knowledge and publications, third-party research reports and other surveys. While we believe that our internal assumptions are reasonable, these assumptions may be inaccurate. If any of the assumptions proves to be inaccurate, then the actual market for our product candidates could be smaller than our estimates of the potential market opportunity. If the actual market for our product candidates is smaller than we expect, or if the products fail to achieve an adequate level of acceptance by physicians,

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health care payors and patients, our revenue from product sales may be limited and we may be unable to achieve or maintain profitability.

We currently have no marketing, sales or distribution infrastructure. If we are unable to develop sales, marketing and distribution capabilities on our own or through collaborations, or if we fail to achieve adequate pricing or reimbursement we will not be successful in commercializing our product candidates, if approved.

        We currently have no marketing, sales and distribution capabilities and our product candidates are still in clinical development. If any of our product candidates are approved, we intend either to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our product candidates, or to outsource these functions to a third party. Either of these options would be expensive and time-consuming. These costs may be incurred in advance of any approval of our product candidates. In addition, we may not be able to hire a sales force that is sufficient in size or has adequate expertise in the medical markets that we intend to target. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of our products.

        To the extent that we enter into collaboration agreements with respect to marketing, sales or distribution, our product revenue may be lower than if we directly marketed or sold any approved products. In addition, any revenue we receive will depend in whole or in part upon the efforts of these third-party collaborators, which may not be successful and are generally not within our control. If we are unable to enter into these arrangements on acceptable terms or at all, we may not be able to successfully commercialize any approved products. If we are not successful in commercializing any approved products, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

If the FDA or comparable foreign regulatory authorities approve generic versions of any of our products that receive marketing approval, or such authorities do not grant our products appropriate periods of exclusivity before approving generic versions of our products, the sales of our products could be adversely affected.

        Once an NDA is approved, the product covered thereby becomes a "reference listed drug" in the FDA's publication, "Approved Drug Products with Therapeutic Equivalence Evaluations," commonly known as the Orange Book. Manufacturers may seek approval of generic versions of reference listed drugs through submission of ANDAs in the United States. In support of an ANDA, a generic manufacturer need not conduct clinical trials. Rather, the applicant generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use or labeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference listed drug and companies that produce generic products are generally able to offer them at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is typically lost to the generic product.

        The FDA may not approve an ANDA for a generic product until any applicable period of non-patent exclusivity for the reference listed drug has expired. The FDCA provides a period of five years of non-patent exclusivity for a new drug containing an NCE. Specifically, in cases where such exclusivity has been granted, an ANDA may not be submitted to the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification that a patent covering the reference listed drug is either invalid or will not be infringed by the generic product, in which case the applicant may submit its application four years following approval of the reference listed drug.

        While we believe that rimegepant contains active ingredients that would be treated as NCEs by the FDA and, therefore, if approved, should be afforded five years of data exclusivity, the FDA may disagree with that conclusion and may approve generic products after a period that is less than five years. Moreover,

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while we believe that trigriluzole, a prodrug of riluzole, and BHV-5000 will also be treated as NCEs under current FDA interpretations, if approved, the FDA may ultimately disagree with our conclusion. Manufacturers may seek to launch these generic products following the expiration of the applicable marketing exclusivity period, even if we still have patent protection for our product.

        Competition that our products may face from generic versions of our products could materially and adversely impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates.

Risks Related to Our Dependence on Third Parties

If we fail to comply with our obligations under our existing and any future intellectual property licenses with third parties, we could lose license rights that are important to our business.

        We are party to several license agreements under which we in-license patent rights and other intellectual property related to or business, including a license agreement with BMS, under which we were granted an exclusive license relating to rimegepant and BHV-3500, a license agreement with ALS Biopharma and FCCDC, pursuant to which we were assigned intellectual property rights relating to trigriluzole, a license agreement with Catalent, pursuant to which we were granted an exclusive license to use their Zydis technology in the development of BHV-0223, and a license agreement with AstraZeneca, pursuant to which we were granted an exclusive license relating to BHV-5000. We have also entered into other license agreements that relate to other patent rights and other indications we are pursuing or may pursue in the future. We may enter into additional license agreements in the future. Our license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty, insurance and other obligations on us. Any uncured, material breach under these license agreements could result in our loss of rights to practice the patent rights and other intellectual property licensed to us under these agreements, and could compromise our development and commercialization efforts for our product candidates. See "Business—License Agreements" for a more detailed description of our current license agreements.

Our intellectual property in-licenses with third parties may be subject to disagreements over contract interpretations, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.

        The agreements under which we currently in-license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could harm our business, financial condition, results of operations and prospects. If any of our current or future licenses or material relationships or any in-licenses upon which our current or future product candidates are based are terminated or breached, we may:

        If we experience any of the foregoing, it could harm our business, financial condition and results of operations.

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We rely on third parties to conduct our preclinical studies and clinical trials and if these third parties perform in an unsatisfactory manner, our business could be substantially harmed.

        We intend to conduct our future clinical trials, including our two planned Phase 3 clinical trials of rimegepant and our Phase 2/3 clinical trial of trigriluzole, using our own clinical resources while also leveraging expertise and assistance from CROs as appropriate. We do not currently have the ability to independently conduct large-scale clinical trials, such as a Phase 3 clinical trial, without outside assistance.

        We have relied upon and plan to continue to rely upon medical institutions, clinical investigators, contract laboratories and other third parties, such as CROs, to conduct or assist us in conducting GCP-compliant clinical trials on our product candidates properly and on time, and may not currently have all of the necessary contractual relationships in place to do so. Once we have established contractual relationships with such third-party CROs, we will have only limited control over their actual performance of these activities.

        We and our CROs and other vendors are required to comply with cGMP, GCP and GLP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Union and any comparable foreign regulatory authorities for all of our product candidates in preclinical and clinical development. Regulatory authorities enforce these regulations through periodic inspections of trial sponsors, principal investigators, clinical trial sites and other contractors. Although we rely on CROs to conduct any current or planned GLP-compliant preclinical studies and GCP-compliant clinical trials and have limited influence over their actual performance, we remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and applicable laws and regulations, and our reliance on the CROs does not relieve us of our regulatory responsibilities. If we or any of our CROs or vendors fail to comply with applicable regulations, the data generated in our preclinical studies and clinical trials may be deemed unreliable and the FDA, EMA or any comparable foreign regulatory agency may require us to perform additional preclinical studies and clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory agency, such regulatory agency will determine that all of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with products produced under cGMP requirements. Our failure to comply with these requirements may require us to repeat clinical trials, which would delay the regulatory approval process.

        While we will have agreements governing their activities, our CROs will not be our employees, and we will not be able to control whether or not they devote sufficient time and resources to our future preclinical and clinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our business. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reason, our clinical trials may be extended, delayed or terminated, the clinical data generated in our clinical trials may be deemed unreliable, and we may not be able to obtain regulatory approval for, or successfully commercialize any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate that we develop would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

        If our relationship with these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires management time and focus, and could delay development and commercialization of our product candidates. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can negatively impact our ability to meet our desired clinical development timelines. Though we intend to carefully manage our relationships with our

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CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a negative impact on our business and financial condition.

We currently rely on third parties for the production of our clinical supply of our product candidates and we intend to continue to rely on third parties for our clinical and commercial supply.

        We currently rely on and expect to continue to rely on third parties for the manufacturing and supply of chemical compounds for the clinical trials of our product candidates and, if approved, our commercial supply. Reliance on third-party suppliers may expose us to different risks than if we were to manufacture product candidates ourselves. The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA or other regulatory authorities pursuant to inspections that will be conducted after we submit our NDA or comparable foreign marketing application to the FDA or other foreign regulatory agency.

        Although we have auditing rights with all our manufacturing counterparties, we do not have control over a supplier's or manufacturer's compliance with these laws, regulations and applicable cGMP standards and other laws and regulations, such as those related to environmental health and safety matters. There can be no assurance that our preclinical and clinical development product supplies will not be limited, interrupted or of satisfactory quality or continue to be available at acceptable prices. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure or maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. In the event that any of our manufacturers fails to comply with regulatory requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, or if the FDA or a comparable foreign regulatory agency does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities. Any replacement of our manufacturers could require significant effort, time and expense, which could significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

        Any failure to achieve and maintain compliance with these laws, regulations and standards could adversely affect our business in a number of ways, including:

        Furthermore, third-party providers may breach agreements they have with us because of factors beyond our control. They may also terminate or refuse to renew their agreements because of their own financial difficulties or business priorities, potentially at a time that is costly or otherwise inconvenient for us. If we were unable to find adequate replacement or another acceptable solution in time, our clinical trials could be delayed or our commercial activities could be harmed.

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        In addition, the fact that we are dependent on third parties for the manufacture, storage and distribution of our product candidates means that we are subject to the risk that our product candidates and, if approved, commercial products may have manufacturing defects that we have limited ability to prevent or control. The sale of products containing such defects could result in recalls or regulatory enforcement action that could adversely affect our business, financial condition and results of operations. Our reliance on third parties also exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may appropriate our trade secrets or other proprietary information.

We rely completely on third-party contractors to supply, manufacture and distribute clinical drug supplies for our product candidates, including certain sole-source suppliers and manufacturers; we intend to rely on third parties for commercial supply, manufacturing and distribution if any of our product candidates receive regulatory approval; and we expect to rely on third parties for supply, manufacturing and distribution of preclinical, clinical and commercial supplies of any future product candidates.

        We do not currently have, nor do we plan to acquire, the internal infrastructure or capability to supply, manufacture or distribute preclinical, clinical or commercial quantities of drug substances or products.

        Our ability to develop our product candidates depends and our ability to commercially supply our products will depend, in part, on our ability to successfully obtain the APIs and other substances and materials used in our product candidates from third parties and to have finished products manufactured by third parties in accordance with regulatory requirements and in sufficient quantities for preclinical and clinical testing and commercialization. If we fail to develop and maintain supply relationships with these third parties, we may be unable to continue to develop or commercialize our product candidates.

        We do not have direct control over the ability of our contract suppliers and manufacturers to maintain adequate capacity and capabilities to serve our needs, including quality control, quality assurance and qualified personnel. Although we are ultimately responsible for ensuring compliance with regulatory requirements such as cGMPs, we are dependent on our contract suppliers and manufacturers for day-to-day compliance with cGMPs for production of both APIs and finished products. Facilities used by our contract suppliers and manufacturers to produce the APIs and other substances and materials or finished products for commercial sale must pass inspection and be approved by the FDA and other relevant regulatory authorities. Our contract suppliers and manufacturers must comply with cGMP requirements enforced by the FDA through its facilities inspection program and review of submitted technical information. If the safety of any product or product candidate or component is compromised due to a failure to adhere to applicable laws or for other reasons, we may not be able to successfully commercialize or obtain regulatory approval for the affected product or product candidate, and we may be held liable for injuries sustained as a result. Any of these factors could cause a delay or termination of preclinical studies, clinical trials or regulatory submissions or approvals of our product candidates, and could entail higher costs or result in our being unable to effectively commercialize our approved products on a timely basis, or at all.

        We also rely and will continue to rely on certain third parties as the sole source of the materials they supply or the finished products they manufacture. For example, Catalent is the sole-source supplier for the Zydis formulation of BHV-0223. We may also have sole-source suppliers for one or more of our other product candidates. Some of the APIs and other substances and materials used in our product candidates are currently available only from one or a limited number of domestic or foreign suppliers and foreign manufacturers and certain of our finished product candidates are manufactured by one or a limited number of contract manufacturers. In the event an existing supplier fails to supply product on a timely basis or in the requested amount, supplies product that fails to meet regulatory requirements, becomes unavailable through business interruption or financial insolvency or loses its regulatory status as an approved source or if we or our manufacturers are unable to renew current supply agreements when such agreements expire and we do not have a second supplier, we likely would incur added costs and delays in identifying or qualifying replacement manufacturers and materials and there can be no assurance that

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replacements would be available to us on a timely basis, on acceptable terms or at all. In certain cases we may be required to get regulatory approval to use alternative suppliers, and this process of approval could delay production of our products or development of product candidates indefinitely. We and our manufacturers do not currently maintain inventory of these APIs and other substances and materials. Any interruption in the supply of an API or other substance or material or in the manufacture of a finished product could have a material adverse effect on our business, financial condition, operating results and prospects.

        In addition, these contract manufacturers are or may be engaged with other companies to supply and manufacture materials or products for such companies, which also exposes our suppliers and manufacturers to regulatory risks for the production of such materials and products. As a result, failure to meet the regulatory requirements for the production of those materials and products may also affect the regulatory clearance of a contract supplier's or manufacturer's facility. If the FDA or a comparable foreign regulatory agency does not approve these facilities for the supply or manufacture of our product candidates, or if it withdraws its approval in the future, we may need to find alternative supply or manufacturing facilities, which would negatively impact our ability to develop, obtain regulatory approval of or market our product candidates, if approved.

        As we prepare for later-stage clinical trials and potential commercialization, we will need to take steps to increase the scale of production of our product candidates, which may include transferring production to new third-party suppliers or manufacturers. In order to conduct larger or late-stage scale clinical trials for our product candidates and supply sufficient commercial quantities of the resulting drug product and its components, if that product candidate is approved for sale, our contract manufacturers and suppliers will need to produce our product candidates in larger quantities, more cost effectively and, in certain cases, at higher yields than they currently achieve. These third-party contractors may not be able to successfully increase the manufacturing capacity for any of such product candidates in a timely or cost-effective manner or at all. Significant scale up of manufacturing may require additional processes, technologies and validation studies, which are costly, may not be successful and which the FDA and foreign regulatory authorities must review and approve. In addition, quality issues may arise during those scale-up activities because of the inherent properties of a product candidate itself or of a product candidate in combination with other components added during the manufacturing and packaging process, or during shipping and storage of the APIs or the finished product. If our third-party contractors are unable to successfully scale up the manufacture of any of our product candidates in sufficient quality and quantity and at commercially reasonable prices, and we are unable to find one or more replacement suppliers or manufacturers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality, and we are unable to successfully transfer the processes on a timely basis, the development of that product candidate and regulatory approval or commercial launch for any resulting products may be delayed, or there may be a shortage in supply, either of which could significantly harm our business, financial condition, operating results and prospects.

        We expect to continue to depend on third-party contract suppliers and manufacturers for the foreseeable future. Our supply and manufacturing agreements, if any, do not guarantee that a contract supplier or manufacturer will provide services adequate for our needs. We and our contract suppliers and manufacturers continue to improve production processes, certain aspects of which are complex and unique, and we may encounter difficulties with new or existing processes. While we attempt to build in certain contractual obligations on such third-party suppliers and manufacturers, we may not be able to ensure that such third parties comply with these obligations. Depending on the extent of any difficulties encountered, we could experience an interruption in clinical or commercial supply, with the result that the development, regulatory approval or commercialization of our product candidates may be delayed or interrupted. In addition, third-party suppliers and manufacturers may have the ability to increase the price payable by us for the supply of the APIs and other substances and materials used in our product candidates, in some cases without our consent.

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        Additionally, any damage to or destruction of our third-party manufacturers' or suppliers' facilities or equipment may significantly impair our ability to have our product candidates manufactured on a timely basis. Furthermore, if a contract manufacturer or supplier becomes financially distressed or insolvent, or discontinues our relationship beyond the term of any existing agreement for any other reason, this could result in substantial management time and expense to identify, qualify and transfer processes to alternative manufacturers or suppliers, and could lead to an interruption in clinical or commercial supply.

        Our reliance on contract manufacturers and suppliers further exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may misappropriate our trade secrets or other proprietary information.

        In addition, the manufacturing facilities of certain of our suppliers are located outside of the United States. This may give rise to difficulties in importing our products or product candidates or their components into the United States or other countries as a result of, among other things, regulatory agency approval requirements or import inspections, incomplete or inaccurate import documentation or defective packaging.

We, or third-party manufacturers on whom we rely, may be unable to successfully scale-up manufacturing of our product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any.

        In order to conduct clinical trials of our product candidates and commercialize any approved product candidates, we, or our manufacturers, will need to manufacture them in large quantities. We, or our manufacturers, may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during scale-up activities. If we, or any of our manufacturers, are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing, and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. If we are unable to obtain or maintain third-party manufacturing for commercial supply of our product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.

We may in the future enter into collaborations with third parties to develop our product candidates. If these collaborations are not successful, our business could be harmed.

        We may potentially enter into collaborations with third parties in the future. We will face, to the extent that we decide to enter into collaboration agreements, significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time-consuming to negotiate, document, implement and maintain. We may not be successful in our efforts to establish and implement collaborations or other alternative arrangements should we so chose to enter into such arrangements. The terms of any collaborations or other arrangements that we may establish may not be favorable to us.

        Any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborations are subject to numerous risks, including:

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        If any such potential future collaborations do not result in the successful development and commercialization of product candidates, or if one of our future collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, the development of our product candidates could be delayed and we may need additional resources to develop our product candidates. In addition, if one of our future collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and the perception of us in the business and financial communities could be adversely affected. All of the risks relating to product development, regulatory approval and commercialization apply to the activities of our potential future collaborators.

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If we are not able to establish or maintain collaborations, we may have to alter some of our future development and commercialization plans.

        Our product development programs and the potential commercialization of our product candidates will require substantial additional capital to fund expenses. For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the future development and potential commercialization of those product candidate. Furthermore, we may find that our programs require the use of proprietary rights held by third parties, and the growth of our business may depend in part on our ability to acquire, in-license or use these proprietary rights.

        We face significant competition in seeking appropriate collaborators, and a number of more established companies may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, financial resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA, EMA or similar foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under existing license agreements from entering into agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

        We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. Even if we are able to obtain a license to intellectual property of interest, we may not be able to secure exclusive rights, in which case others could use the same rights and compete with us. If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to curtail the development of such product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

        Because we rely on third parties to develop and manufacture our product candidates, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information,

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such as trade secrets. Despite these contractual agreements with third parties, sharing trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor's discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may harm our business.

        In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators. A competitor's discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

Risks Related to Regulatory Compliance

Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set.

        In the United States, the European Union, and other foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, was enacted, which substantially changes the way healthcare is financed by both governmental and private insurers. Among the provisions of the ACA, those of greatest importance to the pharmaceutical and biotechnology industries include:

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        Some of the provisions of the ACA have yet to be implemented, and there have been judicial and Congressional challenges to certain aspects of the ACA. In addition, the current administration and Congress will likely continue to seek legislative and regulatory changes, including repeal and replacement of certain provisions of the ACA. In January 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In March 2017, following the passage of the budget resolution for fiscal year 2017, the U.S. House of Representatives introduced legislation known as the American Health Care Act, which, if enacted, would have amended or repealed significant portions of the ACA. However, consensus over the scope and content of the American Health Care Act could not be reached by its proponents in the U.S. House of Representatives. Thus, the proposed legislation has been withdrawn and the prospects for legislative action on this bill are uncertain. Congress could consider other legislation to repeal or replace certain elements of the ACA. We continue to evaluate the effect that the ACA and its possible repeal and replacement has on our business.

        In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2025 unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other health care funding, which could have an adverse effect on our customers and accordingly, our financial operations.

        Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, CMS may develop new payment and delivery models, such as bundled payment models. The U.S. Department of Health and Human Services, or HHS, set a goal of moving 30% of Medicare payments to alternative payment models tied to the quality or value of services by 2016 and 50% of Medicare payments into these alternative payment models by the end of 2018. In March, HHS announced that it has achieved its goal for 2016. In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which

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could limit the amounts that the U.S. federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

        Individual states in the United States have also become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our products or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

        In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize any of our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

        We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we or our collaborators are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Our business operations and current and future relationships with investigators, health care professionals, consultants, third-party payors and customers will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

        Although we do not currently have any products on the market, if we obtain FDA approval for our product candidates, and begin commercializing those products in the United States, our operations may be directly, or indirectly through our prescribers, customers and third-party payors, subject to various U.S. federal and state healthcare laws and regulations, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal civil and criminal false claims laws and Physician Payments Sunshine Act and regulations. Healthcare providers, physicians and others play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. These laws may impact, among other things, our current business operations, including our clinical research activities,

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and proposed sales, marketing and education programs and constrain the business of financial arrangements and relationships with healthcare providers, physicians and other parties through which we market, sell and distribute our products for which we obtain marketing approval. In addition, we may be subject to patient data privacy and security regulation by both the U.S. federal government and the states in which we conduct our business. Finally, we may be subject to additional healthcare, statutory and regulatory requirements and enforcement by foreign regulatory authorities in jurisdictions in which we conduct our business. The laws that may affect our ability to operate include:

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        Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from U.S. government funded healthcare programs, such as Medicare and Medicaid, or similar programs in other countries or jurisdictions, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment or restructuring of our operations. Further, defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. If any of the physicians or other providers or entities with whom we expect to do business is found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment. If any of the above occur, it could adversely affect our ability to operate our business and our results of operations.

We may not be able to obtain or maintain orphan drug designation or exclusivity for our product candidates.

        We have obtained orphan drug designation in the United States for trigriluzole in SCA and BHV-0223 in ALS. We may seek orphan drug designation for other product candidates in the future. Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States.

        Our orphan drug exclusivity for BHV-0223 for ALS is contingent upon a showing that BHV-0223 is clinically superior to Rilutek in the treatment of ALS. Clinical superiority may be demonstrated by showing that a drug has greater effectiveness than the approved drug, greater safety in a substantial portion of the target population, or otherwise makes a major contribution to patient care. If we are unable to demonstrate that BHV-0223 is clinically superior to riluzole, we will not be entitled to the benefits of orphan drug exclusivity for BHV-0223 for ALS, which could adversely affect our business and our ability to market and sell BHV-0223 if it is approved for sale.

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        Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same drug for the same indication during that time period. The applicable period is seven years in the United States and ten years in the European Union. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or the EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

        We cannot assure you that any future application for orphan drug designation with respect to any other product candidate will be granted. If we are unable to obtain orphan drug designation with respect to other product candidates in the United States, we will not be eligible to obtain the period of market exclusivity that could result from orphan drug designation or be afforded the financial incentives associated with orphan drug designation. Even when we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve a later drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent protection for our technology and product candidates, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

        We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our current and future product candidates. We have sought to protect our proprietary position by filing and in-licensing patent applications in the United States and abroad related to our development programs and product candidates.

        The patent prosecution process is expensive and time-consuming, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions. Prosecution of our patent portfolio is at a very early stage. None of our owned or in-licensed patents claiming BHV-5000, trigriluzole or BHV-0223 have issued, and applications under the Patent Cooperation Treaty, or PCT, remain pending with respect to trigriluzole and BHV-0223. As applicable deadlines under the PCT become due, we will have to decide whether and where to pursue patent protection for the various inventions claimed in our patent portfolio, and we will only have the opportunity to obtain patents in those jurisdictions where we pursue protection.

        It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our current and future product candidates in the United States or in other foreign countries. Our patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, a patent issues from such applications, and then only to the extent the issued claims cover the technology.

        If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our current and future product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, products. Any such outcome could have a negative effect on our business.

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        The patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, EU patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions remain confidential for a period of time after filing, and some remain so until issued. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, and such prior art could potentially invalidate one or more of our patents or prevent a patent from issuing from one or more of our pending patent applications. There is also no assurance that there is not prior art of which we are aware, but which we do not believe affects the validity, patentability or enforceability of a claim in our patents and patent applications, which may, nonetheless, ultimately be found to affect the validity, patentability or enforceability of a claim.

        Even if patents do successfully issue and even if such patents cover our current or future product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated or held unenforceable, which could allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates, prevent others from designing around our claims or provide us with a competitive advantage. Any of these outcomes could impair our ability to prevent competition from third parties. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

        We, independently or together with our licensors, have filed several patent applications covering various aspects of our product candidates. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent, or whether any issued patents will be found invalid and unenforceable or will be challenged by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced.

Our patents and pending patent applications related to trigriluzole and BHV-0223 only protect or seek to protect the formulation or method of administration of our product candidates and not the active pharmaceutical ingredient, riluzole, a compound for which patent protection is no longer available.

        We own several families of patent applications covering prodrugs and formulations of riluzole. These patent applications include several U.S. applications and corresponding PCT applications. These families of patent applications cover trigriluzole and numerous other prodrugs of riluzole as well as BHV-0223, a sublingual or ODT form of riluzole. Other patent applications provide coverage for alternative formulations of riluzole prodrugs and their uses. The applications also cover prodrugs related to riluzole and prodrugs relating to lanicemine. The patent for riluzole, which is the active pharmaceutical ingredient in these product candidates, expired in 2013, and so only novel riluzole-containing pharmaceutical compositions and their uses can be protected by one or more patent applications.

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We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop and market our product candidates.

        We cannot guarantee that any of our or our licensors' patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction. For example, U.S. applications filed before November 29, 2000 and certain U.S. applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our product candidates could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product candidates. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent's prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our product candidates. We may incorrectly determine that our product candidates are not covered by a third-party patent or may incorrectly predict whether a third party's pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our product candidates.

        If we fail to identify and correctly interpret relevant patents, we may be subject to infringement claims. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

We are dependent on licensed intellectual property. If we were to lose our rights to licensed intellectual property, we may not be able to continue developing or commercializing our product candidates, if approved. If we breach any of the agreements under which we license the use, development and commercialization rights to our product candidates or technology from third parties or, in certain cases, we fail to meet certain development deadlines, we could lose license rights that are important to our business.

        We are a party to a number of license agreements under which we are granted rights to intellectual property that are important to our business and we may need or choose to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose on us, various development, regulatory and/or commercial diligence obligations, payment of milestones and/or royalties and other obligations. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license. Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

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        Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:

        If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

        We have entered into several licenses to support our various programs. See "Business—License Agreements" for a detailed description of our rights and obligations under these license agreements. Termination of any of these license agreements would have a material adverse impact on our ability to develop and commercialize derived products under each respective agreement.

        We may enter into additional licenses to third-party intellectual property that are necessary or useful to our business. Our current licenses and any future licenses that we may enter into impose various royalty payment, milestone, and other obligations on us. Under some license agreements, we may not control prosecution of the licensed intellectual property, or may not have the first right to enforce the intellectual property. In those cases, we may not be able to adequately influence patent prosecution or enforcement, or prevent inadvertent lapses of coverage due to failure to pay maintenance fees. If we fail to comply with any of our obligations under a current or future license agreement, the licensor may allege that we have breached our license agreement, and may accordingly seek to terminate our license. Termination of any of our current or future licenses could result in our loss of the right to use the licensed intellectual property, which could materially adversely affect our ability to develop and commercialize a product candidate or product, if approved, as well as harm our competitive business position and our business prospects. Under some license agreements, termination may also result in the transfer of or granting in rights under certain of our intellectual property and information related to the product candidate being developed under the license, such as regulatory information.

        In addition, if our licensors fail to abide by the terms of the license, if the licensors fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms, our business could suffer.

Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

        Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents

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covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from competitive medications, including generic medications. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing product candidates similar or identical to ours.

        Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments, and similar legislation in the European Union. The Hatch-Waxman Amendments permit a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. Only one patent per approved product can be extended, and the extension cannot extend the total patent term beyond fourteen years from approval. If we are unable to obtain patent term extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product will be shortened and our competitors may obtain approval to market competing products sooner. As a result, our revenue from applicable products could be reduced. Further, if this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. Because riluzole has already been approved, we will not be eligible to obtain patent term extension for any of our patents, should they issue, that cover BHV-0223.

If we are unable to obtain licenses from third parties on commercially reasonable terms or fail to comply with our obligations under such agreements, our business could be harmed.

        It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required to obtain a license from these third parties. If we are unable to license such technology, or if we are forced to license such technology, on unfavorable terms, our business could be materially harmed. If we are unable to obtain a necessary license, we may be unable to develop or commercialize the affected product candidates, which could materially harm our business and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.

        If we fail to comply with our obligations under license agreements, our counterparties may have the right to terminate these agreements, in which event we might not be able to develop, manufacture or market, or may be forced to cease developing, manufacturing or marketing, any product that is covered by these agreements or may face other penalties under such agreements. Such an occurrence could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, cause us to lose our rights under these agreements, including our rights to important intellectual property or technology or impede, delay or prohibit the further development or commercialization of one or more product candidates that rely on such agreements.

Intellectual property rights do not necessarily address all potential threats to our business.

        Once granted, patents may remain open to invalidity challenges including opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before

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patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant. In the course of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether.

        In addition, the degree of future protection afforded by our intellectual property rights is uncertain because even granted intellectual property rights have limitations, and may not adequately protect our business, provide a barrier to entry against our competitor or potential competitors or permit us to maintain our competitive advantage. Moreover, if a third party has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from our intellectual property rights. The following examples are illustrative:

        Should any of these events occur, they could have significantly harm our business and results of operations.

Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

        As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical

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industry involve both technological complexity and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents is costly, time-consuming and inherently uncertain. In addition, the America Invents Act, or the AIA, was signed into law on September 16, 2011, and many of the substantive changes became effective on March 16, 2013.

        An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a "first-to-file" system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. A third party that files a patent application in the U.S. Patent and Trademark Office, or USPTO, after that date but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application, but circumstances could prevent us from promptly filing patent applications on our inventions.

        Among some of the other changes introduced by the AIA are changes that limit where a patentee may file a patent infringement suit and providing additional opportunities for third parties to challenge any issued patent in the USPTO. This applies to all of our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. The AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

        The USPTO has developed in the last few years regulations and procedures to govern administration of the AIA, and many of the substantive changes to patent law associated with the AIA, and, in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the AIA will have on the operation of our business. However, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our or our licensors' or collaboration partners' patent applications and the enforcement or defense of our or our licensors' or collaboration partners' issued patents, all of which could have an adverse effect on our business and financial condition.

        Additionally, the U.S. Supreme Court has ruled on several patent cases in recent years, such as Association for Molecular Pathology v. Myriad Genetics, Inc. (Myriad I), Mayo Collaborative Services v. Prometheus Laboratories, Inc. , and Alice Corporation Pty. Ltd. v. CLS Bank International , either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. Similarly, the complexity and uncertainty of European patent laws has also increased in recent years. For example, the April 2010 amendment of the European Patent Convention, which limited the time permitted for filing divisional applications, was subsequently abrogated. This amendment and subsequent abrogation illustrates the uncertainty involved in the prosecution of European patent laws. In addition, the European patent system is relatively stringent in the type of amendments that are allowed during prosecution. These changes could limit our ability to obtain new patents in the future that may be important for our business.

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Some intellectual property which we have in-licensed may have been discovered through government funded programs and thus may be subject to federal regulations such as "march-in" rights, certain reporting requirements, and a preference for U.S. industry. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.

        Some of the intellectual property rights we have licensed or acquired, including rights licensed to us by Rutgers, the State University of New Jersey, and rights assigned to us by ALS Biopharma, LLC, may have been generated through the use of U.S. government funding and may therefore be subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act. These U.S. government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as "march-in rights"). The U.S. government also has the right to take title to these inventions if we, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. To the extent any of our current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply. Any exercise by the government of certain of its rights could harm our competitive position, business, financial condition, results of operations and prospects.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a negative impact on the success of our business.

        Our commercial success depends, in part, upon our ability, and the ability of our future collaborators, to develop, manufacture, market and sell our product candidates, if approved, and use our proprietary technologies without alleged or actual infringement, misappropriation or other violation of the patents and proprietary rights of third parties. There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and re-examination proceedings before the USPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. Some claimants may have substantially greater resources than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the intellectual property rights of third parties.

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        We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our product candidates and technology, including interference or derivation proceedings, post grant review and inter partes review before the USPTO or similar adversarial proceedings or litigation in other jurisdictions. Similarly, we or our licensors or collaborators may initiate such proceedings or litigation against third parties, including to challenge the validity or scope of intellectual property rights controlled by third parties. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our technology, such as our compositions, formulations, or methods of treatment, prevention or use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires or is finally determined to be invalid, unenforceable or not infringed by our technology. In either case, such a license may not be available on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. Furthermore, even in the absence of litigation, we may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In such an event, we would be unable to further practice our technologies or develop and commercialize any of our product candidates at issue, which could harm our business significantly.

        Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates, if approved. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. Third parties making such claims may have the ability to dedicate substantially greater resources to these legal actions than we or our licensors or collaborators can. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

We may become involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could be expensive, time-consuming and unsuccessful.

        Competitors may infringe or otherwise violate our or our licensors' patents or misappropriate or otherwise violate our or our licensor's other intellectual property rights. To counter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming. Our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we can. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

        The initiation of a claim against a third party may also cause the third party to bring counter claims against us such as claims asserting that our patents are invalid or unenforceable or claims challenging the scope of the intellectual property rights we own or control. In patent litigation in the United States,

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defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement, lack of adequate written description or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte re-examinations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is no invalidating prior art, of which we, our licensors and the patent examiner were unaware during prosecution.

        For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party. Therefore, these patents and applications may not be defended in a manner consistent with the best interests of our business. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future product candidates. Such a loss of patent protection could harm our business. In addition, if the breadth or strength of protection provided by our or our licensors' patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

        We may not be able to prevent, alone or with our licensors, infringement or misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result in substantial costs and distract our management and other employees.

        Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common shares.

We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.

        Filing, prosecuting and defending patents covering our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Further, licensing partners may not prosecute patents in certain jurisdictions in which we may obtain commercial rights, thereby precluding the possibility of later obtaining patent protection in these countries. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain

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developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents, if obtained, or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights, whether owned or licensed to us, in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on our ability to successfully commercialize our product candidates in all of our expected significant foreign markets.

        Additionally, the requirements for patentability may differ in certain countries, particularly developing countries. For example, unlike other countries, China has a heightened requirement for patentability, and specifically requires a detailed description of medical uses of a claimed drug. In India, unlike the United States, there is no link between regulatory approval of a drug and its patent status. Furthermore, generic drug manufacturers or other competitors may challenge the scope, validity or enforceability of our or our licensors' patents, requiring us or our licensors to engage in complex, lengthy and costly litigation or other proceedings. Generic drug manufacturers may develop, seek approval for, and launch generic versions of our products. In addition to India, certain countries in Europe and developing countries, including China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our and our licensors' efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.

        We do and may employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our licensors, competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, and we are not currently subject to any claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties, we may in the future be subject to such claims. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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We may be subject to claims challenging the inventorship or ownership of our patents, patent applications or other intellectual property, or our licensors may be subject to similar such claims.

        Although we are not currently experiencing any claims challenging the inventorship or ownership of our patents or ownership of our intellectual property, we may in the future be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor, or that an employee, consultant, or other third party performed work for us that conflicts with that person's obligations to a third party, such as an employer, and thus, that the third party has an ownership interest in the intellectual property arising out of work performed for us. While it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. For example, the assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, or we may have disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. This risk similarly applies to any intellectual property that we in-license. If a licensor is subject to a claim challenging inventorship or ownership, it could adversely impact our exclusivity under or rights to use valuable in-licensed intellectual property.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

        Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time-consuming and is likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

        We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon, misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have an adverse effect on our ability to compete in the marketplace.

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Our inability to protect our confidential information and trade secrets would harm our business and competitive position.

        In addition to seeking patents for some of our technology and product candidates, via intellectual property we own or license, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how by maintaining physical security of our premises and physical and electronic security of our information technology systems. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. We cannot guarantee that our trade secrets and other proprietary and confidential information will not be disclosed or that competitors will not otherwise gain access to our trade secrets. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts both within and outside the United States may be less willing or unwilling to protect trade secrets. Moreover, if a competitor lawfully obtained or independently developed any of our trade secrets, we would have no right to prevent such competitor from using that technology or information to compete with us. Any misappropriation, disclosure or independent development of our trade secrets could harm our competitive position.

        Trade secrets and know-how can be difficult to protect as trade secrets and know-how will over time be disseminated within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from company to company or academic to industry scientific positions. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could adversely affect our business, results of operations and financial condition. Even if we are able to adequately protect our trade secrets and proprietary information, our trade secrets could otherwise become known or could be independently discovered by our competitors. Competitors could purchase our products and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, in the absence of patent protection, we would have no right to prevent them, or those to whom they communicate, from using that technology or information to compete with us.

        We may not be able to prevent misappropriation of our intellectual property, trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares.

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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our products, our competitors might be able to enter the market, which would harm our business. In addition, to the extent that we have responsibility for taking any action related to the prosecution or maintenance of patents or patent application in-licensed from a third party, any failure on our part to maintain the in-licensed rights could jeopardize our rights under the relevant license and may expose us to liability.

Risks Related to Our Business Operations, Employee Matters and Managing Growth

Our future growth and ability to compete depends on retaining our key personnel and recruiting additional qualified personnel.

        We are highly dependent on the management, development, clinical, financial and business development experience of our senior management. Each of these officers may currently terminate their employment with us at any time and will continue to be able to do so after the closing of this offering. We do not maintain "key person" insurance for any of our executives or employees.

        The competition for qualified personnel in the biopharmaceutical field is intense, and our future success depends upon our ability to attract, retain and motivate highly-skilled scientific, technical and managerial employees. We face competition for personnel from other companies, universities, public and private research institutions and other organizations. If our recruitment and retention efforts are unsuccessful in the future, it may be difficult for us to implement business strategy, which could harm our business.

        In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

Our future growth depends, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.

        Our future profitability will depend, in part, on our ability to commercialize our product candidates in markets outside of the United States and the European Union. If we commercialize our product candidates in foreign markets, we will be subject to additional risks and uncertainties, including:

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        Foreign sales of our products could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.

Laws and regulations governing our international operations may preclude us from developing, manufacturing and selling certain product candidates and products outside of the United States and require us to develop and implement costly compliance programs.

        As we expand our operations outside of the United States, we will be required to dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate, as well as with the Foreign Corrupt Practices Act, or FCPA, compliance with which is expensive and difficult, particularly in countries in which corruption is a recognized problem. As a result, these laws may preclude us from developing, manufacturing or selling certain product candidates outside of the United States, which could limit our growth potential and increase our development costs. The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions.

We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

        As of December 31, 2016, we had 12 employees, all of which were employed directly by our U.S. subsidiary, Biohaven Pharmaceuticals, Inc. As our clinical development progresses, we expect to experience growth in the number of our employees and the scope of our operations, particularly in the areas of clinical operations, regulatory affairs and, if any of our product candidates receives marketing

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approval, sales, marketing and distribution. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.

        We are exposed to the risk that our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs and vendors may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or unauthorized activities that violates (1) the laws and regulations of the FDA, the EMA and other similar regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities, (2) manufacturing standards, (3) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad and (4) laws that require the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, including information obtained in the course of clinical trials, creating fraudulent data in our preclinical studies or clinical trials or illegal misappropriation of product candidates, which could result in regulatory sanctions and serious harm to our reputation.

        Prior to the completion of this offering, we intend to adopt a code of business conduct and ethics, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm and the curtailment or restructuring of our operations.

We may be subject to securities litigation, which is expensive and could divert management attention.

        Our share price may be volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. This risk is especially relevant for us because biotechnology companies have experienced significant stock price volatility in recent years. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.

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Risks Related to This Offering and Our Common Shares

There has been no public market for our common shares prior to this offering, and an active market in the shares may not develop or be liquid enough for investors to resell our common shares quickly or at the market price.

        Prior to this offering, there has been no public market for our common shares. We cannot predict the extent to which an active market for our common shares will develop or be sustained after this offering, or how the development of such a market might affect the market price for our common shares. The initial public offering price of our common shares in this offering will be agreed upon between us and the underwriters based on a number of factors, including market conditions in effect at the time of the offering, which may not be indicative of the price at which our shares will trade following completion of the offering. If an active market for our common shares does not develop or is not sustained, it may be difficult for you to sell shares you purchased in this offering at an attractive price or at all.

The price of our common shares is likely to be volatile and may fluctuate due to factors beyond our control.

        The share price of publicly traded emerging biopharmaceutical and drug discovery and development companies has been highly volatile and is likely to remain highly volatile in the future. The market price of our common shares may fluctuate significantly due to a variety of factors, including:

        These and other market and industry factors may cause the market price and demand for our securities to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their common shares at or above the price paid for the shares and may otherwise negatively affect the liquidity of our common shares. In addition, the stock market in general,

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and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

        Some companies that have experienced volatility in the trading price of their shares have been the subject of securities class action litigation. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our offerings or business practices. Defending against litigation is costly and time-consuming, and could divert our management's attention and resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market price of our common shares.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common shares and our trading volume could decline.

        The trading market for our common shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by equity research analysts. If no or too few securities or industry analysts commence coverage of us, the trading price for our common shares would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our common shares or publish inaccurate or unfavorable research about our business, the price of our common shares would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common shares could decrease, which might cause the price of our common shares and trading volume to decline.

We will incur increased costs as a result of operating as a public company, and our management and board of directors will be required to devote substantial time to new compliance initiatives and corporate governance practices.

        As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the stock exchange on which our common shares are listed, and other applicable securities rules and regulations impose various requirements on public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management, board of directors and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our management and board of directors. However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Concentration of ownership of our common shares among our existing executive officers, directors and principal shareholders may prevent new investors from influencing significant corporate decisions.

        Based upon our common shares outstanding as of            , upon the closing of this offering, our executive officers, directors and shareholders who owned more than 5% of our outstanding common shares before this offering will, in the aggregate, beneficially own approximately        % of our outstanding

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common shares. Based on an assumed initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, the number of common shares beneficially owned by our executive officers, directors and current 5% shareholders and their respective affiliates will, in the aggregate, increase to        % of our common shares. These shareholders, acting together, will be able to significantly influence all matters requiring shareholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets.

        Some of these persons or entities may have interests different than yours. For example, because many of these shareholders purchased their shares at prices substantially below the price at which shares are being sold in this offering and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other shareholders.

Anti-takeover provisions in our memorandum and articles of association could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management and limit the market price of our common shares.

        Provisions in our memorandum and articles of association that will become effective upon the closing of this offering may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for our common shares, thereby depressing the market price of our common shares. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our board of directors. Among other things, these provisions:

        Any provision of our memorandum and articles of association or BVI law that has the effect of delaying or deterring a change of control could limit the opportunity for our shareholders to receive a

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premium for their common shares, and could also affect the price that some investors are willing to pay for our common shares.

Future sales of our common shares in the public market could cause our share price to fall.

        Sales of a substantial number of our common shares in the public market after this offering, or the perception that these sales might occur, could depress the market price of our common shares and could impair our ability to raise capital through the sale of additional equity securities. Upon the closing of this offering, we will have             common shares outstanding, assuming no exercise of outstanding options or the underwriters' option to purchase additional shares.

        All of the common shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act except for any shares held by our affiliates as defined in Rule 144 under the Securities Act. A total of common shares outstanding immediately after this offering, or        %, will be restricted as a result of securities laws, lock-up agreements or other contractual restrictions that restrict transfers for 180 days after the date of this prospectus.

        The underwriters may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements with the underwriters prior to expiration of the lock-up period. See "Shares Eligible for Future Sale."

        The holders of            common shares outstanding after this offering, or        % of outstanding shares immediately after giving effect to this offering, will be entitled to rights with respect to registration of such shares under the Securities Act pursuant to an investors' rights agreement between such holders and us. See "Description of Share Capital—Registration Rights." If such holders, by exercising their registration rights, sell a large number of shares, the market price for our common shares could be harmed. If we file a registration statement for the purpose of selling additional shares to raise capital and are required to include shares held by these holders pursuant to the exercise of their registration rights, our ability to raise capital may be impaired. We will also file a registration statement on Form S-8 under the Securities Act to register shares for issuance under our equity incentive plans, including our 2014 Equity Incentive Plan and our 2017 Equity Incentive Plan. Our 2017 Equity Incentive Plan will provide for automatic increases in the shares reserved for issuance under the plan which could result in additional dilution to our shareholders. Once we register these shares, they can be freely sold in the public market upon issuance and vesting, subject to any lock-up restrictions of the holder.

Because we do not expect to pay dividends on our common shares in the foreseeable future, capital appreciation, if any, would be your sole source of gain.

        We have never declared or paid any dividends on our common shares. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. The decision to pay future dividends to shareholders will be at the discretion of our board of directors after taking into account various factors including our business prospects, cash requirements, financial performance and new product development. Accordingly, investors cannot rely on dividend income from our common shares and any returns on an investment in our common shares will likely depend entirely upon any future appreciation in the price of our common shares.

If you purchase common shares in this offering, you will suffer immediate dilution of your investment.

        The assumed initial public offering price of our common shares is substantially higher than the pro forma as adjusted net tangible book value per share. Therefore, if you purchase common shares in this offering, you will pay a price per share that substantially exceeds the book value per share of our tangible assets, after subtracting our liabilities, after this offering. Based on an assumed initial public offering price

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of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, you will experience immediate dilution of $            per common share, representing the difference between our pro forma as adjusted net tangible book value per share after giving effect to this offering and the assumed initial public offering price. In addition, purchasers of common shares in this offering will have contributed approximately %            of the aggregate price paid by all purchasers of our common shares but will own only approximately %             of our common shares outstanding after this offering. To the extent options or warrants are exercised, you will incur further dilution. See the section of this prospectus entitled "Dilution."

We will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common shares. We intend to use the net proceeds from this offering to conduct our two planned Phase 3 clinical trials of rimegepant for the acute treatment of migraine; to fund continued research and development of BHV-3500 for the prevention of chronic and episodic migraine; to complete our ongoing Phase 2/3 clinical trial of trigriluzole for the treatment of spinocerebellar ataxia; to fund continued research and development of BHV-5000 for the treatment of symptoms associated with Rett syndrome, including completion of our planned Phase 1 clinical trial for this indication; to fund other research and development activities, including development of BHV-0223 for the treatment of ALS; to repay indebtedness outstanding under our credit agreement and notes payable to related parties; and for working capital and other general corporate purposes, including the satisfaction of any milestone payment obligations under our license agreements. The failure by our management to apply these funds effectively could result in financial losses that could have an adverse effect on our business, cause the price of our common shares to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to "emerging growth companies" will make our common shares less attractive to investors.

        We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an "emerging growth company," we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As an "emerging growth company," we are required to report only two years of financial results and selected financial data compared to three and five years, respectively, for comparable data reported by other public companies. We may take advantage of these exemptions until we are no longer an "emerging growth company." We could be an "emerging growth company" for up to five years, although circumstances could cause us to lose that status earlier, including if the aggregate market value of our common shares held by non-affiliates exceeds $700 million as of any June 30 (the end of our second fiscal quarter) before that time, in which case we would no longer be an "emerging growth company" as of the following December 31 (our fiscal year end). We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and the price of our common shares may be more volatile.

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We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common shares.

        We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

        If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common shares.

        Prior to the completion of this offering, we have been a private company with limited accounting personnel and other resources to address our internal control over financial reporting. In preparation of our financial statements to meet the requirements of this offering, we determined that material weaknesses in our internal control over financial reporting existed during each of fiscal 2014 and 2015 and remained unremediated as of December 31, 2016. These material weaknesses in our internal control over financial reporting are described below.

        We did not design or maintain an effective control environment commensurate with our financial reporting requirements. We lacked a sufficient number of trained professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. This material weakness contributed to the following material weaknesses:

        These material weaknesses contributed to several accounting adjustments being made to our financial statements for the years ended December 31, 2014, 2015 and 2016 and the nine months ended September 30, 2015 and 2016 related to our accounting for our license agreement obligations, income taxes, variable interest entities, share-based compensation, derivative liabilities, warrants and contingent equity, research and development expense, general and administrative expense, and other income (expense). In addition, these material weaknesses contributed to the restatement of our financial statements for the nine months ended September 30, 2016 related to our accounting for license agreement obligations.

        We identified an additional material weakness as a result of the material weakness in our control environment in that we did not design and maintain controls over the operating effectiveness of information technology, or IT, general controls for information systems that are relevant to the preparation

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of our financial statements. Specifically, we did not design and maintain effective controls over program change management; user access, including segregation of duties; or computer operations.

        These IT deficiencies did not result in a material misstatement to our financial statements; however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls, such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports.

        Each of the control deficiencies could result in a misstatement of these accounts or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute material weaknesses.

        We have initiated remediation efforts focused on improving our internal control over financial reporting and to specifically address the control deficiencies that led to our material weaknesses. These efforts include the following:

        We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. In addition, neither our management nor an independent registered public accounting firm has ever performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.

You may have fewer protections as a shareholder of our company, as the rights of shareholders under British Virgin Islands law differ from those under U.S. law.

        Our corporate affairs will be governed by our memorandum and articles of association, the BVI Business Companies Act, 2004, or the BVI Act, and the common law of the BVI. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under BVI law are to a large extent governed by the common law of the BVI and by the BVI Act. The common law of the BVI is derived in part from comparatively limited judicial precedent in the BVI as well as from English common law, which has persuasive, but not binding, authority on a court in the BVI. The rights of our shareholders and the fiduciary responsibilities of our directors under BVI law therefore are not as clearly established as they would be under statutes or judicial

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precedents in some jurisdictions in the United States. In particular, the BVI has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law.

        As a result of all of the above, holders of our common shares may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than they would as shareholders of a U.S. company. They may have greater difficulty securing legal advice about the law of the BVI than they would U.S. and state law, and the relatively less developed nature of that country's securities law may leave investors with less certainty about the validity and strength of any claims they believe they may have against us. In addition, other differences between BVI and U.S. law, as well as the terms of our articles of association, may result in shareholders having different potential influence than they would under various U.S. state laws with respect to matters such as officer and director actions, mergers and acquisitions, takeover efforts, and other corporate decision making. For a discussion of significant differences between the provisions of the BVI Act and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

Shareholders in BVI business companies may not be able to initiate shareholder derivative actions, thereby depriving a shareholder of the ability to protect its interests.

        While statutory provisions do exist in BVI law for derivative actions to be brought in certain circumstances, shareholders in BVI business companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a BVI business company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The BVI courts are also unlikely to: (i) recognize or enforce against us judgments of courts in the United States based on certain civil liability provisions of U.S. securities law; or (ii) to impose liabilities against us, in original actions brought in the BVI, based on certain civil liability provisions of U.S. securities laws that are penal in nature or that relate to taxes or similar fiscal or revenue obligations or would be viewed as contrary to British Virgin Island public policy or the proceedings pursuant to which judgment was obtained were contrary to natural justice. There is no statutory recognition in the BVI of judgments obtained in the United States, although any final and conclusive monetary judgment obtained against a BVI business company in a U.S. court, for a definite sum, may be treated by the courts of the BVI as a cause of action in itself so that no retrial of the issues would be necessary provided that in respect of the judgment of the U.S. court:

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The laws of the BVI relating to the protection of minority shareholders differ from those under U.S. law and, in some circumstances, may offer less protection.

        The BVI Act includes the following statutory remedies which minority shareholders in the company can rely upon:

        In addition to the statutory rights outlined above, there are common law rights for the protection of shareholders that may be invoked, largely dependent on English common law. Under the general rule pursuant to English common law known as the rule in Foss v. Harbottle , a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company's affairs by the majority or the board of directors. However, every shareholder is entitled to have the affairs of the company conducted properly according to law and the constituent documents of the company. As such, if those who control the company have persistently disregarded the requirements of company law or the provisions of the company's memorandum and articles of association, then the courts will grant relief. Generally, the areas in which the courts will intervene are the following: (1) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (2) acts that constitute fraud on the minority where the wrongdoers control the company; (3) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (4) where the company has not complied with provisions requiring approval of the shareholders, which are more limited than the rights afforded minority shareholders under the laws of many states in the United States.

        Having regard to the above, the protection available to minority shareholders under BVI law may be more limited than under the laws of some jurisdictions in the United States.

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It may be difficult to enforce a U.S. or foreign judgment against us, our directors and officers named in this prospectus outside the United States, or to assert U.S. securities laws claims outside of the United States.

        As a BVI business company, it may be difficult for a shareholder to effect service of process within the United States upon us, our directors and officers, or to enforce against us, or them, judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state therein. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.

Changes in tax law, determinations by tax authorities or changes in our effective tax rates may adversely affect our business and financial results.

        Under current law, we expect to be treated as a non-U.S. corporation for U.S. federal income tax purposes. The tax laws applicable to our business activities, however, are subject to change and uncertain interpretation. Our tax position could be adversely impacted by changes in tax rates, tax laws, tax practice, tax treaties or tax regulations or changes in the interpretation thereof by the tax authorities in jurisdictions in which we do business. Our actual tax rate may vary from our expectation and that variance may be material. A number of factors may increase our future effective tax rates, including: (1) the jurisdictions in which profits are determined to be earned and taxed; (2) the resolution of issues arising from any future tax audits with various tax authorities; (3) changes in the valuation of our deferred tax assets and liabilities; (4) our ability to use net operating loss carryforwards to offset future taxable income and any adjustments to the amount of the net operating loss carryforwards we can utilize; and (5) changes in tax laws or the interpretation of such tax laws, and changes in generally accepted accounting principles.

        As a company organized under the laws of the BVI, we are principally subject to taxation in the BVI. Under the current laws of the BVI, tax on a company's income is assessed at a zero percent tax rate. For U.S. federal tax purposes, a corporation is generally considered a "domestic corporation" if it is incorporated or organized in the United States, and a "foreign corporation" if it is incorporated or organized in a non-U.S. jurisdiction. Because we are a British Virgin Islands incorporated entity, we would be classified as a foreign corporation under these general rules. Section 7874 of the Code, or Section 7874, however, contains rules that can result in a foreign corporation being treated as a domestic corporation for U.S. federal tax purposes. Under Section 7874, a foreign corporation will nevertheless be treated as a domestic corporation for U.S. federal tax purposes if (1) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a domestic corporation (including the indirect acquisition of assets by acquisition of all the outstanding shares of a domestic corporation), (2) the shareholders of the acquired domestic corporation hold at least 80% (by either vote or value) of the shares of the acquiring foreign corporation after the acquisition by reason of holding shares in the acquired domestic corporation (including the receipt of the foreign corporation's shares in exchange for the domestic corporation's shares) (the "ownership test"), and (3) the foreign corporation's "expanded affiliated group" does not have substantial business activities in the foreign corporation's country of organization or incorporation relative to the expanded affiliated group's worldwide activities. For purposes of Section 7874, "expanded affiliated group" means the foreign corporation and all subsidiaries in which the foreign corporation, directly or indirectly, owns more than 50% of the shares by vote and value.

        On December 31, 2016, the Company entered into an agreement with the stockholders of Biohaven Pharmaceuticals, Inc., a Delaware corporation, or BPI, to purchase all of the outstanding capital stock of BPI for an aggregate purchase price of $0.6 million, payable by the issuance of Company promissory notes

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to each BPI stockholder (see "Certain Relationships and Related Party Transactions—Transactions with Biohaven Pharmaceuticals, Inc."). Although the Company and BPI had certain shareholders in common before December 31, 2016, based on the rules for determining share ownership under Section 7874, we believe the stockholders of BPI owned less than 80% of our company. Accordingly, we do not believe that this transaction meets the ownership test under Section 7874 and therefore do not believe that we should be treated as a domestic corporation for U.S. federal tax purposes. However, the tax law in this area could be changed, including changed on a retroactive basis, and the application of Section 7874 to our acquisition of BPI could substantially increase our effective tax rate.

        We may also become subject to income, withholding or other taxes in jurisdictions by reason of our activities and operations, and it is possible that taxing authorities in such jurisdictions could assert that we are subject to greater taxation than we currently anticipate. For example, following this offering, we expect to form an Irish subsidiary that will be the principal operating company for conducting our business and the entity that will hold our intellectual property rights in certain of our product candidates. This new Irish subsidiary would be subject to taxation in Ireland. In addition to the establishment of this Irish entity as our principal operating company, we, as the parent company, may also be subject to taxation in Ireland in the future, even as we remain a company organized under the laws of the BVI. Any of these transactions may result in higher tax liabilities and a higher overall effective tax rate. Any significant increase in our future effective tax rates could reduce net income for future periods.

If we are a passive foreign investment company there could be adverse U.S. federal income tax consequences to U.S. holders.

        Under the Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which (1) 75% or more of our gross income consists of passive income or (2) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, passive income. For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets and received directly its proportionate share of the income of such other corporation. If we are a PFIC for any taxable year during which a U.S. holder holds our shares, the U.S. holder may be subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements.

        Although we do not believe we were a PFIC for our taxable year ending December 31, 2016, and do not currently expect to be a PFIC for our current taxable year or future taxable years, we cannot provide any assurances regarding our PFIC status for any past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies which in some circumstances are unclear and subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans which are subject to change. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our shares from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which, in our current and future taxable years, we may not be able to fully control, for example, with respect to income attributed to us from entities owned 25% or more by us. The composition of our income and assets is also affected by how, and how quickly, we spend the cash we raise in any offering, including this offering.

        In certain circumstances, a U.S. holder of shares in a PFIC may alleviate some of the adverse tax consequences described above by making a "qualified electing fund", or QEF, election to include in income its pro rata share of the corporation's income on a current basis. However, a U.S. holder may make

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a qualified electing fund election with respect to our common shares only if we agree to furnish such U.S. holder annually with a PFIC annual information statement as specified in the applicable U.S. Treasury Regulations. We currently do not intend to prepare or provide the information that would enable U.S. holders to make a QEF election if we are treated as a PFIC for any taxable year, and prospective investors should assume that a QEF election will not be available.

        For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences in the event we are classified as a PFIC, see the section of this prospectus entitled "Material United States Federal Income Considerations For U.S. Holders—Passive Foreign Investment Company Considerations."

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements include, but are not limited to, statements concerning the following:

        These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in "Risk Factors." Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

        You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

        You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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INDUSTRY AND MARKET DATA

        We obtained the industry, market and competitive position data used throughout this registration statement from our own internal estimates and research, as well as from industry and general publications, in addition to research, surveys and studies conducted by third parties. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of our industry and market, which we believe to be reasonable. In addition, while we believe the industry, market and competitive position data included in this registration statement is reliable and is based on reasonable assumptions, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed in "Risk Factors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

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USE OF PROCEEDS

        We estimate that the net proceeds from our issuance and sale of common shares in this offering will be approximately $             million, or approximately $             million if the underwriters exercise their over-allotment option in full, based upon an assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 1,000,000 shares in the number of common shares we are offering would increase or decrease the net proceeds to us from this offering by $             million, assuming no change in the assumed initial public offering price.

        We currently estimate that we will use the net proceeds from this offering, together with our existing cash, as follows:

        In the ordinary course of our business, we expect to from time to time evaluate the acquisition of, investment in or in-license of complementary products, technologies or businesses, and we could use a portion of the net proceeds from this offering for such activities. We currently do not have any agreements, arrangements or commitments with respect to any potential acquisition, investment or license, other than the Kleo investment described above.

        This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. Predicting the cost necessary to develop product candidates can be difficult and the amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development, the status of and results from clinical trials, any collaborations that we may enter into with third parties for our product candidates and any unforeseen cash needs.

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        Based on our current operational plans and assumptions, we expect that the net proceeds from this offering, together with our existing cash, will be sufficient to fund our operations through            , including the repayment of our outstanding debt, and, with respect to our planned and ongoing clinical trials, will be sufficient to enable us to complete our two planned Phase 3 clinical trials of rimegepant and complete our Phase 2/3 clinical trial of trigriluzole. With respect to the continued research and development of BHV-3500 and BHV-5000, we expect that we may require additional funds as these programs progress, the amounts of which will depend on the ultimate clinical development paths we pursue. However, our plans and assumptions could be wrong and we may need to raise additional capital in order to complete our planned and ongoing trials and any potential future trials that may be required by regulatory authorities. We may need to raise additional capital through public and private equity offerings, debt financings, strategic partnerships, alliances and licensing arrangements, or a combination of the above.

        We incurred the indebtedness under the one-year credit agreement with Wells Fargo in August 2016 in the principal amount of $5.0 million to satisfy our payment obligations under our license agreement with BMS. The one-year credit agreement matures on August 30, 2017, and borrowings under the agreement bear interest at a rate equal to monthly LIBOR plus 1.50% per annum. As of December 31, 2016, the interest rate applicable to the borrowings under the one-year credit agreement was 2.27% per annum. In connection with this credit agreement, Wells Fargo required that we obtain a personal guaranty of our loan obligations from one of our directors, John Childs. Another one of our directors, Gregory Bailey, provided a further guaranty related to the credit agreement. We incurred the indebtedness under our notes payable in the aggregate amount of $0.6 million in consideration for the acquisition of 100% of the capital stock of BPI on December 31, 2016. We issued the notes to the holders of the capital stock of BPI, which consisted of Declan Doogan, the chairman of our board of directors; family trusts associated with Vlad Coric, our chief executive officer and one of our directors; and a family trust associated with Robert Berman, our chief medical officer. The notes mature on December 31, 2021, but are mandatorily payable upon the consummation of this offering, and the interest on the notes accrues at a rate of 4.5% per annum.

        As of December 31, 2016, we owned approximately 18.6% of the outstanding shares of Kleo and two of our outside directors serve as Kleo directors, resulting from our arm's-length investment in Kleo in August 2016. In connection with our initial investment, we committed to make additional investments totaling $5.5 million in Kleo, subject to certain conditions, and in March 2017, we satisfied our first purchase obligation by purchasing 1,375,000 shares of Kleo common stock for cash consideration of $1.4 million.

        Our management will have broad discretion in the application of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds from this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending these uses, we plan to hold these net proceeds in non-interest bearing accounts, with the goal of capital preservation and liquidity so that such funds are readily available to fund our operations.


DIVIDEND POLICY

        We have never declared or paid any dividends on our common shares. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.

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CAPITALIZATION

        The following table sets forth our cash and our capitalization as of December 31, 2016:

        The pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read the following table in conjunction with our consolidated financial statements and the related notes appearing at the end of this prospectus, and the

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sections of this prospectus titled "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Description of Share Capital."

 
  As of December 31, 2016  
 
  Actual   Pro Forma   Pro Forma
As Adjusted
 
 
  (in thousands, except share and per
share data)

 

Cash

  $ 23,565   $ 62,200   $    

Notes payable, net of discount

  $ 4,216   $ 4,216   $    

Notes payable to related parties

    595     595        

Warrant liability

    780     780        

Contingent equity liability

    18,938            

Series A convertible preferred shares, no par value; 11,242,172 shares authorized, 4,948,369 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    43,270            

Shareholders' equity (deficit):

                   

Preferred shares, no par value; no shares authorized, issued or outstanding, actual;            shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted

               

Common shares, no par value; 38,000,000 shares authorized, 13,088,500 shares issued and outstanding, actual;            shares authorized, 24,330,583 shares issued and outstanding, pro forma;            shares authorized,             shares issued and outstanding, pro forma as adjusted

    19,944     120,787        

Additional paid-in capital

    10,479     10,479        

Accumulated deficit

    (75,456 )   (75,456 )      

Total shareholders' equity (deficit)

    (45,033 )   55,810        

Total capitalization

  $ 22,766   $ 61,401   $    

        A $1.00 increase (decrease) in the assumed initial public offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, total shareholders' equity and total capitalization by $            million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, total shareholders' equity and total capitalization by $            million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions.

        The number of common shares outstanding in the table above does not include:

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DILUTION

        If you invest in our common shares in this offering, your ownership interest will be diluted immediately to the extent of the difference between the initial public offering price per common share and the pro forma as adjusted net tangible book value per common share immediately after this offering.

        Our historical net tangible book value (deficit) as of December 31, 2016 was $(45.2) million, or $(3.45) per common share. Our historical net tangible book value (deficit) is the amount of our total tangible assets less our total liabilities and the carrying value of convertible preferred shares, which is not included within shareholders' equity (deficit). Historical net tangible book value per share represents historical net tangible book value (deficit) divided by the 13,088,500 common shares outstanding as of December 31, 2016.

        Our pro forma net tangible book value as of December 31, 2016 was $55.7 million, or $2.29 per common share. Pro forma net tangible book value represents the amount of our total tangible assets less our total liabilities, after giving effect to:

        Pro forma net tangible book value per share represents our pro forma net tangible book value divided by the total number of shares outstanding as of December 31, 2016, after giving effect to the pro forma adjustments described above.

        After giving further effect to (i) our issuance and sale of           common shares in this offering at an assumed initial public offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the repayment of $                         million of aggregate indebtedness under our credit agreement and our notes payable to related parties using a portion of the net proceeds from this offering, our pro forma as adjusted net tangible book value as of December 31, 2016 would have been $            million, or $           per share. This represents an immediate increase in pro forma as adjusted net tangible book value per share of $           to existing shareholders and immediate dilution in pro forma as adjusted net tangible book value per share of $           to new investors purchasing common shares in this offering. Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the assumed

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initial public offering price per share paid by new investors. The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share

        $    

Historical net tangible book value (deficit) per share as of December 31, 2016

  $ (3.45 )      

Increase per share attributable to the pro forma adjustments described above

    5.74        

Pro forma net tangible book value per share as of December 31, 2016

    2.29        

Increase in pro forma as adjusted net tangible book value per share attributable to new investors purchasing common shares in this offering and the repayment of our indebtedness

             

Pro forma as adjusted net tangible book value per share after this offering

             

Dilution per share to new investors purchasing common shares in this offering

        $    

        A $1.00 increase (decrease) in the assumed initial public offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value after this offering by $           per share and the dilution to new investors purchasing common shares in this offering by $           per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discount and commissions. An increase of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase our pro forma as adjusted net tangible book value after this offering by $           per share and decrease the dilution to new investors purchasing common shares in this offering by $           per share, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions. A decrease of 1,000,000 shares in the number of shares offered by us would decrease the pro forma as adjusted net tangible book value after this offering by $           per share and increase the dilution to new investors purchasing common shares in this offering by $           per share, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions.

        If the underwriters exercise their over-allotment option in this offering in full, the pro forma as adjusted net tangible book value per share after this offering would be $           per share, and the dilution in pro forma as adjusted net tangible book value per share to new investors purchasing common shares in this offering would be $           per share, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The following table summarizes, on the pro forma as adjusted basis described above, the total number of common shares purchased from us on an as converted to common share basis, the total consideration paid or to be paid, and the average price per share paid or to be paid by existing shareholders and by new investors in this offering at an assumed initial public offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

 
  Shares Purchased   Total Consideration    
 
 
  Average Price
Per Share
 
 
  Number   Percentage   Amount   Percentage  

Existing shareholders

    24,330,583       % $ 99,755,146       % $ 4.10  

New investors

                          $    

Total

          100.0 % $       100.0 %      

        A $1.00 increase (decrease) in the assumed initial public offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease)

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the total consideration paid by new investors by $            million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by             percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by            percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $            million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by            percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by            percentage points, assuming no change in the assumed initial public offering price.

        The table above assumes no exercise of the underwriters' over-allotment option in this offering. If the underwriters' over-allotment option is exercised in full, the number of common shares held by new investors purchasing common shares in this offering would be increased to           % of the total number of common shares outstanding after this offering, and the number of shares held by existing shareholders would be reduced to           % of the total number of common shares outstanding after this offering.

        The tables and discussion above do not include:

        To the extent that stock options or warrants are exercised, new stock options are issued under our equity incentive plan, or we issue additional common shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

        You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this prospectus. We have derived the consolidated statement of operations data for the years ended December 31, 2015 and 2016 and the consolidated balance sheet data as of December 31, 2015 and 2016 from our audited consolidated financial statements appearing at the end of this prospectus. Our historical results are not necessarily indicative of results that may be expected in any future period.

 
  Year Ended
December 31,
 
 
  2015   2016  
 
  (in thousands, except
per share data)

 

Consolidated Statement of Operations Data:

             

Operating expenses:

             

Research and development

  $ 7,559   $ 55,529  

General and administrative

    2,137     5,109  

Total operating expenses

    9,696     60,638  

Loss from operations

    (9,696 )   (60,638 )

Other income (expense):

             

Interest expense

        (385 )

Change in fair value of warrant liability

        154  

Change in fair value of derivative liability

    (370 )   (65 )

Change in fair value of contingent equity liability

        (2,263 )

Loss from equity method investment

        (247 )

Total other income (expense), net

    (370 )   (2,806 )

Loss before provision for income taxes

    (10,066 )   (63,444 )

Provision for income taxes

        90  

Net loss

    (10,066 )   (63,534 )

Less: Net income (loss) attributable to non-controlling interests

    (4 )   143  

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (10,062 ) $ (63,677 )

Net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted (1)

  $ (0.91 ) $ (5.05 )

Weighted average common shares outstanding—basic and diluted (1)

    11,009     12,608  

Pro forma net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted (unaudited) (1)

        $ (4.48 )

Pro forma weighted average common shares outstanding—basic and diluted (unaudited) (1)

          14,215  

(1)
See Note 15 to our consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. and on the calculation of pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.

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  As of
December 31,
 
 
  2015   2016  
 
  (in thousands)
 

Consolidated Balance Sheet Data:

             

Cash

  $ 1,460   $ 23,565  

Working capital (1)

    1,558     16,093  

Total assets

    1,892     27,017  

Notes payable, net of discount

        4,216  

Notes payable to related parties

        595  

Warrant liability

        780  

Contingent equity liability

        18,938  

Convertible preferred shares

        43,270  

Total shareholders' equity (deficit)

    1,087     (45,033 )

(1)
We define working capital as current assets less current liabilities.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes appearing at the end of this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this prospectus, our actual results could differ materially from the results described in or implied by these forward-looking statements.

Overview

        We are a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting neurologic diseases, including rare disorders. Our product candidates are small molecules based on two distinct mechanistic platforms—calcitonin gene-related peptide, or CGRP, receptor antagonists and glutamate modulators—which we believe have the potential to significantly alter existing treatment approaches across a diverse set of neurologic indications with high unmet need in both large markets and orphan indications. The most advanced product candidate from our CGRP receptor antagonist platform is rimegepant, an orally available, potent and selective small molecule human CGRP receptor antagonist that we are developing for the acute treatment of migraine. In July 2016, we acquired exclusive, worldwide rights to our CGRP receptor antagonist platform, including rimegepant and another product candidate, BHV-3500, which we are developing for the prevention of chronic and episodic migraine, through a license agreement with Bristol-Myers Squibb Company, or BMS. In 2017, we intend to initiate two Phase 3 clinical trials of rimegepant and to commence IND-enabling studies to allow us to ultimately pursue clinical trials of BHV-3500.

        We are developing three product candidates that modulate the body's glutamate system. Two of these product candidates, trigriluzole and BHV-0223, act as glutamate transporter modulators, while our product candidate BHV-5000 is an antagonist of the glutamate N -methyl-D-aspartate, or NMDA, receptor. We are developing trigriluzole for the treatment of ataxias, with an initial focus on spinocerebellar ataxia, or SCA. In May 2016, we received orphan drug designation from the U.S. Food and Drug Administration, or FDA, for trigriluzole for the treatment of SCA, and in the fourth quarter of 2016 we enrolled the first patient in a Phase 2/3 clinical trial, from which we expect to report topline results in early 2018.

        We are developing BHV-0223 for the treatment of amyotrophic lateral sclerosis, or ALS. In December 2016, we received orphan drug designation from the FDA for BHV-0223 to treat ALS. In 2017, we plan to commence a trial comparing the bioequivalence of BHV-0223 and riluzole in healthy volunteers. Depending on the outcome of this bioequivalence study, we plan to file a new drug application, or NDA, with the FDA and pursue the regulatory approval of BHV-0223 for ALS under Section 505(b)(2) of the U.S. Federal Food, Drug, and Cosmetic Act.

        We are also developing BHV-5000, an orally available, first-in-class, low-trapping NMDA receptor antagonist, for the treatment of symptoms associated with Rett syndrome, including breathing irregularities. Rett syndrome is a rare and severe genetic neurodevelopmental disorder for which no approved treatments are currently available. We acquired worldwide rights to BHV-5000 under an exclusive license agreement with AstraZeneca AB, or AstraZeneca, in October 2016. We anticipate completing our commercial-grade formulation efforts for BHV-5000 in the third quarter of 2017. We plan to conduct a Phase 1 clinical trial of BHV-5000 to evaluate its pharmacokinetic properties and then in 2018 to commence a single Phase 2/3 clinical trial of BHV-5000 for the treatment of breathing irregularities associated with Rett syndrome that, if successful, we believe could support our application for regulatory approval.

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        Since our inception in September 2013, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring and developing product candidates and related intellectual property rights, planning for commercialization, and conducting discovery, research and development activities for our product candidates. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations to date primarily with proceeds from the sale of preferred shares and common shares and borrowings under a credit agreement with a bank. Through December 31, 2016, we had received net cash proceeds of $57.8 million from sales of our preferred shares and common shares and gross proceeds of $5.0 million from borrowings under the credit agreement. In February 2017, we received net cash proceeds of $38.6 million from the sale of Series A preferred shares in connection with the second and final closing of our Series A preferred share financing.

        Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current product candidates and programs. Our net loss was $10.1 million and $63.5 million for the years ended December 31, 2015 and 2016, respectively. As of December 31, 2016, we had an accumulated deficit of $75.5 million. We expect to continue to incur significant expenses for at least the next several years as we advance our product candidates from discovery through preclinical development and clinical trials and seek regulatory approval and pursue commercialization of any approved product candidate. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. In addition, we may incur expenses in connection with the in-license or acquisition of additional product candidates. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

        As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

        Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

        As of December 31, 2016, we had cash of $23.6 million, and in February 2017, we received net cash proceeds of $38.6 million from the sale of Series A preferred shares in connection with the second and final closing of our Series A preferred share financing. We believe that the anticipated net proceeds from this offering, together with our existing cash, will enable us to repay our indebtedness and to fund our operating expenses and capital expenditure requirements for at least the next            months. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See "—Liquidity and Capital Resources."

        Without giving effect to the anticipated net proceeds from this offering, we expect that our existing cash will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments through July 31, 2017. Beyond that point, we will need to raise additional capital to finance our

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operations, which cannot be assured. We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern within one year after the issuance date of our financial statements for the year ended December 31, 2016. See Note 1 to our consolidated financial statements appearing at the end of this prospectus for additional information on our assessment.

        Similarly, in its report on our financial statements for the year ended December 31, 2016, our independent registered public accounting firm included an explanatory paragraph stating that our recurring losses from operations since inception and required additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern.

Components of Our Results of Operations

Revenue

        To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval or additional license agreements with third parties, we may generate revenue in the future from product sales.

Operating Expenses

Research and Development Expenses

        Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:

    expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

    manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches;

    employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in research and development functions;

    costs related to compliance with regulatory requirements;

    facilities costs, depreciation and other expenses, which include rent and utilities; and

    payments made in cash, equity securities or other forms of consideration under third-party licensing agreements.

        We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

        Our direct research and development expenses are tracked on a program-by-program basis for our product candidates and consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs, and central laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses by program also include fees incurred under license agreements. We do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee the research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.

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        The table below summarizes our research and development expenses incurred by program:

 
  Year Ended
December 31,
 
 
  2015   2016  
 
  (in thousands)
 

BHV-0223

  $ 1,627   $ 380  

Rimegepant

        25,139  

Trigriluzole

    3,497     11,761  

BHV-5000

        13,550  

Research and discovery and unallocated costs

    2,435     4,699  

Total research and development expenses

  $ 7,559   $ 55,529  

        Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several years as we increase personnel costs, including share-based compensation, commence Phase 3 clinical trials of rimegepant, continue our ongoing Phase 2/3 clinical trial of trigriluzole, conduct other clinical trials and prepare regulatory filings for our product candidates. We also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to our product candidates.

        The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:

    the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;

    establishing an appropriate safety profile with IND-enabling studies;

    successful patient enrollment in, and the initiation and completion of, clinical trials;

    the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

    establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

    development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;

    obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

    significant and changing government regulation;

    launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; and

    maintaining a continued acceptable safety profile of the product candidates following approval.

        We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical

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trials of some product candidates or focus on others. Any changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. Drug commercialization will take several years and millions of dollars in development costs.

General and Administrative Expenses

        General and administrative expenses consist primarily of salaries, related benefits, travel and share-based compensation expense for personnel in executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, accounting and audit services.

        We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. We anticipate the additional costs for these services will increase our general and administrative expenses by approximately $1.5 million to $2.0 million on an annual basis. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expense as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidate.

Other Income (Expense)

Interest Expense

        Interest expense consists of interest on outstanding borrowings under our credit agreement with Wells Fargo Bank, National Association, or Wells Fargo, entered into in August 2016 at the applicable interest rate as well as amortization of the debt discount relating to that loan. In periods subsequent to December 31, 2016, interest expense will also consist of interest on our notes payable to related parties, which we issued in December 2016 in connection with our acquisition of Biohaven Pharmaceuticals, Inc., or BPI, at the applicable interest rate.

Change in Fair Value of Warrant Liability

        In connection with entering into our credit agreement with Wells Fargo, we agreed to issue warrants to purchase our common shares to the guarantor and co-guarantor of our obligations under the agreement. We classify the warrants as a liability on our consolidated balance sheet that we remeasure to fair value at each reporting date, and we recognize changes in the fair value of the warrant liability as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair value of the warrant liability until the warrants are exercised, expire or qualify for equity classification.

Change in Fair Value of Derivative Liability

        Our license agreement with Yale University, or Yale, provides for a change-of-control payment to Yale upon the occurrence of a change-of-control event, as defined in the agreement, including an initial public offering. We classify the change-of-control payment obligation as a liability on our consolidated balance sheet that we remeasure to fair value at each reporting date, and we recognize changes in the fair value of

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the derivative liability as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair value of the derivative liability until a change-of-control event occurs.

Change in Fair Value of Contingent Equity Liability

        Our license agreements with BMS and AstraZeneca require us to issue shares of capital stock upon the occurrence of specified financing or change-of-control events or development milestones, as defined in the agreements. We classify these contingent obligations to issue shares as liabilities on our consolidated balance sheet that we remeasure to fair value at each reporting date, and we recognize changes in the fair values of the contingent equity liabilities as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair values of the contingent equity liabilities until the occurrence of a respective triggering event.

Loss from Equity Method Investment

        In August 2016, we executed a stock purchase agreement with Kleo Pharmaceuticals, Inc., or Kleo, to purchase shares of common stock in an initial closing, with a commitment to purchase additional shares of common stock over a 15-month period through December 2017. As of August 29, 2016 and December 31, 2016, we owned approximately 21.7% and 18.6%, respectively, of the outstanding shares of Kleo. We account for our investment in Kleo under the equity method of accounting. As a result, our proportionate share of Kleo's net income or loss each reporting period is included in other income (expense), net in our consolidated statement of operations and comprehensive loss and results in a corresponding adjustment to the carrying value of the equity method investment on our consolidated balance sheet.

Provision for Income Taxes

        As a company incorporated in the British Virgin Islands, or BVI, we are principally subject to taxation in the BVI. Under the current laws of the BVI, tax on a company's income is assessed at a zero percent tax rate. As a result, we have not recorded any income tax benefits from our losses incurred in the BVI during each reporting period, and no net operating loss carryforwards will be available to us for those losses.

        In addition, in each reporting period, our tax provision includes the effects of consolidating the results of operations of BPI, either through December 30, 2016 as a variable interest entity or as of December 31, 2016 as our wholly owned subsidiary. BPI is subject to taxation in the United States. Due to BPI's history of cumulative losses through September 30, 2016, we had recorded no tax benefits for the losses incurred by BPI through that date and had recorded a full valuation allowance against BPI's deferred tax assets, which consisted primarily of its U.S. net operating loss carryforwards for all periods through September 30, 2016.

        During the three months ended December 31, 2016, we fully utilized BPI's remaining U.S. net operating loss carryforwards due to BPI's profitability in that period and we recorded a full release of the valuation allowance, which was an insignificant amount. As a result, we recorded an income tax provision for the first time during the three months ended December 31, 2016.

Net Income (Loss) Attributable to Non-Controlling Interests

        From our inception through December 31, 2016, we consolidated the results of BPI. Although we did not have an ownership interest in BPI during that period, we determined that BPI was a variable interest entity, of which we were the primary beneficiary.

        Net income (loss) attributable to non-controlling interests in our consolidated statement of operations and comprehensive loss consists of the portion of the net income or loss of BPI that is not allocated to us. Changes in the amount of net income (loss) attributable to non-controlling interests are directly impacted

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by changes in the net income or loss of BPI. On December 31, 2016, we acquired 100% of the issued and outstanding shares of BPI. As a result, for periods subsequent to the acquisition, we no longer report any non-controlling interests related to BPI.

Results of Operations

Comparison of the Years Ended December 31, 2015 and 2016

        The following table summarizes our results of operations for the years ended December 31, 2015 and 2016:

 
  Year Ended
December 31,
   
 
 
  2015   2016   Change  
 
  (in thousands)
 

Operating expenses:

                   

Research and development

  $ 7,559   $ 55,529   $ 47,970  

General and administrative

    2,137     5,109     2,972  

Total operating expenses

    9,696     60,638     50,942  

Loss from operations

    (9,696 )   (60,638 )   (50,942 )

Other income (expense):

                   

Interest expense

        (385 )   (385 )

Change in fair value of warrant liability

        154     154  

Change in fair value of derivative liability

    (370 )   (65 )   305  

Change in fair value of contingent equity liability

        (2,263 )   (2,263 )

Loss from equity method investment

        (247 )   (247 )

Total other income (expense), net

    (370 )   (2,806 )   (2,436 )

Loss before provision for income taxes

    (10,066 )   (63,444 )   (53,378 )

Provision for income taxes

        90     90  

Net loss

    (10,066 )   (63,534 )   (53,468 )

Less: Net income (loss) attributable to non-controlling interests

    (4 )   143     147  

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (10,062 ) $ (63,677 ) $ (53,615 )

Research and Development Expenses

 
  Year Ended
December 31,
   
 
 
  2015   2016   Change  
 
  (in thousands)
 

Direct research and development expenses by program:

                   

BHV-0223

  $ 1,627   $ 380   $ (1,247 )

Rimegepant

        25,139     25,139  

Trigriluzole

    3,497     11,761     8,264  

BHV-5000

        13,550     13,550  

Research and discovery and unallocated costs:

                   

Personnel related (including share-based compensation)

    1,915     4,137     2,222  

Other

    520     562     42  

Total research and development expenses

  $ 7,559   $ 55,529   $ 47,970  

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        Research and development expenses were $7.6 million for the year ended December 31, 2015, compared to $55.5 million for the year ended December 31, 2016. The increase of $48.0 million was primarily due to increases of $25.1 million in direct costs for our rimegepant program, $13.6 million in direct costs for our BHV-5000 program, $8.3 million in spending related to our trigriluzole program and $2.3 million in research and discovery and unallocated costs, all partially offset by a decrease of $1.2 million in direct costs for our BHV-0223 program.

        The increase in direct costs for our rimegepant program was primarily due to an accrual of a liability of $13.1 million for our contingent obligation to issue equity to BMS under our license agreement with BMS and the payment of $9.0 million in license fees under that agreement. The increase in direct costs for our BHV-5000 program was due to an accrual of a liability of $8.6 million for our contingent obligation to issue equity to AstraZeneca under our license agreement and the payment of $5.0 million in license fees under that agreement. The increase in direct costs for our trigriluzole program primarily related to an animal toxicity study that commenced in December 2015.

        The increase in research and discovery and unallocated costs was primarily due to an increase of $2.2 million in personnel-related costs, including share-based compensation, as a result of hiring additional personnel in our research and development department. Personnel-related costs for the year ended December 31, 2015 and 2016 included share-based compensation expense of $1.5 million and $2.4 million, respectively.

        The decrease in direct costs for our BHV-0223 program was due to formulation work and Phase 1 clinical trial work that was completed during the year ended December 31, 2015. Our Phase 2 clinical trial of BHV-0223 had not begun as of December 31, 2016.

General and Administrative Expenses

        General and administrative expenses were $2.1 million for the year ended December 31, 2015, compared to $5.1 million for the year ended December 31, 2016. The increase of $3.0 million was primarily due to increases of $1.9 million in personnel-related costs, including share-based compensation, $1.0 million in professional fees and $0.1 million in facility-related costs. Personnel-related costs for the year ended December 31, 2015 and 2016 included share-based compensation expense of $1.3 million and $2.2 million, respectively. The increase in personnel-related costs was due to the hiring of additional personnel in our general and administrative functions. Professional fees increased due to costs associated with the preparation, audit and review of our financial statements as well as ongoing business operations.

Other Income (Expense), Net

        Other income (expense), net was a net expense of $0.4 million for the year ended December 31, 2015, compared to $2.8 million for the year ended December 31, 2016. The increase of $2.4 million in net expense was primarily due to an increase of $2.3 million in the fair value of the contingent equity liability associated with our license agreements with BMS and AstraZeneca and an increase in interest expense of $0.4 million due to interest on borrowings under our credit agreement with Wells Fargo that we entered into in August 2016. These increases in other expense were partially offset by a decrease of $0.3 million in the change in the fair value of the derivative liability associated with our license agreement with Yale.

Provision for Income Taxes

        We recorded no provision for income taxes for the year ended December 31, 2015, compared to a provision of $0.1 million for the year ended December 31, 2016. We recorded a tax provision in 2016 for the U.S. federal and state income taxes of BPI's profitable operations in the United States and due to the fact that, in the three months ended December 31, 2016, we fully utilized BPI's remaining U.S. net operating loss carryforwards.

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Liquidity and Capital Resources

        Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations to date primarily with proceeds from the sale of preferred shares and common shares and borrowings under our credit agreement with Wells Fargo. Through December 31, 2016, we had received net cash proceeds of $57.8 million from sales of our preferred shares and common shares and gross proceeds of $5.0 million from borrowings under the credit agreement. As of December 31, 2016, we had cash of $23.6 million. In February 2017, we received net cash proceeds of $38.6 million from the sale of Series A preferred shares in connection with the second and final closing of our Series A preferred share financing.

        Cash in excess of immediate requirements is invested primarily with a view to liquidity and capital preservation.

Cash Flows

        The following table summarizes our cash flows for each of the periods presented:

 
  Year Ended
December 31,
 
 
  2015   2016  
 
  (in thousands)
 

Net cash used in operating activities

  $ (5,625 ) $ (29,504 )

Net cash used in investing activities

    (3 )   (3,153 )

Net cash provided by financing activities

    5,316     54,762  

Net increase (decrease) in cash

  $ (312 ) $ 22,105  

Operating Activities

        During the year ended December 31, 2016, operating activities used $29.5 million of cash, resulting from our net loss of $63.5 million, partially offset by non-cash charges of $31.2 million and net cash provided by changes in our operating assets and liabilities of $2.8 million. Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2016 consisted primarily of a $2.1 million increase in accrued expenses and a $0.7 million increase in accounts payable. The increases in accrued expenses and accounts payable were primarily due to increases in clinical trial costs and professional fees associated with the preparation, audit and review of our financial statements.

        During the year ended December 31, 2015, operating activities used $5.6 million of cash, resulting from our net loss of $10.1 million and net cash used in changes in our operating assets and liabilities of $0.3 million, partially offset by non-cash charges of $4.7 million. Net cash used in changes in our operating assets and liabilities for the year ended December 31, 2015 consisted primarily of a $0.4 million increase in prepaid expenses and other current assets as a result of prepayments under our ongoing research, development and clinical trial work performed by CROs, partially offset by a $0.1 million increase in accrued expenses. The increase in accrued expenses was due to our increased level of operating activities and the timing of vendor invoicing and payments.

Investing Activities

        During the year ended December 31, 2016, we used $3.2 million of cash in investing activities, primarily consisting of our investment in Kleo.

        During the year ended December 31, 2015, we used an insignificant amount of cash in investing activities, consisting of purchases of property and equipment.

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Financing Activities

        During the year ended December 31, 2016, net cash provided by financing activities was $54.8 million, primarily consisting of net cash proceeds of $38.6 million from our issuance of Series A preferred shares in October 2016, net cash proceeds of $11.3 million from our issuance of common shares and gross proceeds of $5.0 million from borrowings under the credit agreement, partially offset by $0.2 million of payments of debt issuance costs associated with the borrowings.

        During the year ended December 31, 2015, net cash provided by financing activities was $5.3 million, consisting of net proceeds of $4.8 million from our issuance of common shares and net proceeds of $0.5 million from the collection of a note receivable from Portage Biotech, Inc. in connection with its initial equity investment in our company.

Credit Agreement

        On August 30, 2016, we entered into a one-year credit agreement with Wells Fargo providing for a term loan in the principal amount of $5.0 million, or the Credit Agreement, and we borrowed the full $5.0 million available. Our obligations under the Credit Agreement are guaranteed by a member of our board of directors, who is also a shareholder. A second member of our board of directors and shareholder agreed to serve as a secondary guarantor for 50% of the loan balance. In connection with their guaranties of the loan, we issued to each director an immediately exercisable warrant to purchase 107,500 common shares at an exercise price of $9.2911 per share. Borrowings under the Credit Agreement bear interest at a variable rate equal to monthly LIBOR, which was 0.77% as of December 31, 2016, plus 1.50% per annum. In the event of a default, the interest rate applicable is equal to the monthly LIBOR rate then in effect, increased by 4.0% per annum. The Credit Agreement requires monthly, interest-only payments through the maturity date of August 30, 2017, at which date all remaining amounts will be due and payable. The Credit Agreement contains affirmative and negative covenants, but does not contain any financial covenants.

Notes Payable to Related Parties

        On December 31, 2016, we entered into stock purchase agreements with each of the stockholders of BPI, acquiring 100% of the issued and outstanding shares of BPI for aggregate purchase consideration of $0.6 million. We funded the acquisition through the issuance of promissory notes to each of the former stockholders of BPI. The former beneficial stockholders of BPI are shareholders of our company and currently serve as our chief executive officer, our chief medical officer and the chairman of our board of directors, respectively. The notes are payable in five annual payments, the first four of which are interest only, with the final payment to include the principal balance outstanding plus any accrued and unpaid interest. The notes bear interest at a rate of 4.5% per annum and mature on December 31, 2021. The notes become immediately due and payable upon specified events, including immediately prior to the consummation of this offering or upon the occurrence of a change of control of our company. There are no affirmative, negative or financial covenants associated with the notes.

Funding Requirements

        We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. In addition, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company. Our expenses will also increase as we:

    initiate our two planned Phase 3 clinical trials of rimegepant, conduct our ongoing Phase 2/3 potentially pivotal trial of trigriluzole and complete our planned bioequivalence study for BHV-0223;

    initiate other supporting studies required for regulatory approval of our product candidates, including long-term safety studies, drug-drug interaction studies, preclinical toxicology and carcinogenicity studies;

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    support formulation efforts of BHV-5000 and initiate our planned Phase 1 clinical trial for that product candidate;

    initiate formulation and clinical development for BHV-3500;

    complete commercial-grade formulation work and stability testing for all our programs;

    seek regulatory approvals for any product candidates that successfully complete clinical trials;

    establish a sales, marketing and distribution infrastructure in anticipation of commercializing any product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly;

    hire additional clinical, medical, and development personnel;

    expand our infrastructure and facilities to accommodate our growing employee base;

    transition our organization to being a public company;

    maintain, expand and protect our intellectual property portfolio; and

    acquire or in-license other product candidates and technologies.

        We believe that the anticipated net proceeds from this offering, together with our existing cash, will enable us to repay our indebtedness and to fund our operating expenses and capital expenditure requirements for at least the next                        months, including the completion of our ongoing Phase 2/3 clinical trial of trigriluzole. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We expect that we will require additional capital to commercialize rimegepant, if we receive regulatory approval, and to pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for rimegepant, trigriluzole or our other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize.

        Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

    the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;

    the costs, timing and outcome of regulatory review of our product candidates;

    the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;

    the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;

    the costs and timing of hiring new employees to support our continued growth;

    the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

    the extent to which we acquire or in-license other product candidates and technologies;

    the costs of manufacturing commercial-grade product and necessary inventory to support commercial launch;

    the costs associated with in-licensing additional products candidates to augment our current pipeline; and

    the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any.

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        Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common shareholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

        The following table summarizes our contractual obligations as of December 31, 2016 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

 
  Payments Due by Period  
 
  Total   Less than
1 Year
  1 to 3
Years
  4 to 5
Years
  More than
5 Years
 
 
  (in thousands)
 

Research commitments (1)

  $ 6,973   $ 5,154   $ 1,819   $   $  

Debt obligations (2)

    5,836     5,133     54     649      

Share purchase obligations (3)

    5,750     5,750              

Total

  $ 18,559   $ 16,037   $ 1,873   $ 649   $  

(1)
Amounts in the table reflect commitments for costs associated with external CROs and CMOs engaged to conduct clinical development activities and clinical trials as well as to manufacture clinical trial materials.

(2)
Amounts in the table reflect the contractually required principal and interest payable pursuant to outstanding borrowings under the Credit Agreement and notes payable to related parties. Interest payments due under the Credit Agreement in the table above were calculated using an interest rate of 2.27%, which was the interest rate applicable to borrowings under the Credit Agreement as of December 31, 2016.

(3)
Amounts in the table reflect the cash portion of our commitments to purchase an aggregate of 5,500,000 shares of common stock of Kleo through December 2017 and to purchase 500,000 shares of Kleo common stock from an officer and stockholder of Kleo in January 2017. In March 2017, we purchased the 500,000 shares of Kleo common stock for consideration consisting of $249,750 in cash and 32,500 of our common shares and we purchased 1,375,000 shares of Kleo common stock for cash consideration of $1.4 million pursuant to our commitment.

        Clinical development commitments in the preceding table include agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. For obligations with cancellation provisions, the amounts included in the preceding table are limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee.

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        Under various agreements with third-party licensors and collaborators, we have agreed to make milestone payments and pay royalties and annual maintenance fees to third parties and to meet due diligence requirements based upon specified milestones. We have not included any contingent payment obligations, such as milestones, royalties, or due diligence, in the table above as the amount, timing and likelihood of such payments are not known. We have not included any of the annual maintenance fee payments in the above table, as although the amount and timing are known, we cannot currently determine the final termination dates of the agreements and, as a result, we cannot determine the total amounts of such payments we will be required to make under the agreements.

        Under our license agreement with BMS, we are obligated to make development milestone payments of up to $127.5 million for rimegepant or a derivative thereof and up to $74.5 million for other covered product candidates, as well as up to $150.0 million in commercial milestone payments for each licensed product and tiered royalties based on net sales of licensed products under the agreement at percentages in the low to mid teens.

        Under our license agreement with AstraZeneca, we are obligated to make development milestone payments of up to $30.0 million with respect to Rett syndrome and up to $60.0 million for any other indication, as well as commercial milestone payments of up to $120.0 million for all products licensed under the agreement and tiered royalties based on net sales of licensed products under the agreement at mid single-digit to low double-digit percentages.

        Under our license agreement with Yale, we are obligated to make regulatory milestone payments of up to $2.0 million, as well as royalties based on net sales of products from the licensed patents at a low single-digit percentage, subject to a minimum amount of up to $1.0 million per year.

        Under our license agreement with Catalent, we are obligated to pay up to $1.6 million upon the achievement of specified regulatory and commercial milestones, as well as royalties based on net sales of products licensed under the agreement at a low single-digit percentage.

        Under our license agreement with MGH, we are obligated to pay an annual license maintenance fee of up to $50,000, to make clinical and regulatory milestone payments of up to $0.8 million and commercial milestone payments of up to $2.5 million, and to pay royalties based on net sales at a low single-digit percentage.

        Under our agreement with ALS Biopharma and FCCDC, we are obligated to pay $3.0 million upon the achievement of a specified regulatory milestone with respect to the first licensed product and $1.0 million upon the achievement of a specified regulatory milestone with respect to subsequent products, as well as royalties based on net sales of products licensed under the agreement at a low single-digit percentage.

        Under our license agreement with Rutgers, we are obligated to pay an annual license maintenance fee of up to $25,000 per year, to make clinical and regulatory milestone payments of up to $0.8 million, and to pay royalties based on net sales of products at a low single-digit percentage, subject to a minimum amount of up to $0.1 million per year.

Critical Accounting Policies and Significant Judgments and Estimates

        Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from

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other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

        While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing at the end of this prospectus, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Accrued Research and Development Expenses

        As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:

    vendors, including central laboratories, in connection with preclinical development activities;

    CROs and investigative sites in connection with preclinical and clinical studies; and

    CMOs in connection with drug substance and drug product formulation of preclinical and clinical trial materials.

        We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

Share-Based Compensation

        We measure stock options and other share-based awards granted to employees and directors based on the fair value on the date of the grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. We have only issued stock options with service-based vesting conditions and record the expense for these awards using the straight-line method.

        For share-based awards granted to consultants and non-employees, we recognize compensation expense over the period during which services are rendered by such consultants and non-employees until

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completed. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of our common shares and updated assumption inputs in the Black-Scholes option-pricing model.

        We estimate the fair value of each stock option grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common shares and assumptions we make for the volatility of our common shares, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield.

Determination of the Fair Value of Common Shares

        As there has been no public market for our common shares to date, the estimated fair value of our common shares has been determined by our board of directors as of the date of each option grant, with input from management, considering our most recent arm's-length sale of our common shares or third-party valuation of our common shares as well as our board of directors' assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent sale of our common shares or third-party valuation through the date of the grant. Our board of directors considered various objective and subjective factors to determine the fair value of our common shares as of each grant date, including:

    the prices at which we sold preferred shares and the superior rights and preferences of the preferred shares relative to our common shares at the time of each grant;

    the progress of our research and development programs, including the status of preclinical studies and planned clinical trials for our product candidates;

    our stage of development and commercialization and our business strategy;

    external market conditions affecting the biotechnology industry, and trends within the biotechnology industry;

    our financial position, including cash on hand, and our historical and forecasted performance and operating results;

    the lack of an active public market for our common shares and our preferred shares;

    the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or a sale of our company in light of prevailing market conditions; and

    the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry.

        In the course of preparing for this offering, in February 2017, we obtained third-party valuations, performed on a retrospective basis, of our common shares as of August 17, 2015, the date we issued common shares and common share warrants in connection with our license agreement with ALS Biopharma, and as of October 31, 2016, the date of the first closing of our Series A preferred share financing. In addition, we obtained third-party valuations of our common shares as of various dates between December 31, 2016 and March 31, 2017. Our third-party valuations resulted in valuations of our common shares of $5.23 per share as of August 17, 2015, $6.73 per share as of October 31, 2016, $7.45 per share as of December 31, 2016, $8.68 per share as of January 31, 2017, $9.85 per share as of February 28, 2017 and $10.82 per share as of March 31, 2017. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants' Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

        Our third-party valuation of common shares performed as of August 17, 2015 was prepared using the discounted cash flow, or DCF, method, a form of the income approach, to estimate our equity value. In

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order to estimate equity value, the DCF method uses the estimated present value of future net cash flows for the expected life of the related assets or business, discounted at a rate of return that considers the relative risk of achieving those cash flows, the time value of money and the current stage of development of the business. A reasonable discount for lack of marketability is applied to the total equity value to arrive at an estimate of the total fair value of equity on a non-marketable basis. The total fair value of equity on a non-marketable basis is then allocated between each class of equity, including common shares, stock options and warrants. The aggregate fair value of outstanding options and warrants, which was calculated using the Black-Scholes option-pricing model, was deducted from the total equity value on a non-marketable basis to arrive at the fair value of common shares outstanding.

        Our third-party valuations of common shares performed as of every other date listed above were prepared using the hybrid method, which used market approaches to estimate our enterprise value. The hybrid method is a probability-weighted expected return method, or PWERM, where the equity value in one or more of the scenarios is calculated using an option-pricing method, or OPM. The OPM treats common shares and preferred shares as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company's securities changes. Under this method, the common shares have value only if the funds available for distribution to shareholders exceeded the value of the preferred share liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. The PWERM is a scenario-based methodology that estimates the fair value of common shares based upon an analysis of future values for the company, assuming various outcomes. The common share value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of shares. The future value of the common shares under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common shares.

        The assumptions underlying these valuations represent management's best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our share-based compensation expense could be materially different.

        Following the closing of this offering, the fair value of our common shares will be determined based on the quoted market price of our common shares.

Options Granted

        The following table sets forth by grant date the number of shares subject to options granted between January 1, 2015 and April 6, 2017, the per share exercise price of the options, the fair value of common shares per share on each grant date, and the per share estimated fair value of the options:

Grant Date                        
  Number of
Shares Subject
to Options
Granted
  Per Share
Exercise
Price of
Options
  Fair Value
per Common
Share on
Grant Date
  Per Share
Estimated Fair
Value of
Options
 

October 23, 2015

    1,247,500   $ 5.60   $ 5.23   $ 3.22  

December 15, 2016

    616,925   $ 9.29   $ 6.73   $ 4.09  

January 9, 2017

    5,500   $ 9.29   $ 7.45   $ 4.24  

January 11, 2017

    54,000   $ 9.29   $ 7.45   $ 4.41  

January 25, 2017

    10,800   $ 9.29   $ 8.68   $ 5.12  

January 31, 2017

    325,819   $ 9.29   $ 8.68   $ 5.44  

February 15, 2017

    20,800   $ 9.29   $ 8.68   $ 5.15  

February 27, 2017

    54,000   $ 9.85   $ 9.85   $ 5.94  

March 6, 2017

    10,000   $ 9.85   $ 9.85   $ 6.01  

April 5, 2017

    74,000   $ 10.82   $ 10.82   $ 6.84  

April 6, 2017

    479,514   $ 10.82   $ 10.82   $ 7.03  

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Valuation of Warrant Liability

        In connection with entering into the Credit Agreement, we agreed to issue warrants to purchase our common shares to the guarantor and co-guarantor of our obligations under the agreement. We classify the warrants as a liability on our consolidated balance sheet because each warrant represents a freestanding financial instrument that it not indexed to our own shares. The warrant liability was initially recorded at fair value upon entering into the Credit Agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair value of the warrant liability until the warrants are exercised, expire or qualify for equity classification.

        We utilize a Monte Carlo simulation, which is a statistical method used to generate a defined number of share price paths to develop a reasonable estimate of the range of future expected share prices, to value our warrant liability. The Monte Carlo simulation incorporates assumptions and estimates to value the warrant liability. We assess these assumptions and estimates on a quarterly basis as additional information impacting the assumptions is obtained. Estimates and assumptions impacting the fair value measurement include the estimated probability of adjusting the exercise price of the warrants, the number of shares for which the warrants are exercisable, the fair value per share of the underlying common shares issuable upon exercise of the warrants, remaining contractual term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying common shares. We estimated the fair value of our common shares by taking into consideration the most recent arm's-length sale of our common shares or third-party valuation of our common shares as well as additional factors that we deem relevant. We have historically been a private company and lack company-specific historical and implied volatility information of our shares. Therefore, we estimate expected share volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. We estimated a 0% expected dividend yield based on the fact that we have never paid or declared dividends and do not intend to do so in the foreseeable future.

Valuation of Derivative Liability

        Our license agreement with Yale provides for a change-of-control payment to Yale upon the occurrence of a change-of-control event, as defined in the agreement, including an IPO. We classify the change-of-control payment obligation as a liability on our consolidated balance sheet because it represents a contingent obligation to pay a variable amount of cash that may be based, in part, on the value of our own shares. The derivative liability was initially recorded at fair value upon entering into the license agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the derivative liability are recognized as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair value of the derivative liability until a change-of-control event occurs.

        The fair value of the derivative liability was determined using the PWERM, which considers as inputs the type and probability of occurrence of a change-of-control event, the amount of the payment, the expected timing of a change-of-control event and a risk-adjusted discount rate. The estimates are based, in part, on subjective assumptions and could differ materially in the future. Changes to these assumptions could have a significant impact on the fair value of the derivative liability.

Valuation of Contingent Equity Liability

        Our license agreements with BMS and AstraZeneca require us to issue shares of capital stock upon the occurrence of specified financing or change-of-control events or development milestones, as defined in

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the agreements. In each agreement, the class and number of shares to be issued upon a triggering event were not known upon entering into the license agreements; however, the dollar amount of the shares to be issued upon a triggering event is fixed. We classify these contingent obligations to issue shares as a liability on our consolidated balance sheet because each represents an obligation to issue a variable number of shares for a fixed dollar amount. Each contingent equity liability was initially recorded at fair value upon entering into each respective agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair values of the contingent equity liabilities are recognized as a component of other income (expense), net in our consolidated statement of operations and comprehensive loss. We will continue to recognize changes in the fair values of the contingent equity liabilities until the occurrence of a respective triggering event.

        The fair values of the contingent equity liabilities were determined using the PWERM, which considers as inputs the probability of occurrence of events that would trigger the issuance of shares, the expected timing of such events, the expected value of the contingently issuable equity upon the occurrence of a triggering event and a risk-adjusted discount rate. The estimates are based, in part, on subjective assumptions and could differ materially in the future. Changes to these assumptions could have a significant impact on the fair value of the contingent equity liabilities.

        In October 2016, upon the initial closing of our Series A preferred share financing, we issued to AstraZeneca 538,150 Series A preferred shares in partial satisfaction of our obligation to issue shares under our license agreement with AstraZeneca. In connection with this offering, we expect that we will issue an aggregate of 1,883,523 additional common shares to BMS and AstraZeneca in satisfaction of our remaining obligation to issue shares under our license agreements with BMS and AstraZeneca. As a result, upon the closing of this offering, the then-current fair value of the contingent equity liabilities will be reclassified to shareholders' equity and the contingent equity liabilities will no longer be outstanding.

Emerging Growth Company Status

        The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.

Off-Balance Sheet Arrangements

        We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Recently Issued Accounting Pronouncements

        A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing at the end of this prospectus.

Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

        As of December 31, 2016, we had $5.0 million of borrowings outstanding under the Credit Agreement. Amounts outstanding under the Credit Agreement bear interest at a variable rate equal to monthly LIBOR, which was 0.77% as of December 31, 2016, plus a margin of 1.50%. An immediate 10% change in monthly LIBOR rates would not have had a material impact on our debt-related obligations, financial position or results of operations. In addition, given the short-term nature of the Credit Agreement, which matures in August 2017, we do not believe our exposure to interest rate risk is significant.

        Our notes payable to related parties outstanding as of December 31, 2016 bear interest at fixed interest rates and, therefore, do not expose us to interest rate risk.

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BUSINESS

Overview

        We are a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting neurological diseases, including rare disorders. Our product candidates are small molecules based on two distinct mechanistic platforms—calcitonin gene-related peptide, or CGRP, receptor antagonists and glutamate modulators—which we believe have the potential to significantly alter existing treatment approaches across a diverse set of neurological indications with high unmet need in both large markets and orphan indications. The most advanced product candidate from our CGRP receptor antagonist platform is rimegepant, which we are developing for the acute treatment of migraine and for which we intend to initiate two Phase 3 clinical trials in the second half of 2017, with topline results expected in the first half of 2018. The most advanced product candidate from our glutamate modulation platform is trigriluzole, which we are developing for the treatment of ataxias with an initial focus on spinocerebellar ataxia, or SCA. We have received orphan drug designation from the FDA for trigriluzole in SCA, and we began a Phase 2/3 clinical trial in SCA in December 2016 and expect to report topline results in early 2018. Our second most advanced product candidate from our glutamate modulation platform is BHV-0223, which we are developing for the treatment of amyotrophic lateral sclerosis, or ALS, a neurodegenerative disease that affects nerve cells in the brain and spinal cord. We have received orphan drug designation from the FDA for BHV-0223 in ALS.

        We believe many of our product candidates have the potential to be first-in-class or best-in-class treatment options, while others will potentially represent the first available treatment options for their indications. Based on the data from its Phase 2b clinical trial, we believe rimegepant has the potential to be the best-in-class CGRP receptor antagonist for the acute treatment of migraine, having shown statistically significant improvement on the symptoms of pain, nausea, photophobia and phonophobia associated with migraine attacks. To our knowledge, rimegepant is the only small molecule CGRP receptor antagonist currently in development for the acute treatment of migraine to have achieved statistical significance, meaning there is a low probability, typically less than 5%, that the difference happened by chance, on all of these measures in a single study. We also believe that trigriluzole has the potential to be the first FDA-approved drug treatment option for ataxias. We intend to expedite development of trigriluzole for SCA using the Section 505(b)(2) regulatory pathway and are currently conducting a Phase 2/3 trial that we believe, if successful, may be sufficient to support our application for regulatory approval of trigriluzole. We believe that BHV-0223 has the potential to be the first-in-class sublingual treatment for ALS. BHV-0223 is designed to deliver the unique pharmacologic, glutamate modulation effects of riluzole which has shown a survival benefit for ALS patients, and which is currently the only treatment for ALS approved by the FDA. We believe BHV-0223 could also provide best-in-class formulation attributes such as ease of administration, more predictable pharmacokinetic performance, no food effect, reduced drug load and reduced liver exposure.

Our CGRP Receptor Antagonist Platform: Rimegepant and BHV-3500 Targeting Migraine

        Our CGRP receptor antagonist platform comprises two product candidates: rimegepant for the acute treatment of migraine and BHV-3500 for the prevention of chronic and episodic migraine. Rimegepant, the lead product candidate, is an orally available, selective and potent small molecule CGRP receptor antagonist. Migraine is both widespread and disabling. The Migraine Research Foundation ranks migraine as the world's third most prevalent illness, and the Global Burden of Disease Study 2010 rates migraine as the seventh highest specific cause of disability worldwide. According to the American Migraine Foundation, migraine affects approximately 36 million people in the United States, and treatment of migraine accounted for an estimated market of approximately $1.9 billion in 2012 in the United States. Current treatment approaches, such as triptans, can be limited by headache recurrence, which are headaches that are relieved and then reoccur within 24 hours after taking migraine medication, and cardiovascular contraindications or warnings. We believe rimegepant has the potential to be a best-in-class

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CGRP receptor antagonist for the acute treatment of migraine with the ability to address important unmet needs, such as durable efficacy across all four traditional migraine symptoms and reduced incidence of headache recurrence, without contraindications or warnings in patients with cardiovascular disease or hypertension, since its CGRP-based mechanism of action does not involve active vasoconstriction, or the constriction of blood vessels.

        In a Phase 2b, double-blind, randomized, placebo-controlled, dose-ranging clinical trial of 812 patients completed by Bristol-Myers Squibb Company, or BMS, rimegepant dosed at 75 mg was observed to have statistically significant improvement as compared to placebo on all four key migraine symptoms—pain, nausea, photophobia and phonophobia—the four traditional endpoints identified by the U.S. Food and Drug Administration, or FDA, for drug approval for treatment of migraine. To our knowledge based on publicly available information, rimegepant is the only small molecule CGRP receptor antagonist currently in development that has achieved statistically significant improvement on all four of the traditional endpoints within a single study. Rimegepant also was observed to have statistically significant effects on two-to-24 hour and two-to-48 hour pain freedom (head pain intensity level reported as "no pain") and two-to-24 hour pain relief (no pain or mild pain), as compared to placebo. In these measurements, benefits were present at two hours after dosing and persisted through 24 hours after dosing and, with respect to pain freedom, persisted through 48 hours after dosing. This durable improvement is significant because other common migraine medications, such as triptans, have been linked to the headache recurrence. The Phase 2b data also showed statistically significant improvement as compared to placebo in multiple doses of rimegepant. As of December 31, 2016, approximately 687 subjects have received single or multiple doses of rimegepant, and no treatment-related serious adverse events have been observed and adverse events have generally been mild and transient in nature. In the second half of 2017, we plan to commence two Phase 3 clinical trials of rimegepant for the acute treatment of migraine, with topline results expected in the first half of 2018. We are advancing the 75 mg dose of rimegepant in our Phase 3 clinical trials, as that dose was the lowest effective dose in the Phase 2b trial and there did not appear to be additional benefits of higher doses, which is a general characteristic of the dose-response profile of acute treatments for migraine.

        BHV-3500, the second product candidate from our CGRP receptor antagonist platform, is a small molecule, structurally distinct from rimegepant, that we are developing for the prevention of chronic and episodic migraine. Chronic migraine is characterized by experiencing 15 or more headache days per month, while episodic migraine is characterized by experiencing fewer than 15 headache days per month. BHV-3500 is potent, highly soluble and selective at the human CGRP receptor. In addition, BHV-3500 has demonstrated in nonclinical studies characteristics that we believe will make it particularly well suited for daily preventative treatment of chronic and episodic migraine. Preliminary proof-of-concept has been observed in a marmoset model with oral delivery and, based on preliminary preclinical evaluations, no significant cardiovascular safety or systemic toxicity issues have been observed. We believe BHV-3500's chemical properties also make the product candidate potentially suitable for multiple routes of delivery, including nasal, subcutaneous, inhalation or oral administration. Because BHV-3500 has exhibited an efficacy profile similar to rimegepant in preclinical studies, we believe that BHV-3500 may demonstrate similar comprehensive and durable improvements in the four key migraine symptoms. In 2017, we plan to commence studies to enable an investigational new drug application, or IND, to ultimately pursue clinical trials of BHV-3500 for the prevention of chronic and episodic migraine.

        We acquired exclusive, worldwide rights to our CGRP receptor antagonist platform, including rimegepant and BHV-3500, through a license agreement with BMS. As part of this agreement, BMS has taken an equity stake in our company.

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Our Glutamate Modulation Platform: Trigriluzole, BHV-0223 and BHV-5000 Targeting Orphan Neurological Indications

        Under our glutamate modulation platform, we are currently developing three product candidates, trigriluzole (previously known as BHV-4157) for the treatment of ataxias, BHV-0223 for the treatment of ALS and BHV-5000 for the treatment of symptoms associated with Rett syndrome, including breathing irregularities. These product candidates modulate the glutamate system via two distinct mechanisms—glutamate transporter modulation (trigriluzole and BHV-0223) and glutamate N -methyl-D-aspartate, or NMDA, receptor antagonism (BHV-5000).

        Trigriluzole is a third-generation tripeptide prodrug, that converts to the active metabolite riluzole, that we are developing for the treatment of ataxias. We believe that trigriluzole will qualify as a new chemical entity, or NCE, if it receives regulatory approval by the FDA. Trigriluzole has the potential to be the first drug approved by the FDA for the treatment of ataxias, and we have chosen SCA as our lead indication. SCA is one of a group of rare genetic disorders that is characterized by slowly progressive incoordination of gait, speech and hand and eye movements. In general, a person with SCA retains full mental capacity but progressively loses physical control over voluntary muscles. According to a 2016 report by Orphanet cataloging the prevalence and incidence of rare diseases, SCA affects approximately 22,000 individuals in the United States. Other ataxias affect an aggregate of greater than 100,000 individuals in the United States. No approved drug treatments for SCA are currently available. We believe that trigriluzole may be effective in the treatment of SCA based on the results of two prior randomized controlled trials conducted by third parties, in which riluzole was observed to have statistically significant improvements in ataxia-related endpoints, and the results of multiple in vivo and in vitro preclinical studies that suggest that trigriluzole may mitigate the limitations of riluzole. In May 2016, we received orphan drug designation from the FDA for trigriluzole in SCA, and we intend to develop trigriluzole for SCA under Section 505(b)(2) of the U.S. Federal Food, Drug, and Cosmetic Act. Trigriluzole had been dosed in 58 subjects in a Phase 1 clinical trial and has been generally well tolerated, without evidence of novel, clinically significant safety signals or lab abnormalities compared to the active metabolite riluzole. We are currently enrolling in our Phase 2/3 clinical trial, which includes Phase 2 elements, such as an early interim analysis of safety or activity, and Phase 3 elements, such as larger patient populations with less restrictive enrollment criteria, which we believe, if successful, may be sufficient to support our application for regulatory approval of trigriluzole. We enrolled the first patient in our Phase 2/3 clinical trial in December 2016, and we expect to report topline results from this trial in early 2018. If the results of this trial are positive, we anticipate submitting a new drug application, or NDA, to the FDA in 2018.

        BHV-0223 is a sublingual, oral disintegrating tablet, or ODT, formulation of riluzole that we are developing for the treatment of ALS. ALS is a progressive neurodegenerative motor neuron disease that affects nerve cells in the brain and the spinal cord. ALS affects up to 20,000 individuals in the United States and typically presents in patients with painless muscle weakness, trouble swallowing and muscle atrophy that ultimately progresses to paralysis, impaired breathing and death. Orally administered riluzole, which was approved by the FDA in 1995, remains the only agent shown to extend survival and time to tracheostomy in patients with ALS, although it has significant shortcomings that limit its utility. We believe that BHV-0223 has the potential to significantly improve the treatment of patients with ALS by combining the unique pharmacologic activities of glutamate modulation that are conferred by riluzole with an improved pharmacologic profile that results in easier administration, more predictable pharmacokinetic performance, no food effect, reduced drug load and reduced liver exposure compared to oral riluzole. In December 2016, we received orphan drug designation from the FDA for BHV-0223 in ALS. BHV-0223 had been dosed in 11 subjects as of January 31, 2017 in connection with our Phase 1 clinical trial. Adverse events have generally been mild and transient, and no treatment-related serious adverse events have been observed. In 2017, we plan to commence a bioequivalence study of BHV-0223 40 mg to riluzole 50 mg in healthy volunteers. We plan to subsequently submit an NDA for the use of BHV-0223 in patients with ALS and pursue regulatory approval under the Section 505(b)(2) regulatory pathway.

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        BHV-5000 is an orally available, first-in-class, low-trapping, NMDA receptor antagonist prodrug that we are developing for the treatment of symptoms associated with Rett syndrome, including breathing irregularities. Rett syndrome is a rare and severe genetic neurodevelopmental disorder. After six to 18 months of apparently normal post-natal development, patients with Rett syndrome develop global deceleration of psychomotor function, loss of acquired cognitive skills and brain-mediated episodes of transient respiratory suppression. With intensive care, patients may survive into adulthood, yet they are severely physically and cognitively impaired. Rett syndrome affects approximately 15,000 individuals in the United States. No approved drug therapies for Rett syndrome are currently available and care is supportive. As a low-trapping NMDA receptor antagonist, BHV-5000 has differentiating pharmacologic properties compared to other agents that have been in development within this drug class. The unique property of a low-trapping NMDA receptor antagonist is its ability to uncouple from the target receptor more freely, a property that is thought to mitigate the dissociative or psychotic-like effects that have been observed with other NMDA antagonists. We are studying BHV-5000 in Rett syndrome based on results of ketamine studies in preclinical mouse models, in which improvement in key clinical features of the disease have been observed, including a reduction in the frequency of episodes of respiratory suppression. These preclinical findings are supported by anecdotal clinical reports regarding the use of ketamine, another NMDA receptor antagonist, in patients with Rett syndrome that have been reported to also show clinical improvements. We anticipate completing our commercial-grade formulation for BHV-5000 in the third quarter of 2017. As of December 31, 2016, BHV-5000 had been dosed in approximately 40 healthy subjects in a Phase 1 trial conducted by AstraZeneca AB, or AstraZeneca, and has been observed to be well tolerated with no clinically relevant safety signals. Its active metabolite, lanicemine, has been administered in clinical trials conducted by AstraZeneca to approximately 790 subjects, in single or multiple doses, and has been observed to be generally well tolerated with most adverse events being mild and transient in nature. After a confirmatory Phase 1 clinical trial, which we plan to initiate in 2017, to bridge pharmacokinetics with a prior formulation, we plan to commence a single Phase 2/3 clinical trial of BHV-5000 for the treatment of breathing irregularities associated with Rett syndrome in 2018, with the potential for this to be a pivotal trial that, if successful, we believe could support our application for regulatory approval.

        We acquired exclusive, worldwide rights to BHV-5000 through a license agreement with AstraZeneca in October 2016. As part of this agreement, AstraZeneca has taken an equity stake in our company.

        In addition to ataxias, ALS and Rett syndrome, we may expand our pipeline into other therapeutic indications where glutamate plays a central role in the pathophysiology of the disease, including anxiety and mood disorders.

Biohaven Management Team

        We are led by a team of experienced executives who have held senior research and development positions at leading biotech and large pharmaceutical companies. Members of our management team and board of directors have deep experience leading neuroscience research and have been involved in the development and commercialization of numerous drugs, such as Zoloft, Abilify, Opdivo, Yervoy and Soliris. This depth of experience has facilitated our ability to license important product candidates and intellectual property from top-tier pharmaceutical companies and leading academic institutions, such as AstraZeneca, BMS, ALS Biopharma, Rutgers University, the Massachusetts General Hospital (a teaching hospital of Harvard Medical School) and Yale University. Members of our Scientific Advisory Board hold or have held affiliations with Yale University, Harvard Medical School, the National Institutes of Health and the FDA. We also have ongoing academic collaborations with Johns Hopkins University, Columbia University, Rutgers University and Yale University. We believe the strength of our management team and board of directors positions us well to enter into additional license and collaboration arrangements with world-class institutions and large pharmaceutical companies.

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Product Candidates

        The following table summarizes our lead development programs. We hold the worldwide rights to all of our product candidates.

GRAPHIC

Our Strategy

        Our goal is to become a leader in the development of innovative therapies for neurological diseases that have the potential to change current treatment paradigms. The key elements of our strategy to achieve this goal include:

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Our CGRP Receptor Antagonist Platform

Migraine Overview and Market Opportunity

        Migraine is a chronic and debilitating disorder characterized by recurrent attacks lasting four to 72 hours with multiple symptoms, including typically one-sided, pulsating headaches of moderate to severe pain intensity that are associated with nausea or vomiting, and/or sensitivity to sound (phonophobia) and sensitivity to light (photophobia). Migraines are often preceded by transient neurological warning symptoms, known as auras, which typically involve visual disturbances such as flashing lights, but may also involve numbness or tingling in parts of the body. Migraine is both widespread and disabling. The Migraine Research Foundation ranks migraine as the world's third most prevalent illness, and the Global Burden of Disease Study 2010 rates migraine as the seventh highest specific cause of disability worldwide. According to the Migraine Research Foundation, in the United States, approximately 36 million individuals suffer from migraine attacks. While most sufferers experience migraine attacks once or twice per month, more

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than 4 million people have chronic migraine, defined as experiencing at least 15 migraine days per month for more than three months. Others have episodic migraine, which is characterized by experiencing less than 15 migraine days per month. People with episodic migraine may progress to chronic migraine over time. Migraine attacks can last a few hours or up to days. More than 90% of individuals suffering from migraine attacks are unable to work or function normally during a migraine attack, with many experiencing comorbid conditions such as depression, anxiety and insomnia.

        Triptans are the current first-line therapy for treatment of migraine, with over 13.9 million annual prescriptions in the United States. Despite the market for triptans being highly genericized, branded options continue to be popular. For example, even at a price of approximately $400-600/month, Maxalt is one of the more commonly prescribed triptans. There has been minimal improvement in the standard treatment for migraine since the early 1990s. Reformulations of generic triptans or incremental improvements with new agents that target the same pathway are predicted to generate additional sales in the near term, but major sales growth for the migraine market are expected from novel therapeutics over the next several years. We believe that rimegepant will be a potential best-in-class small molecule CGRP receptor antagonist for the acute treatment of migraine and could achieve meaningful penetration of the market of migraine sufferers whose symptoms are not adequately addressed with current treatments.

        The prevention of chronic and episodic migraine in the United States is a multi-billion dollar potential market. According to a report published by Neuropsychiatric Disease and Treatment , 38% to 50% of diagnosed migraine sufferers may be candidates for migraine prevention therapy. Currently, preventive medications approved for migraine include beta blockers, such as propranolol, topiramate, sodium valproate, and botulinum toxin, or Botox, and generate nearly 10 million prescriptions annually.

        In patients with high frequency and chronic migraine, beta blockers, topiramate and sodium valproate are commonly used. These medications are often not well tolerated by patients because of adverse events such as cognitive impairment, nausea, fatigue and sleep disturbance. In clinical trials with topiramate, the reduction in number of migraine days per month has been observed to be relatively small; for example, migraine days reduced by 2.5 days from 6-7 days at baseline, or reduced by 3.5 days from 15-16 days at baseline. Migraine is twice as prevalent in women as compared to men. In the affected female patient population, predominantly women of child-bearing age, the association of these agents with poor pregnancy outcomes and fetal abnormalities can limit their use. Botox is only approved in patients with 15 or more migraine days per month. Approximately 47% of Botox-treated patients experience a 50% reduction in either migraine days per month or migraine frequency per month within six months, which leaves more than half of patients inadequately treated. In addition, the Botox dosing regimen consists of approximately 31 subcutaneous injections at various sites on the head and neck, with recommended repetition every 12 weeks if the patient has a therapeutic response.

        We believe BHV-3500 has the potential to address a significant unmet need as well as compete effectively with current and future migraine prevention therapies. BHV-3500 may afford multiple routes of delivery including daily oral administration for the prevention of chronic migraine, potential for enhanced safety profile, superior chemical attributes and a higher value to patients and payors with lower expected costs compared to large molecule biologics in current development.

CGRP's Role in Migraine

        The CGRP receptor is located within pain-signaling pathways, intracranial arteries and mast cells and its activation is thought to play a causal role in migraine pathophysiology. For example, research and clinical studies have shown: serum levels of CGRP are elevated during migraine attacks, infusion of intravenous CGRP produces persistent pain in migraine sufferers and non-migraine sufferers, and treatment with anti-migraine drugs normalize CGRP levels. Additionally, multiple clinical studies show that small molecule CGRP receptor antagonists, which inhibit the binding of endogenous CGRP to CGRP receptors, are effective in aborting migraine attacks.

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        Treatment with a CGRP receptor antagonist is believed to relieve migraine through the following possible mechanisms:

        The graphic below depicts the mechanism of action by which CGRP receptor antagonism is thought to alleviate migraine.

GRAPHIC


N Engl J Med, Paul L. Durham, "CGRP-Receptor Antagonists—A Fresh Approach to Migraine Therapy," March 11, 2004. Copyright © Massachusetts Medical Society.

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Our Lead Product Candidate: Rimegepant, an Oral CGRP Receptor Antagonist for Acute Treatment of Migraine

        We are developing rimegepant as an orally available, selective and potent small molecule CGRP receptor antagonist for the acute treatment of migraine. We believe that rimegepant has the potential to be the best-in-class CGRP receptor antagonist for the treatment of migraine with the ability to address important unmet needs, such as durable efficacy across all four traditional migraine symptoms and reduced incidence of headache recurrence, without contraindications or warnings in patients with cardiovascular disease or cardiovascular risk factors such as hypertension.

        Rimegepant dosed at 75 mg was observed to have statistically significant, durable improvement as compared to placebo in a Phase 2b, double-blind, randomized, placebo-controlled, dose-ranging clinical trial completed by BMS. In this trial, 812 patients suffering from migraine attacks received either placebo, sumatriptan 100 mg (a currently approved triptan medication for migraine) or rimegepant dosed at 10, 25, 75, 150, 300 or 600 mg. The Phase 2b data showed statistically significant effects of rimegepant starting at the 75 mg dose compared to placebo, meaning that at this dose level, statistically significant results were observed on all four key migraine symptoms—pain, nausea, photophobia and phonophobia. Higher doses of rimegepant, while also showing improvement compared to placebo, did not appear to convey any meaningful additional benefit above the 75 mg dose. The observed improvement profile is consistent with the published literature showing a lack of a progressive dose-response curve for acute anti-migraine drugs. To our knowledge and based on publicly available information, rimegepant is the only small molecule CGRP receptor antagonist currently in development that has achieved statistically significant improvement on all four of the traditional endpoints within a single study, which suggests a broad efficacy profile important both to patients and physicians. Rimegepant also was observed to have evidence of durable improvement as demonstrated by statistically significant effects on two-to-24 hour and two-to-48 hour pain freedom and two-to-24 hour pain relief, as compared to placebo. In these measurements, benefits were present at two hours after dosing and persisted through 24 hours after dosing and, with respect to pain freedom, through 48 hours after dosing. This durable improvement is significant because other common migraine medications, such as triptans, have been associated with headache recurrence.

        The Phase 2b trial successfully completed its aim of identifying a Phase 3 dose. Based on these observations, we are advancing the 75 mg dose of rimegepant in our Phase 3 clinical trials. In the second half of 2017, we plan to commence two Phase 3 clinical trials of rimegepant for the acute treatment of migraine, with topline results expected in the first half of 2018.

Acute Treatment of Migraine and Limitation of Current Treatments

        Clinicians use a number of pharmacologic agents for the acute treatment of migraine. A study published by the American Headache Society in 2015 concluded that the medications deemed effective for the acute treatment of migraine fell into the following classes: triptans, ergotamine derivatives, NSAIDs, opioids and combination medications. The current standard of care for the acute treatment of migraine is prescription of triptans, which are serotonin 5-HT1B/1D receptor agonists. Triptans have been developed and approved for the acute treatment of migraine over the past two decades. The initial introduction of triptans represented a shift toward drugs more selectively targeting the suspected pathophysiology of migraine. While triptans account for almost 80% of anti-migraine therapies prescribed at office visits by healthcare providers, issues such as an incomplete effect or headache recurrence remain important clinical limitations. In fact, only about 30% of patients from clinical trials are pain free at two hours after taking triptans. In addition, triptans are contraindicated in patients with cardiovascular disease, cerebrovascular disease, or significant risk factors for either because of potential systemic and cerebrovascular vasoconstriction from the 5-HT1B-mediated effects. The package insert for triptans includes warnings and precautions for migraine patients with risk factors for cardiovascular disease and states that high risk patients, including those with increased age, diabetes, hypertension, smoking, obesity or a strong family history of coronary artery disease, should be evaluated prior to receiving the first dose of a triptan. Triptans

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are contraindicated in patients with a history of ischemic heart disease, coronary artery vasospasm, history of stroke, peripheral vascular disease or uncontrolled hypertension. Even in patients who have a negative cardiovascular evaluation, product labeling for triptans recommends that consideration be given to administration of the first dose in a medically-supervised setting and performing an electrocardiogram immediately following administration. Additionally, periodic cardiovascular evaluation should be considered for long-term users of triptans who have cardiovascular risk factors. According to a recent study published in the journal Headache, an estimated 2.6 million migraine sufferers in the United States have a cardiovascular event, condition or procedure that limits the potential of triptans as a treatment option. Thus, we believe there remains a significant unmet medical need for a novel migraine-specific medication that does not increase the risk of cardiovascular liability.

The Potential Benefits of Rimegepant Compared to Other Treatments

        Traditionally, for approval of drugs for the acute treatment of migraine, the FDA required the drug to meet four co-primary endpoints at two hours after dosage in clinical trials: pain freedom or pain relief, and freedom from nausea, phonophobia and photophobia. In October 2014, the FDA issued new, less stringent draft guidance indicating that pivotal migraine trials could use co-primary endpoints of freedom from pain and most bothersome symptom to support approval. We believe rimegepant may be superior to other acute treatments for migraine currently approved and in development because, based on our Phase 2b clinical trial data, rimegepant was observed to result in statistically significant improvement in all four endpoints of pain, nausea, photophobia and phonophobia at the 75 mg dose, compared to placebo, with a favorable safety profile.

        The table below compares key features of rimegepant to two other product candidates targeting migraine that are currently in development and that we anticipate could receive marketing approval as

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early as 2019-2020, and to CGRP antibodies, which represent another class of migraine-targeting product candidates in development.

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        Based on the results from the Phase 2b trial and earlier-stage development, we believe rimegepant offers the following clinical and product benefits for the acute treatment of migraine:

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The Potential of CGRP Antagonists: Novel mechanism of action without causing vasoconstriction

        The release of the neuropeptide CGRP from pain nerves is believed to play a causal role in the underlying pathophysiology of migraine and is also a potent dilator of intracranial arteries. Unlike triptans, which possess potent vasoconstrictive properties that could worsen cardiovascular or cerebrovascular disease, blocking the CGRP receptor reverses pathologic dilation of blood vessels without constricting them past their normal resting state size and without active vasoconstriction. The absence of cardiovascular effects may prove to be one of the major advantages in the use of CGRP receptor antagonists for the treatment of migraine. Preclinical and clinical evidence suggests that the use of CGRP receptor antagonists may be effective in treating migraine by blocking the pathophysiological processes associated with CGRP release, specifically by: (1) inhibiting pain transmission; (2) decreasing artery dilation without any active vasoconstriction; and (3) halting neurogenic inflammation. To date, the preclinical and clinical evidence indicates that CGRP receptor antagonists have an absence of vasoconstrictor activity and lack other undesirable cardiovascular side effects, such as changes in the blood pressure or heart rate. Studies of numerous drugs in development have provided proof of concept of the effects of CGRP targeting agents in humans.

Our Clinical Program for Rimegepant in Acute Treatment of Migraine

        We licensed rimegepant from BMS in July 2016. To date, the majority of clinical and preclinical development with rimegepant has been conducted by BMS. BMS selected rimegepant as a lead CGRP receptor antagonist compound for its potential best-in-class chemical profile after 10 years of research on this drug target.

        Rimegepant is being developed for oral administration and was observed to have evidence of comprehensive and durable treatment effect in a large Phase 2b clinical trial conducted by BMS. This Phase 2b clinical trial, the results of which were published in 2014, was a double-blind, randomized, placebo-controlled, dose-ranging trial of rimegepant for the acute treatment of migraine. The primary objective was to evaluate the efficacy of rimegepant compared with placebo in the acute treatment of migraine as measured by pain freedom (head pain intensity level reported as "no pain") at two hours post-dosing using a four point rating scale (no pain, mild pain, moderate pain, severe pain) while identifying an optimal dose to support the Phase 3 clinical trials. Subjects were randomized to receive placebo, a 100 mg dose of sumatriptan or one of six doses of rimegepant (10 mg, 25 mg, 75 mg, 150 mg, 300 mg, or 600 mg). Randomization made use of an adaptive design, whereby one quarter of subjects were assigned placebo and one-eighth were assigned sumatriptan; the remainder were assigned to one of six

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rimegepant groups based on a Bayesian analysis of the observed response rates. Subjects were instructed to treat one migraine of moderate to severe pain intensity and return to the clinic within seven days.

        A total of 885 subjects were randomized and 812 completed the study (the remaining subjects did not experience a migraine during the treatment phase of the trial). Key entry criteria included: age 18 to 65 inclusive with at least a one-year history of migraine beginning prior to 50 years of age; migraine attacks lasting four to 72 hours if left untreated; not more than eight attacks per month of moderate or greater severity over the prior three months; and less than 15 total headache days per month (migraine plus non-migraine) in each of the three preceding months.

        Patients were given an electronic diary to record improvements and returned to the study site within seven days of study treatment for review of the data. Patients who experienced relief of headache pain to a mild intensity or pain-free intensity level at two hours post-dosing were considered to be responders. The patients who did not experience such relief at the end of two hours were permitted to use an approved rescue medication. Use of rescue medication within 48 hours was also recorded. Whatever the case, the patient was required to continue to complete his or her electronic diary for up to 48 hours after dosing. Secondary efficacy variables included total migraine freedom: a composite endpoint consisting of freedom from headache pain coupled with no symptoms of photophobia, phonophobia or nausea, at two hours post-dosing, and sustained pain freedom from two to 24 hours. Exploratory measures included pain relief at two hours post-dosing, sustained pain relief from two to 24 hours post-dosing, freedom from photophobia, phonophobia or nausea at two hours post-dosing, and sustained pain freedom from two to 48 hours post-dosing. Safety variables included AEs, serious adverse events, or SAEs, clinical laboratory evaluations, vital sign measurements, physical examinations, and electrocardiograms, or ECGs. The following graphic illustrates the study design of the Phase 2b clinical trial:

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        With regard to the primary study outcome, the percentage of patients who were pain free at two hours after dosing is depicted in the figure below. The rimegepant 75 mg, 150 mg, and 300 mg dose groups each were significantly superior to placebo (p £ 0.01). Among the rimegepant dose groups, the percentage of subjects who were pain free at two hours after dosing was 31.4% (27/86) in the 75 mg group; 32.9% (28/85) in the 150 mg group; and 29.7% (33/111) in the 300 mg group, compared to 15.2% of patients in the placebo group. Statistical separation from placebo was not seen with the 600 mg group (24.4%, 20/82) as compared to the lower doses.

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Pain Freedom 2 hours Post-Dosing (+/– 95% Confidence)

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        The table below shows the percentage of patients in the placebo, sumatriptan, and each rimegepant dose groups who experienced pain freedom and pain relief in the trial, and the corresponding p-values. P-value is a conventional statistical method for measuring the statistical significance of clinical results. A p-value of 0.05 represents statistical significance, meaning that there is only a 5% likelihood that the observed results occurred by chance. The table shows that rimegepant 75 mg showed statistically significant improvements compared to placebo on sustained pain freedom from two-to-24 hours and two-to-48 hours post-dose, on pain relief two hours post-dose and on sustained pain relief from two-to-24 hours post-dose (all with a 0.1% likelihood that the observed results were merely due to chance).

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        The figure below shows the percentage of patients who reported sustained pain freedom and sustained pain relief at two-to-24 hours after dosing among the placebo dose group, the sumatriptan dose group, and each dose group of rimegepant. Rimegepant was statistically superior to placebo on pain freedom and pain relief at two-to-24 hours across all dose groups 75 mg and above.

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Sustained Pain Freedom and Pain Relief 2-24 Hours Post-Dosing (+/– 95% Confidence)

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        The figure below shows the Phase 2 trial results for the three other traditional co-primary endpoints previously required by the FDA—freedom from nausea, phonophobia and photophobia, showing the proportion of patients with alleviation of these symptoms at two hours after dosing in the placebo dose group, the sumatriptan dose group, and in each of the rimegepant dose groups. Rimegepant 75 mg was statistically superior to placebo on nausea, photophobia and phonophobia freedom at two hours after dosing.

Nausea, Phonophobia and Photophobia Freedom 2 Hours Post-Dosing (+/– 95% Confidence)

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        With regard to safety and tolerability in the Phase 2 clinical trial, the overall incidence of AEs was comparable across the placebo and rimegepant treatment groups. The most commonly seen AE in the rimegepant dosing groups was nausea, which appeared to exhibit a dose dependent trend at the higher doses: 1.4% in the 10 mg dose group; 0% in the 25 mg dose group; 3% in each of the 75 mg and 150 mg dose groups; 4% in the 300 mg dose group; and 8% in the 600 mg dose group. Importantly, although the patient numbers were small, the reported events of chest discomfort, chest pain, muscle tightness, and jaw pain were only observed in the sumatriptan-treated patients, with no rimegepant treated patients reporting chest pain-related symptoms. Most of the adverse events reported were mild to moderate in intensity. Two serious adverse events were reported (post-lumbar puncture headache and pneumonia), but neither was deemed by the trial investigators to be treatment-related. No deaths were reported, and no patients discontinued because of AEs. There were no clinically important ECG findings, vital sign abnormalities, or physical examination findings after administration of rimegepant.

        The table below shows the number and percentage of patients reporting a commonly occurring AE within 48 hours post-dosing. Rimegepant was generally well tolerated with no events of chest discomfort and low rate of AEs across dose groups.

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        Treatment-emergent AEs that occurred within two hours post-dosing were reported most often in the sumatriptan group (10.0%), followed by the 600 mg (8.3%), 300 mg (8.0%), 150 mg (7.0%), 10 mg (6.9%), 25 mg (4.8%), and the 75 mg (4.7%) dose groups, and the placebo group (2.9%). In the rimegepant dose groups, the most common adverse events reported within two hours post-dosing were primarily low rates of dizziness and somnolence, and gastrointestinal disorders, primarily nausea and vomiting.

        The liver has been a target of interest in certain small molecule CGRP receptor antagonists, as indications of liver toxicity have been associated with frequent use. In the Phase 2b trial, one patient in the rimegepant 75 mg dose group and one patient in the placebo group had a report of an asymptomatic and mild increase in certain hepatic enzymes, which are types of liver enzyme measured in a liver function test to detect damage and inflammation to the liver. The subject in the rimegepant 75 mg dose group had peak alanine transaminase, or ALT, and aspartate transaminase, or AST, elevations that were less than 1.22 times the upper limit of normal (ULN) and reported as an AE, while the placebo subject had a total bilirubin level that was greater than 2xULN. No subjects in the Phase 2b trial had AST or ALT elevation that exceeded 3xULN, a level that is considered to be a potentially meaningful indicator of a drug's potential to cause severe drug-induced liver injury, or DILI, based on FDA guidance.

        In conclusion, in the Phase 2b clinical trial, rimegepant was observed to be superior to placebo in the acute treatment of migraine and the trial identified the lowest dose that is fully effective in patients. More specifically, the selection of 75 mg rimegepant as the dose for advancement in Phase 3 trials was based on observed improvement as compared to placebo on the key primary outcome measure, pain freedom at two hours (31.4% vs 15.2% placebo; p = 0.0018) and key secondary and exploratory outcome measures: total

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migraine freedom at two hours (27.9% vs 11.8%; p = 0.0008), sustained pain freedom two to 24 hours (27.9% vs 7.4%, p < 0.0001), freedom from photophobia at two hours (41.9% vs 24.0%, p = 0.0023), freedom from phonophobia at two hours (52.3% vs 27.9%, p < 0.0001), freedom from nausea at two hours (67.4% vs 51.0%, p = 0.0074), pain relief at two hours (72.1% vs 51.2%, p = 0.0007), and sustained pain relief from two-to-24 hours (69.8% vs 42.4%, p < 0.0001). Notably, rimegepant is the only small molecule and orally available CGRP receptor antagonist that has shown statistically significant improvement on the key migraine symptoms of pain, nausea, photophobia and phonophobia in a single trial.

        Based on the results of the Phase 2 clinical trial, we have elected to advance the 75 mg dose of rimegepant in our proposed Phase 3 clinical trials. According to FDA 2014 draft guidance for developing drugs for acute treatment of migraine, approval for this indication has historically involved the demonstration of an effect on four co-primary endpoints: pain, nausea, photophobia and phonophobia. More recently, the agency has considered an alternate approach for approval based on an effect on headache pain freedom and patient's most bothersome migraine symptom, or MBS, selected as either nausea, photophobia or phonophobia. Using this approach, the two co-primary endpoints would be (1) having no headache pain at two hours after dosing and (2) a demonstrated effect on the MBS at two hours after dosing. Regardless of the associated symptom identified as most bothersome, the FDA guidance states that all three important migraine symptoms (nausea, photophobia and phonophobia) should be assessed as secondary endpoints.

        We had an end of Phase 2 meeting with the FDA in March 2017 and we plan on conducting two Phase 3 registrational trials commencing in 2017. Both trials will conform to the FDA guidance for approval in acute treatment of migraine. The trials will be double-blinded, randomized, and placebo controlled. The trials will recruit male and female patients 18-65 years of age with at least a one year history of migraine, including an age of onset prior to 50, migraine attacks that last about four to 72 hours, not more than eight attacks of moderate to severe intensity per month within the last three months and not less than two attacks per month. Our goal is to enroll patients who represent the spectrum of real-world migraineurs, including those who have previously been non-responsive to triptans, as the FDA stated to us at our end of Phase 2 meeting that triptan-resistant patients may benefit from rimegepant treatment. We are also enrolling patients who have cardiovascular risk factors and/or vascular disease. The primary objective of the trials will be to evaluate the efficacy of 75 mg of rimegepant compared with placebo in the acute treatment of migraine as measured by two co-primary endpoints: (1) pain freedom (headache pain intensity level reported as "no pain") at two hours after dosing using a four-point numeric rating scale (no pain, mild pain, moderate pain, severe pain) and (2) freedom from the MBS at two hours after dosing. The three other important migraine symptoms (nausea, photophobia and phonophobia) will be assessed as secondary endpoints.

        In designing the Phase 3 trials, care was taken to minimize any changes in study populations compared to the already completed Phase 2 trial with rimegepant with no major changes in inclusion and exclusion criteria between the completed and planned trials. The main differences in trial design between the previous Phase 2 trials and our planned Phase 3 clinical trials include:

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        This change in the hierarchy of outcome measures, sample size and number of treatment arms reflect somewhat standard changes in clinical trial design to increase technical and regulatory chances of success in the registrational program. We are also developing a commercial-grade formulation of rimegepant that we plan to use in our Phase 3 clinical trials. We intend to submit our trial protocols to the FDA prior to the commencement of our Phase 3 trials. The FDA may have additional feedback on our trial design.

        We are also planning a long-term safety study to meet FDA requirements for approval. This study will be a 12-month, long-term, open label safety study conducted in patients with migraine. Two thousand patients will be treated in this study. A subset of patients (approximately 600) will have frequent migraine attacks (i.e., more than eight migraine attacks per month) and will be able to take up to 30 doses of 75 mg rimegepant in one month. At our end of Phase 2 meeting, the FDA stated its desire to see a safety study in which patients received daily or near-daily dosing of rimegepant for at least three months. This desire stems from the FDA's concern about a potential liver signal with the class of CGRP antagonists. The FDA stated that any risk of liver injury has to be very low and that exposure with the drug has to be sufficient to cap the risk of liver injury at a level acceptable for the migraine population. We believe the design of our long-term safety study may adequately address this concern by providing for the enrollment of approximately 600 patients who experience eight or more migraine days per month, who will, in the study, be allowed to use rimegepant on a daily basis, which we believe will generate safety data with respect to long-term, frequent use of rimegepant. Study visits for all patients will be monthly for the first three months and every three months thereafter. Based on feedback we received at our end of Phase 2 meeting with the FDA, we will administer liver function testing at two weeks post-dose and will follow patients with any abnormal liver function tests until clinical resolution. We intend to initiate this study in 2017.

        To date, six clinical trials have been completed in healthy volunteers and patients with migraine that inform pharmacokinetic, metabolic interactions, safety, tolerability and efficacy of rimegepant. Rimegepant has been observed to be generally safe and well tolerated in humans when given as single oral doses up to the maximum dose of 1500 mg and multiple oral doses up to the maximum daily dose of 600 mg for 14 days. No deaths have occurred in clinical trials to date.

        Approximately 687 subjects have been dosed with rimegepant to date. In Phase 1 and 2b trials, approximately 600 subjects have received single doses of rimegepant, ranging from 25 mg to 1500 mg; and approximately 87 subjects have received multiple doses of rimegepant, ranging from 75 mg to 600 mg daily for up to 14 days. In total, we believe the current data suggests a favorable benefit-risk profile for rimegepant in the acute treatment of migraine attacks. The clinical experience with rimegepant to date has allowed the characterization of safety and tolerability at substantial multiples of the intended therapeutic dose and intended frequency of use. Rimegepant has been assessed in single doses up to 1500 mg and in multiple doses from 75 mg to 600 mg with 14 days of dosing (including 300 mg twice daily), where the higher doses yielded exposures more than 54 times greater in AUC, which is a measure of drug exposure, and 23 times higher in C max , which is the peak concentration that a drug achieves after dosing, as compared to the mean therapeutic exposure of a single 75 mg dose. These high exposure multiples were observed to be generally well tolerated.

        As of December 31, 2016, only two SAEs have been reported in the rimegepant program, neither considered related to study drug: one subject had an SAE of severe post-lumbar puncture headache seven

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days after exposure to a single dose of rimegepant that was considered unrelated to study treatment, and one subject had an SAE of moderate pneumonia with onset five days after exposure to a single dose of rimegepant that was considered unrelated to treatment. In addition, one subject who received placebo experienced an SAE (appendicitis).

        Since no data are available regarding the effects of rimegepant on human fetuses or newborns, women of childbearing potential must use adequate birth control and have a negative serum or urine pregnancy test to be eligible to receive rimegepant. Female subjects should avoid attempts at pregnancy in the month prior to exposure to rimegepant and eight weeks after exposure to rimegepant. All urine pregnancy testing results must be confirmed by serum pregnancy testing. Drug interaction studies with oral contraceptives are ongoing to assess effects at therapeutic doses of rimegepant.

Nonclinical Toxicology

        Rimegepant is not genotoxic or phototoxic and has a low potential for off-target receptor interactions or effects on the cardiovascular, respiratory, and CNS systems. With repeated dosing up to three months, rimegepant was clinically tolerated at up to 150 mg/kg/day in rats and 100 mg/kg/day in monkeys. The liver was the primary target organ in mice at levels of 100 mg/kg/day and greater and in rats at levels of 60 mg/kg/day and greater. These dosing levels were not associated with hepatocellular degeneration/necrosis, inflammation, or fibrosis. In monkeys, the primary target organ effect was minimal to moderate macrophage accumulation (histiocytosis) in mandibular and mesenteric lymph nodes in males at 100 mg/kg/day (at least 66× (for rats) and 123× (for monkeys) the anticipated maximum human AUC at a 75 mg/day clinical dose) in the 3-month study that was considered to be a marginal exacerbation of a common spontaneous change in this species. Hepatic lipidosis identified in mouse and rat studies was determined to be rodent specific as it was not observed at rimegepant exposures in monkeys which overlapped those producing lipid effects in rats in the three-month pivotal studies. At the NOEL (no observable effect level) and NOAEL (no observable adverse effect level) doses in rats (30 mg/kg/day) and monkeys (50 mg/kg/day) in the three-month studies, mean (male and female combined) AUC exposures were at least 23× (for rats) and 56× (for monkeys) the anticipated human AUC at a 75 mg/day clinical dose. Since fetal effects in rats were observed only at doses that produced maternal toxicity (300 mg/kg/day) and there were no fetal findings in rabbits at any dose level, rimegepant is not considered to be a selective developmental toxicant. Clinical monitoring for potential hepatotoxicity has been and will continue to be conducted in subsequent studies in humans. Such monitoring will include routine liver function tests including ALT, AST, total bilirubin, GGT and ALP at all study phases, including screening (before exposure to rimegepant), regularly during exposure, and after exposure. Additionally, the frequency, severity, and discontinuations of hepatic-related AEs are monitored closely. All cases of drug induced liver injury, or DILI, are reported as SAEs. There have been no reported cases of DILI with rimegepant administration to date. Other symptoms or target organs from nonclinical studies that will continue to be followed include skeletal muscle effects, emesis, skin rash and hematology measures.

Our Product Candidate BHV-3500, a CGRP Receptor Antagonist for Migraine Prevention

        BHV-3500 is the second compound from our CGRP receptor antagonist platform. We are developing BHV-3500 for the prevention of chronic and episodic migraine, and we believe it has the potential to improve the existing standard of care based on the following benefits:

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Clinical Development Plans

        We are planning to commence a toxicology development program in the first half of 2017 to support the submission of an IND for BHV-3500. This preclinical program will include intranasal and subcutaneous dose toxicity studies. If these studies support the submission of an IND, we would then plan to commence a Phase 1 clinical trial in the second half of 2017 to assess safety, tolerability and pharmacokinetics of BHV-3500 in healthy volunteers.

Our Glutamate Platform

        We are developing three product candidates, trigriluzole, BHV-0223 and BHV-5000, that modulate the glutamate system via two distinct mechanisms which form the basis of our glutamate platform—glutamate transporter modulators (trigriluzole and BHV-0223) and glutamate NMDA receptor antagonists (BHV-5000).

        Glutamate is an important neurotransmitter present in over 90% of all brain synapses and is a naturally occurring molecule that nerve cells use to send signals to other cells in the central nervous system. Glutamate plays an essential role in normal brain functioning and its levels must be tightly regulated. Abnormalities in glutamate function can disrupt nerve health and communication, and in extreme cases may lead to nerve cell death. Nerve cell dysfunction and death leads to devastating diseases, including ataxia, ALS and other neurodegenerative disorders. Glutamate clearance is necessary for proper synaptic activation and to prevent neuronal damage from excessive activation of glutamate receptors. Excitatory amino-acid transporters, or EAATs, help regulate glutamate clearance, and are responsible for most of the glutamate uptake within the brain.

        The mechanism of action of our glutamate platform is depicted below. Glutamate must be tightly regulated once released from a pre-synaptic neuron and acts as a signaling neurotransmitter to stimulate the post-synaptic neuron via stimulation of glutamate receptors (e.g., NMDA, AMPA or Kainate receptors). Glial cells surrounding the synaptic junction are predominantly responsible for clearing

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glutamate through transporters, the EAATs. There are five distinct types of glutamate transporters. (1) As depicted in the glial cell to the right of the figure below, BHV-0223 and trigriluzole increase the activity of the EAATs to increase the clearance of glutamate and decrease glutamate release from the pre-synaptic neuron. Trigriluzole and BHV-0223 also inhibit presynaptic ion channels that may inhibit the release of glutamate from presynaptic neurons. (2) As depicted in the postsynaptic neuron to the bottom of the figure below, BHV-5000 blocks glutamate signaling that is mediated by post-synaptic NMDA receptors. Modulating glutamate also has the potential to be neuroprotective and increase the release of neurotrophic factors, including brain derived neurotrophic factor, or BDNF, which are endogenous molecules that help to support the survival of existing neurons, and encourage the growth and differentiation of new neurons and synapses.

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Glutamate Transporter Modulation

        Abnormal glutamate release or dysfunction of glutamate clearance can cause overstimulation of glutamate receptors which can lead to a dangerous neural injury called excitotoxicity, which has been associated with a wide range of neurodegenerative diseases. The FDA has approved anti-excitotoxicity drugs that act on the glutamatergic system by blocking NMDA receptors, such as memantine (Namenda) for Alzheimer's disease, lamotrigine (Lamictal) for epilepsy and bipolar disorder and riluzole (Rilutek) for ALS. Although these drugs show the therapeutic potential of glutamate receptor antagonists in the treatment of a range of neurological diseases, many of these approved drugs have serious side effects and other drawbacks that we have attempted to solve with our development of BHV-0223 and trigriluzole.

        We are currently developing trigriluzole as the potential first FDA-approved drug treatment option for patients suffering from ataxia, initially focusing on SCA. According to a 2016 report by Orphanet cataloging the prevalence and incidence of rare diseases, SCA affects approximately 22,000 individuals in the United States. If the results of our ongoing Phase 2/3 trial in SCA are positive, we will seek to expand to adjacent ataxias that have similar pathophysiology and represent significant potential for market expansion. According to Orphanet, in the United States, approximately 6,500 to 16,000 patients suffer from Friedreich's ataxia, 27,000 patients have sporadic ataxia, and 84,000 have acquired ataxias. There are currently no FDA-approved medications for the treatment of SCA or any other cerebellar ataxias. Our regulatory approval strategy for trigriluzole for ataxias will focus on obtaining additional orphan drug designations and exclusivity whenever they are available.

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        In addition, preclinical and small-scale pilot studies are underway to explore trigriluzole's use in the treatment of a pipeline of other indications such as essential tremor, neurodegenerative disorders, including ALS and Alzheimer's disease, and neuropsychiatric disorders, including anxiety and depression. We are also developing analogs of trigriluzole and other-related prodrugs for potential use in these separate indications.

        We are currently developing BHV-0223 for the treatment of ALS. According to the ALS Association, ALS affects up to 20,000 individuals in the United States and according to industry data, we estimate 15,000 individuals are clinically diagnosed, with 7,500 ALS patients actively treated with generic riluzole or branded Rilutek. As the only drug approved by the FDA for the treatment of ALS, riluzole is the established standard of care. However, while the market is highly genericized, there have not been further clinical improvements or advances in ALS drug therapeutics since the FDA's approval of riluzole in 1995. In addition, the use of riluzole is limited by a number of non-desirable attributes. We believe that BHV-0223, if approved, could gain meaningful market share, based on its favorable formulation attributes and a pricing model similar to that of branded Rilutek.

Our Product Candidate Trigriluzole for Ataxias

        Trigriluzole is an NCE and tripeptide prodrug of the active metabolite, riluzole. Based on its mechanism of action, preclinical data and clinical studies, trigriluzole has potential for therapeutic benefit in a range of neurological and neuropsychiatric illnesses. Initial development will focus on its use in SCA, an orphan neurological indication that currently has no approved therapies and for which the active metabolite has demonstrated preliminary efficacy in two prior randomized controlled trials conducted by third parties. We acquired trigriluzole from ALS Biopharma, LLC, or ALS Biopharma, and Fox Chase Chemical Diversity Center, Inc., or FCCDC, along with an estate of over 300 prodrugs. A prodrug is a compound that, after administration, is metabolized in the body into an active drug. Trigriluzole is actively transported by virtue of recognition of its tripeptide moiety by the PepT1 transporter in the gut, and is responsible for the increased bioavailability of the drug. Once inside the body, the prodrug, trigriluzole is cleaved by enzymes in the blood to the active metabolite riluzole. To mitigate the limitations of riluzole, several classes of prodrugs were designed, synthesized, and evaluated in multiple in vitro stability assays that predict in vivo drug levels. Trigriluzole is a third generation of prodrug development and the product of six years of intensive chemistry efforts.

        Riluzole is currently only indicated for ALS and has a number of non-desirable attributes that have limited its clinical use. Key limitations of riluzole include:

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        The prodrug design and selection pathway that was pursued with trigriluzole is intended to address all of these limitations of riluzole. In addition, a prodrug can be engineered to enhance absorption and protect from diminished absorption when taken with meals. The trigriluzole preclinical development strategy was based on optimizing in vivo and in vitro features, such as stability in gastrointestinal and stomach fluids; stability in liver microsomes; favorable safety pharmacology with respect to off-target effects (particularly liver effects); metabolic cleavage in the plasma to release the active moiety; and enhanced gastrointestinal absorption properties via selection of linker moiety. In in vivo studies in rodents, the intended benefits of this optimization program were observed, including delayed peak concentrations and greater exposure.

        After six years of chemistry development and preclinical testing, the resulting lead prodrug from the chemistry program was trigriluzole. Trigriluzole is chemically comprised of riluzole linked via an amide bond to a tripeptide that is a substrate for gut transporters (PepT1) and which contributes to its improved bioavailability. The tripeptide moiety is cleaved by plasma aminopeptidases, releasing riluzole and naturally occurring amino acids, which we believe are readily managed by endogenous metabolic routes. We believe that the estate of compounds we acquired, combined with our internally developed intellectual property, will provide a significant barrier to entry from competitors. Trigriluzole is stable in fluids from the gastrointestinal tract and expected to have a differentiated profile with regard to any liability for hepatic effects.

        SCA was chosen as the lead indication based on a strong preclinical rationale as well as demonstration of preliminary efficacy of trigriluzole's active metabolite, riluzole, in two randomized controlled trials in patients with SCA and other ataxias conducted by third parties (Ristori 2010; Romano 2015). If the results of our ongoing Phase 2/3 trial in SCA are positive, we intend to conduct registrational trials to support approval in adjacent ataxia indications, such as Friedreich's ataxia and sporadic ataxia. In addition, based on preclinical studies and early-stage clinical trial results of riluzole, the active metabolite of trigriluzole, we believe trigriluzole or an optimized alternative prodrug from our pipeline may have potential therapeutic benefit in broader neurological conditions, such as essential tremor, Alzheimer's disease, obsessive compulsive disorder, bipolar disorder and generalized anxiety disorder, and in other diseases such as metastatic melanoma.

Overview of Ataxias and Limitations of Current Treatment

        Ataxias are a group of degenerative diseases of the nervous system, including hereditary ataxias and sporadic ataxias. According to the National Ataxia Foundation, the word "ataxia" originates from a Greek word meaning "without order" or "incoordination" and aptly describes many of the symptoms that are experienced by people who suffer from the many forms of ataxia, including problems with coordination, balance and movement which can affect a person's fingers, hands, arms, legs, body, speech and eye movements. Ataxias are generally classified as being either hereditary or sporadic. Hereditary ataxias are degenerative disorders that progress over a number of years. The hereditary ataxias include autosomal dominant forms, such as SCA, episodic ataxias and dentratorubral-pallidoluysian atrophy, and autosomal recessive forms, such as Friedreich's ataxia, fragile X-associated tremor/ataxia syndrome and ataxia-telangiectasia. Sporadic ataxias are generally idiopathic, do not run in families and have an onset later in

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life. Sporadic ataxias share many clinical features of the hereditary forms, which is thought to be attributable to similar underlying cerebellar dysfunction.

        Although symptoms may vary, the typical clinical course of SCA might be described as follows. Balance and coordination are affected first. Incoordination of hands, arms, and legs, and slurring of speech are other common, early symptoms. Over time, individuals with SCA may develop numbness, tingling, or pain in the arms and legs (sensory neuropathy), uncontrolled muscle tensing (dystonia), muscle wasting (atrophy), and muscle twitches (fasciculations). Walking becomes difficult and is characterized by walking with feet placed further apart to compensate for poor balance. Impaired coordination of the arms and hands affects the ability to perform tasks requiring fine motor control such as writing and eating. Rarely, rigidity, tremors, and involuntary jerking movements (chorea) have been reported in people who have been affected for many years. As time goes on, ataxia can affect speech and swallowing. Finally, individuals with SCA may also have difficulty processing, learning, and remembering information (cognitive impairment). Notably, there can also be significant clinical variation in the order and extent of symptom expression between mutations, within a common mutation, and even within a kindred that shares the same genotype. Non-cerebellar involvement may also occur in many SCA subtypes (such as cognition, pyramidal, extrapyramidal, motor neuron, peripheral nerve or macular involvement). Signs and symptoms of SCA typically begin in early adulthood, but can appear anytime from childhood to late adulthood; SCA is degenerative and progresses over a number of years. The neurodegeneration is attributed to the production of abnormal proteins that cause the affected nerve cells, predominantly cerebellar purkinje fibers, to eventually function poorly and ultimately degenerate. As SCA progresses, coordination problems become more pronounced. Atrophy of the cerebellum and sometimes brainstem may be apparent on brain imaging. The diagnosis of SCA requires the exclusion of acquired, non-genetic causes of ataxia, such as alcoholism, vitamin deficiencies, multiple sclerosis, vascular disease, tumors, and paraneoplastic disease. A definitive diagnosis requires genetic testing or occurrence within a kindred that has an identified mutation. Lifespan is significantly shortened due to complications related to neurological deficits.

        There are currently no FDA-approved medications for the treatment of SCA or any other cerebellar ataxia, and treatment is supportive. In general, multidisciplinary care provides supportive measures and the goal of this treatment is to improve quality of life and survival.

The Potential Benefits of Trigriluzole Compared to Riluzole

        We believe trigriluzole offers the following potential advantages, compared to orally dosed riluzole:

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Our Clinical Program for Trigriluzole in Spinocerebellar Ataxia

        Based on the results of our Phase 1 trial with trigriluzole and two third-party academic trials that have shown preliminary efficacy of riluzole in cerebellar ataxias, we are advancing trigriluzole into a Phase 2/3 clinical trial for SCA. We believe this trial, if successful, may be sufficient to support our application for regulatory approval of trigriluzole.

        A summary of these third-party publications regarding the active metabolite of trigriluzole, riluzole, is provided below. In these two publications, the authors conducted studies of riluzole compared to placebo to assess improvement in patients with ataxias using two different ataxia rating scales. In each study, the authors observed statistically significant improvements in the riluzole treatment groups compared to the placebo groups.

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Development and Regulatory Pathway

        Our clinical program for trigriluzole is based on a regulatory pathway under section 505(b)(2) of the U.S. Food Drug and Cosmetic Act that allows reference to data on riluzole for the purpose of safety assessments. In addition, under current FDA interpretations, we believe trigriluzole also qualifies as an NCE and thereby is eligible for conventional regulatory data exclusivities. In December 2016, we began enrollment in a Phase 2/3 clinical trial of trigriluzole in adult subjects with SCA.

        The Phase 2/3 trial is a randomized, double-blind, placebo-controlled trial being conducted at approximately 15 sites in the United States, followed by an open-label extension phase. Approximately 120 subjects will be randomized to receive a once-daily dose of either placebo or 140 mg trigriluzole. Patients will be stratified by diagnosis (genotype) and baseline severity (as measured by the patient's gait SARA score of £ 4 and >4). The randomization phase will last eight weeks. The primary outcome measure of the trial is the change from baseline in patient SARA score after eight weeks of treatment. The choice of the SARA, a validated scale, as the primary outcome measure was based on the consensus of a panel of national experts, based largely on the validation of the instrument in multiple populations, its effective use in demonstrating efficacy in a trial with riluzole (as shown in the Romano study discussed above), favorable psychometric properties, and its ability to assess a broad spectrum of ataxia-related symptoms. A secondary outcome measure will be patient time to perform an eight-meter walk test. Exploratory outcome measures will include improvement as measured using the Unified Huntington's Disease Rating Scale Part IV on functional assessment, Clinical Global Impression of Improvement and the Patient Global Impression of Change. Qualifying subjects will have genotypically confirmed diagnosis of the most common SCA subtypes. They must have moderate symptom severity (i.e., SARA scores of 8 to 30 inclusive and be able to walk eight meters without assistance). In addition, subjects completing the eight-week treatment phase are eligible to participate in a 48-week open-label extension phase. We enrolled the first patient on December 15, 2016. Enrollment is expected to conclude in 2018, with topline results available in early 2018. The design of the trial was informed predominantly by an advisory panel of the leading ataxia experts that we hosted in February 2016 as well as the observations from peer-reviewed publications in the scientific literature. The FDA has stated its concern that our use of the SARA scale, as currently constructed, as a primary endpoint is not appropriate in this trial. We plan to continue to interact with the FDA to discuss their concerns with the SARA and will consider incorporating any feedback in our analysis of the clinical trial data that we collect and measure with the SARA.

        The following chart shows a summary of the trial design for our Phase 2/3 trial of trigriluzole:

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Previous Clinical Trials with Trigriluzole

        In July 2016, we began a Phase 1 randomized, double-blind, placebo-controlled study to evaluate the safety, tolerability and pharmacokinetics of single and multiple ascending doses of trigriluzole in normal healthy volunteers. In this study, the initial safety and tolerability of trigriluzole at single doses ranging from 9.5 mg to 200 mg and multiple doses ranging from 35 mg to 200 mg daily were assessed. Fifty-eight healthy volunteers have been dosed with trigriluzole and 20 have been dosed with placebo. Based on preliminary data, both single and multiple doses up to 200 mg have been well tolerated without evidence of novel, clinically significant safety signals or lab abnormalities. There is no apparent dose response regarding the frequency or severity of AEs. In the blinded group, including subjects treated with both placebo and trigriluzole, the most common AEs were headache (five subjects, two with moderate severity and three with mild severity) and constipation (two subjects). No pattern of AEs or lab abnormalities has become apparent to provide specific cautions or to suggest cautions beyond what is appropriate for the active metabolite, riluzole. Preliminary results suggest approximately 25% to 30% greater systemic exposure of the active metabolite via oral administration of trigriluzole as compared to riluzole tablets. In addition, the time to peak concentration of the active metabolite via oral administration of trigriluzole was extended relative to that achieved with oral riluzole tablets, thus suggesting the mitigation of first-pass metabolism. A cross-over arm of the trial assessing fed and fasted conditions suggested no food effect. These pharmacokinetic properties differentiate from direct oral administration of the active metabolite. These preliminary safety, tolerability and pharmacokinetic data support advancement of trigriluzole into Phase 2/3 clinical testing.

Trigriluzole: Next Indications

        Given the novel chemical properties of trigriluzole and its unique mechanism of action, we believe trigriluzole, or another optimized prodrug of riluzole, has the potential for broad applicability across several neurological indications where modulation of brain glutamate has been implicated in underlying disease states. SCA was chosen as the lead indication based on a strong preclinical rationale, the results of the Ristori and Romano studies outlined above, and data from our own Phase 1 trial with trigriluzole. If we observe positive efficacy results in SCA, we believe this will provide further proof-of-concept that trigriluzole has therapeutic potential in other disorders of glutamate dysfunction and we plan to explore trigriluzole in adjacent cerebellar disorders, such as Friedreich's ataxia and sporadic ataxia, and other orphan indications. We also may select another optimized prodrug from our pipeline to develop for the treatment of broader applications.

        A brief description of potential indications that we could pursue in the future with trigriluzole or other optimized prodrugs from our pipeline is summarized below. We will determine the timing and prioritization of additional indications as warranted by emerging data.

Other Orphan Indications

        If the results of our Phase 2/3 trial in SCA are positive, we believe the trial will provide validation for the role of trigriluzole in a range of other ataxias. Additionally, preliminary data from the Ristori and Romano randomized controlled trials showed improvement in some patients with Friedreich's ataxia, multisystem atrophy of the cerebellar type, sporadic ataxia, antibody-associated ataxia and fragile X-associated tremor/ataxia syndrome. We intend to explore additional trials in other ataxia indications, such as Friedreich's ataxia and sporadic ataxia.

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Other (Non-Orphan) Cerebellar Disorders

Broader Neuropsychiatric Indications

        Based upon preclinical and preliminary clinical work, we also believe there are several potential expansions for trigriluzole, or another optimized prodrug of riluzole from our pipeline, including potential for therapeutic application in a broad range of neuropsychiatric conditions, such as anxiety disorders, mood disorders and neurodegenerative disorders.

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        Our collaborators are exploring the potential applicability of trigriluzole beyond cerebellar and neuropsychiatric indications, including in melanoma (Rutgers University) and glioblastoma (Johns Hopkins University). The oncology collaborations with Rutgers and Johns Hopkins are based upon the mechanistic rationale that some tumors overexpress glutamate receptors, the central role that glutamate may have in cancer metabolism and the effect of glutamate on the tumor microenvironment. Additional proof-of-concept work with trigriluzole is needed in these other indications to establish the likelihood of success in these other disease indications.

Our Product Candidate BHV-0223 for ALS

Overview of Amyotrophic Lateral Sclerosis and Limitations of Current Treatments

        ALS is a progressive neurodegenerative motor neuron disease that affects nerve cells in the brain and the spinal cord. The disease belongs to a group of disorders known as motor neuron diseases, which are characterized by the gradual degeneration and death of motor neurons. ALS affects up to 20,000 individuals in the United States and typically presents in patients with painless muscle weakness, trouble swallowing and muscle atrophy that ultimately progresses to paralysis, impaired breathing and death.

        Since the FDA's approval of riluzole in 1995, there have not been further clinical improvements or advances in ALS drug therapeutics. Several therapies are currently in clinical trials. Riluzole extends survival and/or time to tracheostomy. Riluzole itself has pharmacokinetic and pharmaceutic limitations that have restricted its broader clinical application. Riluzole tablets have 60% bioavailability, attributed to high first-pass metabolism in the liver that is thought to be mediated via metabolism by the heterogeneously expressed CYP1A2 enzyme. This metabolic route is also thought to contribute to the high pharmacokinetic variability associated with riluzole. In addition, riluzole is associated with reduced exposure when taken with meals, or a negative food effect, resulting in the guidance to take riluzole within a period of fasting (one hour before or two hours after a meal) for each of two daily doses. In addition,

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riluzole has dose-dependent effects on liver function tests that necessitate periodic liver function test monitoring and is associated with transient liver transaminase elevations. At riluzole daily doses of 100 mg, drug discontinuation is required in 2% to 4% of subjects. However, this has not been observed with lower doses, an important observation as the planned commercial dose of BHV-0223 represents a lower drug load than the FDA-approved dose of riluzole while delivering similar exposures. The drug substance of riluzole itself has other intrinsic limitations that complicate the ability to produce non-tablet formulations, including very low solubility in water, poor oral palatability, pH dependent chemical stability and intense oral numbness if administered directly to the oral mucosa.

Our Clinical Program for BHV-0223 in ALS

        BHV-0223 is a formulation of riluzole designed to advance beyond the limitations of riluzole tablets for application in ALS. BHV-0223 is a sublingually absorbed and oral disintegrating tablet, or ODT, of riluzole, that makes use of proprietary Zydis ODT technology that we have exclusively licensed world-wide rights from Catalent U.K. Swindon Zydis Limited, or Catalent, for use with riluzole. Catalent's ODT technology allows us to develop a form of riluzole that is fast-dissolving and which we expect will mitigate many of the shortcomings associated with the solid oral dosage form of riluzole. Based on over 20 years of global clinical experience with riluzole, we expect that BHV-0223 is likely to be well tolerated in chronic dosing.

        We believe BHV-0223 offers the following potential advantages, compared to the solid oral dosage form of riluzole, in the treatment of ALS:

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        We recently completed a Phase 1 trial, in which we assessed the safety, tolerability and pharmacokinetics of BHV-0223. This study was a randomized, cross-over, controlled trial employing single and multiple doses of BHV-0223 (10 mg, 17.5 mg and 35 mg strengths delivered sublingually) as well as 50 mg Rilutek delivered orally. Sublingual dosing of 35 mg BHV-0223 delivered an exposure profile that was comparable to that achieved with oral delivery of 50 mg Rilutek tablets. BHV-0223, 35 mg dose, demonstrated a mean 15% greater extent of absorption compared to Rilutek on a dose-normalized basis, a comparable absolute peak concentration and increased early exposure consistent with sublingual absorption. In addition, pharmacokinetic variability appeared lower with sublingual BHV-0223 as compared to 50 mg Rilutek. For example, no subjects in the 35 mg BHV-0223 arm achieved low peak concentrations (i.e., <50 ng/mL) as compared to one-third of subjects who received 50 mg Rilutek. Based on pharmacokinetic modeling, 40 mg of BHV-0223 is the optimized dose strength for the purpose of fulfilling formal regulatory criteria for bioequivalence and is the dose strength that we have chosen to advance in future clinical trials.

        In the Phase 1 trial, BHV-0223 was observed to be generally well tolerated following sublingual administration of doses ranging from 10 mg to 35 mg in healthy subjects. There were no clinically significant laboratory abnormalities or SAEs observed. The vast majority of AEs were mild in intensity, including oral hypoaesthesia. Overall, we believe these results demonstrate the potential of BHV-0223 in delivering riluzole via sublingual absorption in a well tolerated manner that can potentially offer patients with ALS a more favorable route of administration as compared to oral riluzole tablets.

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        The figures above show results from our Phase 1 trial comparing pharmacokinetics in healthy subjects dosed with sublingual BHV-0223 35 mg versus generic Rilutek 50 mg tablets, in a cross-over manner. In the left panel, mean concentrations of patients dosed with BHV-0223 35 mg were similar over time in the same subjects dosed with generic Rilutek 50 mg tablets. The right panel shows the mean concentrations of individual pharmacokinetic profiles superimposed. Notably, subjects dosed with generic Rilutek 50 mg tablets (lower portion of right hand panel) had greater pharmacokinetic variability and more than 30% of subjects showed low peak concentrations (i.e., <50 ng/mL) compared to the same subjects who were administered sublingual BHV-0223 35 mg (upper portion of right hand panel).

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Future Development and Regulatory Pathway

        We intend to pursue regulatory approval of BHV-0223 for the treatment of patients with ALS in the United States under Section 505(b)(2) of the U.S. Federal Food, Drug and Cosmetic Act. Our IND for BHV-0223 went into effect in August 2015. In December 2016, the FDA granted orphan drug designation of BHV-0223 for the treatment of ALS, with eligibility for orphan exclusivity contingent on a showing that BHV-0223 is clinically superior to Rilutek, a previously approved form of riluzole, as well as any other versions of riluzole that may be approved for the same indication before BHV-0223 is approved. Clinical superiority may be demonstrated by showing that a drug has greater effectiveness than the approved drug, greater safety in a substantial portion of the target population, or otherwise makes a major contribution to patient care. We are planning to launch a pivotal bioequivalence study in 2017 comparing BHV-0223 to riluzole in healthy subjects. We plan to include a dosing arm to assess the impact of meals on drug absorption in order to potentially support dosing instructions that can avoid the need for the dietary restrictions that accompany Rilutek. If this trial is successful, we plan to subsequently submit an NDA to the FDA in 2018.

        We also intend to conduct a clinical trial in healthy subjects to assess the effect of BHV-0223 on transaminase levels and other markers of liver function. We believe that these trials, if successful, may also be sufficient to demonstrate the clinical superiority of BHV-0223 to Rilutek.

Glutamate NMDA Receptor Antagonism

        An N -methyl-D-aspartate, or NMDA, receptor antagonist, is a type of glutamate antagonist that works to inhibit the action of NMDA receptors which may play a role in degenerative diseases that affect the brain. BHV-5000 is an oral prodrug of the intravenous drug lanicemine, also referred to as BHV-5500, both of which we in-licensed from AstraZeneca. In addition to being orally available, BHV-5000 is a first-in-class, low-trapping, NMDA receptor antagonist with differentiating pharmacologic properties from other agents in development targeting this receptor. The unique property of low-trapping antagonists is their ability to uncouple from the NMDA receptor more freely than other agents, a property that is thought to contribute to their mitigated risk of dissociative effects as has been observed in the clinic. Lanicemine, the active metabolite of BHV-5000, binds within the NMDA channel pore and functionally blocks the flow of charged ions through the NMDA receptor complex. Lanicemine was initially advanced by AstraZeneca into clinical trials for the potential treatment of stroke, but this development was discontinued as initial results did not warrant continued development for this indication. We are developing BHV-5000 as a potential best-in-class NMDA receptor antagonist for the treatment of breathing irregularities associated with Rett syndrome, and we also intend to explore its application in other neurological or neuropsychiatric indications.

Our Product Candidate BHV-5000 for Rett Syndrome

Overview of Rett Syndrome and Limitations of Current Treatments

        Rett syndrome is a severe neurodevelopmental disorder resulting from an X-linked dominant gene mutation (MECP2). As a result, it occurs almost exclusively in females. After six to 18 months of apparently normal development, patients with Rett syndrome show global deceleration of psychomotor development and subsequent loss of acquired cognitive and motor skills, such as the loss of speech. Patients may also develop pathognomonic stereotyped hand movement or display autonomic dysfunction such as breathing irregularities, including brain-mediated episodes of transient respiratory suppression, or apneic periods. With intensive care, patients may survive into adulthood, yet they are severely physically and cognitively impaired. Rett syndrome occurs in all racial and ethnic groups and occurs worldwide in approximately 1 in every 10,000 live female births. There are approximately 15,000 females with Rett syndrome in the United States. No approved treatments for Rett syndrome are currently available and care is supportive.

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Our Clinical Program for BHV-5000 in Rett Syndrome

        BHV-5000 and lanicemine have been observed to ameliorate the phenotype in transgenic mouse models of Rett syndrome, models which recapitulate key clinical features, such as irregular breathing, apneic periods, abnormal EEG with altered seizure threshold. Based on the preclinical experience, we have chosen to advance BHV-5000 into clinical trials for the treatment of breathing irregularities associated with Rett syndrome. The orally bioavailable prodrug BHV-5000, which was developed as an advancement on the intravenously administered lanicemine, offers an improved route of administration over lanicemine, and has thus been positioned as the lead candidate in this series. After ingestion, BHV-5000 is rapidly cleaved by the enzyme dipeptidyl peptidase-4 (DPP-4), yielding the active metabolite lanicemine. AstraZeneca studied BHV-5000 in a Phase 1 single and multiple ascending dose trial. Doses up to 95 mg of BHV-5000 were studied and were observed to be well tolerated without any clinically relevant safety issues. Among the AEs reported were three cases of euphoria, three cases of hallucination, or visual distortion, and eight cases of nystagmus, a visual condition. These adverse events are consistent with NMDA receptor antagonism. After oral ingestion, systemic concentrations of BHV-5000 were observed to be very low, typically below the limit of quantification.

Preclinical Studies and Previous Clinical Trials with Lanicemine and BHV-5000

        As noted above, BHV-5000 and lanicemine have been observed to ameliorate the phenotype in transgenic mouse models of Rett syndrome. In particular, BHV-5000 has been observed to reduce the number of apneic episodes that are driven by dysfunctions in the central nervous system. These preclinical findings are consistent with those reported for the NMDA receptor antagonist, ketamine, and have been observed at concentrations that have been well tolerated by healthy volunteers in clinical trials. The potential relevance of the preclinical models with this mechanism of action are supported by anecdotal reports on the incidental use of ketamine in patients with Rett syndrome that have been associated with clinical improvements.

        The figure below shows results from a preclinical study with BHV-5000 in a transgenic mouse model. Transgenic (heterozygous for MECP2 mutation) and wild-type mice were administered a single dose of saline or BHV-5000 followed by measurement of apneic episodes. Acute administration of BHV-5000 was associated with a marked reduction in the number of apneic episodes.

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        Lanicemine has been administered to approximately 770 subjects in single or multiple doses in 18 clinical trials conducted by AstraZeneca and has been observed to be generally well tolerated. In clinical experience with lanicemine, the most common adverse event was dizziness. CNS-type AEs from Phase 1 trials also included headache, somnolence, asthenia, impaired concentration and dysesthesias. In one

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study, formal assessment of cognitive function in healthy volunteers revealed improvement in some components of memory, decreased vigilance and decreased calmness. Hypotension and hypertension have been reported as AEs, with low mean increases in blood pressure reported in some studies (e.g., 4 - 8 mmHg supine systolic blood pressure; 2 - 4 mmHg supine diastolic blood pressure—which occurred at doses higher than considered necessary for therapeutic effects). AEs related to dissociation were infrequent but more common in the lanicemine group compared to placebo. AEs potentially associated with abuse potential were low but more common in the lanicemine group than the placebo group. No pattern of clinically meaningful differences between lanicemine and placebo were noted on physical exam, clinical laboratory test results or ECG results.

        Approximately 40 healthy volunteers have been dosed with single or multiple doses of BHV-5000 in clinical trials conducted by AstraZeneca, and it was observed to be well tolerated without any clinically relevant safety issues. We believe BHV-5000 has no pharmacologic activity of its own and is rapidly metabolized to lanicemine in humans. After oral ingestion, systemic concentrations of BHV-5000 are very low, typically below the limit of quantification.

Nonclinical Toxicology Experience with Lanicemine and BHV-5000

        In nonclinical studies, the major dose limiting effects in both rats and dogs were central nervous system effects, which appeared rapidly and included ataxia, head weaving, depressed activity, and, at very high doses, convulsions. At pharmacologically effective doses, lanicemine did not elicit adverse effects on learning, memory or attention. Small increases in heart rate and blood pressure at very high doses were observed. In the rat with daily dosing, effects on adrenal gland, heart tissue, thyroid and kidney were apparent at very high doses—more than 10-fold the proposed maximum clinical exposure. These effects were not seen in dogs and intermittent dosing in the rat was not associated with effects on the kidney or heart. At very high doses, evidence of neuron degeneration was apparent in very few neurons, a finding that is associated with glutamate antagonists. Based on these preclinical findings, which were consistent with other NMDA receptor antagonists, such as ketamine, lanicemine was advanced into clinical trials. Toxicology studies with BHV-5000, up to 2 weeks in rats and dogs, revealed findings consistent with lanicemine, which was expected given the negligible concentrations of BHV-5000 as compared to the active metabolite, lanicemine.

Future Clinical Development of BHV-5000

        The clinical program for BHV-5000 will build upon AstraZeneca's previous development efforts for lanicemine. In support, BHV-5000 is rapidly metabolized to lanicemine and, in a Phase 1 trial, concentrations of BHV-5000 were detectable in only a few subjects who received the highest dose. As a result, we intend to rely on long-term GLP toxicology, reproductive toxicology and carcinogenicity studies of lanicemine to potentially expedite the safety package for BHV-5000. We are in the process of developing a commercial formulation of BHV-5000 with acceptable shelf-life and stability at room temperature. Once this is completed, we intend to conduct a brief Phase 1 trial to characterize and confirm BHV-5000's pharmacokinetic attributes, which we plan to complete by the end of 2017. Subject to the satisfactory completion of the Phase 1 trial, we intend to initiate a Phase 2/3 placebo-controlled, randomized, double-blind clinical trial in patients with Rett syndrome in 2018. We intend to enroll approximately 120 patients in the trial, and the patients will be randomly assigned to 24 weeks of treatment of either placebo or one of two dose levels of BHV-5000. The primary outcome measure will be reduction in respiratory abnormalities (number of apneic episodes), an endpoint that has been advanced with regulatory authorities and used by other sponsors. Reduction in apneic episodes is considered a meaningful benefit for patients and caregivers, both improving quality of life and potentially reducing secondary cardio-respiratory complications. In addition, we will observe impacts on other symptom domains as secondary outcome measures.

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BHV-5000: Next Indications

        We believe that modulation of NMDA receptor activity has the potential for broad applicability across a number of CNS disorders. Our goal is to rapidly advance BHV-5000 into the treatment of breathing irregularities associated with Rett syndrome and then pursue development for other neurological or neuropsychiatric indications with high unmet medical needs. If the results of our proposed Phase 2/3 trial in Rett syndrome are positive, we believe this will serve as proof-of-concept for BHV-5000 across neuroscience indications, and we would then explore development of BHV-5000 in other conditions such as depression, neuropathic pain and other disorders involving NMDA receptor dysfunction.

        Major depressive disorder, or MDD, is the leading cause of disability worldwide, according to the World Health Organization. In the United States, the prevalence rate is approximately 7%. Despite the approval of over two dozen agents, therapeutic effects are limited. More than one-third of patients who complete an initial course of antidepressant treatment will not achieve a satisfactory response, and as many as 20% of patients have chronic depression despite multiple interventions. The only class of agents approved for this population of inadequate responders (also deemed treatment resistant depression) is atypical antipsychotic medications (e.g., aripiprazole, quetiapine, olanzapine-fluoxetine combination and brexpiprazole), agents associated with significant short-term and long-term side effect burdens (sedation, metabolic syndrome, obesity, extrapyramidal side effects that can include akathisia and elevated risk of tardive dyskinesia). Other agents in clinical stages of development for major depressive disorder include rapastinel (Allergan, in Phase 2 testing), esketamine (Johnson & Johnson, in Phase 3 testing), and ALKS-5461 (a combined formulation of buprenorphine and samidorphin developed by Alkermes, which has reported positive Phase 3 data).

        Clinical findings of antidepressant effects of the NMDA receptor antagonist ketamine have provided a link between the NMDA receptor function and depression and a rationale for testing BHV-5000 as an antidepressant. In nonclinical studies, BHV-5000's active metabolite is active in models of depression and anxiety. These data prompted a line of investigation with lanicemine that included four randomized controlled trials conducted by AstraZeneca in patients with treatment resistant depression, overall suggesting an adequate safety and tolerability profile and potential for therapeutic benefit. However, the clinical data to date has not established clear efficacy and additional trials are needed.

        Neuropathic pain is a chronic condition caused by dysfunctional or damaged nerves. Neuropathic pain can be a debilitating and common problem affecting approximately 10% of adults in the United States. Despite the availability of multiple approved drugs, including Lyrica, and guidelines for the treatment of neuropathic pain, treatment of this condition remains a major therapeutic challenge. Existing analgesics are often ineffective, can cause serious side effects and have abuse potential that limits widespread use. Increased NMDA receptor activity is known to contribute to central sensitization in neuropathic pain. NMDA receptor antagonists have been shown to reduce hyperalgesia and pain in animal models of neuropathic pain induced by nerve injury and diabetic neuropathy. Clinically used NMDA receptor antagonists, including ketamine and dextromethorphan, can be effective in patients suffering from neuropathic pain syndromes. The clinical use of robust NMDA antagonists, such as ketamine, is limited due to dissociative, psychotomimetic and abuse potential properties. Novel NMDA receptor antagonists, such as BHV-5000, that are not associated with the psychotomimetic effects and abuse potential could lead to better management of neuropathic pain without causing serious side effects.

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Kleo Pharmaceuticals, Inc.

        In 2016, we invested $3.0 million to acquire a minority interest in Kleo Pharmaceuticals, Inc., or Kleo, a privately held, preclinical-stage company founded by a professor of chemistry and pharmacology at Yale University that is developing small molecule immunotherapies that emulate biologics to fight cancers and infectious diseases. Kleo has in-licensed technology from Yale University related to antibody recruiting molecules, or ARMs, and synthetic antibody mimics, or SyAMs. ARMs and SyAMs are bifunctional molecules composed of two active heads attached with a linker in-between that are designed to direct your immune system to fight specific disease-causing cells. We have also entered into a clinical development master services agreement with Kleo to assist Kleo with clinical development as its programs mature into clinical development.

        As of December 31, 2016, we owned approximately 18.6% of Kleo's outstanding capital stock. In connection with our initial $3.0 million investment in 2016, we agreed to invest an additional $5.5 million in Kleo through December 2017. In March 2017, we satisfied our first purchase obligation by purchasing 1,375,000 shares of Kleo common stock for cash consideration of $1.4 million. Separately, we also purchased 500,000 shares of Kleo common stock in March 2017 from one of Kleo's officers in exchange for aggregate consideration of $249,750 in cash and 32,500 of our common shares.

Competition

        The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary drugs. While we believe that our knowledge, experience and scientific resources provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

        The key competitive factors affecting the success of all of our product candidates, if approved, are likely to be their safety, efficacy, convenience, price, the level of generic competition and the availability of coverage and reimbursement from government and other third-party payors.

        Many of the companies against which we are competing, or against which we may compete in the future, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved drugs than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

CGRP Receptor Antagonist Platform

        With regard to rimegepant and BHV-3500, our compounds targeting acute treatment of migraine and migraine prevention, respectively, we face competition from companies that develop and/or sell the following types of migraine treatments:

Triptans

        Clinicians use a number of pharmacologic agents for the acute treatment and/or prevention of migraine. Aside from the NSAID diclofenac, only one other class of acute migraine-specific medication,

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serotonin 5-HT1B/1D receptor agonists, or triptans, has been developed and approved for the acute treatment of migraine over the past 15 years. The initial introduction of triptans represented a shift toward drugs more selectively targeting the suspected pathophysiology of migraine. We anticipate that the 5-HT1F receptor antagonist lasmiditan in development by CoLucid Pharmaceuticals, Inc. (which agreed to be acquired by Eli Lilly and Company in January 2017) could be approved as early as 2019. Lasmiditan does not directly target the CGRP receptor, but we expect that it would be approved prior to rimegepant. Lasmiditan was designed to act through non-vasoconstrictive mechanisms to treat migraine in patients who have cardiovascular risk factors, stable cardiovascular disease, or those who are dissatisfied with current triptan therapies. Although the efficacy of lasmiditan is expected to be similar to triptans, we believe that rimegepant will differentiate on both durability of efficacy and safety. Rimegepant was well tolerated in the Phase 2b clinical trial, while lasmiditan reported a comparatively high rate of AEs and SAEs in its clinical testing.

Other Oral CGRP Candidates in Development

        Since we will be pursuing approval of our orally available, small molecule rimegepant for the acute treatment of migraine, the most relevant comparator candidate in development is ubrogepant. Ubrogepant is being developed by Allergan and is already in Phase 3 testing, having completed positive Phase 2b trials. Allergan is a global pharmaceutical company with over 16,000 employees and has access to greater financial resources than we do. According to Allergan's annual public filings, it expects product launch of ubrogepant in 2020, which we would expect to precede the potential approval of rimegepant. However, we believe that rimegepant has the potential to be best-in-class based upon the published rimegepant and ubrogepant clinical trial results. Although these agents have not been compared within a single study, the placebo-adjusted outcomes comparing each product candidate's Phase 2b data favor rimegepant on almost all pain and non-pain outcomes compared to ubrogepant.

Other Acute Treatments for Migraine

        Ergot alkaloids (such as Dihydroergotamine (DHE)), analgesics, including opioids, non-steroidal anti-inflammatory drugs, or NSAIDs, acetaminophen and antiemetics also are used in the treatment of migraine. DHE is also a potent vasoconstrictor and has been displaced by the introduction of the triptans. Opioid use for migraine is associated with increased disability and health care utilization. Opioids, while effective for headache pain, are not approved for migraine and carry risk of abuse and addiction.

Migraine Prevention Treatments

        Agents currently used to reduce the frequency of migraine episodes were first approved for other uses. Botox is the only product that has been approved by the FDA for the prevention of chronic migraine. For those patients who do not qualify as having chronic migraine, but still have significant disability due to migraine, there are five products approved by the FDA for use: topiramate (Topamax) and valproic acid (Depakote), both anticonvulsant medicines, propranolol (Inderal) and timolol (Blocadren), both beta-blockers, and amitriptyline, a tricyclic. Some other beta blockers, such as atenolol, metoprolol and nadalol are also prescribed off-label for prevention, as well as calcium channel blockers such as diltiazem and tricyclic antidepressants such as amitriptyline.

        We believe that BHV-3500 will differentiate from the current anti-CGRP mAbs currently pursuing indications for acute treatment or prevention of, migraine. More specifically, there are currently four anti-CGRP mAbs under clinical development: LY2951742 (developed by Arteaus Therapeutics (USA), with rights subsequently acquired by Eli Lilly and Co.); ALD-403 (developed by Alder Biopharmaceuticals (USA)); LBR-101, now TEV-48125 (developed by Labrys Biologics—Pfizer (USA), then acquired by Teva Pharmaceuticals); and AMG334 (developed by Amgen, Inc. (USA)).

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Glutamate Platform

        With respect to trigriluzole, which we are currently developing for the treatment of ataxias, with SCA as our initial indication, there are currently no approved drug treatments for SCA or any other cerebellar ataxia, in the United States. We are aware of companies with clinical stage programs in development for potential treatments for SCA and other cerebellar disorders, including Bioblast Pharma, which is in Phase 2 development of trehalose, which targets SCA 3 and acts as a protein stabilizer; Steminent Biotherapeutics, which is currently conducting a Phase 2 trial of allogeneic adipose-derived mesenchymal stem cells that target polyglutamine SCAs; EryDel which is planning a Phase 3 trial for IEDAT01, which delivers dexamethasone sodium phosphate through red blood cells, Shinogi & CO., Ltd., which is investigating Rovatirelin, a non-peptide mimetic of thyrotropin-releasing hormone, in a Phase 3 trial in Japan; Shire Plc, which is exploring Cuvitru, an intravenous immune globulin that is approved for the treatment of primary immunodeficiency disorders, in Phase 2 development. Mitsubishi Tanabe received approval for taltirelin, an oral thyrotropin releasing hormone, in Japan in 2009 but has not filed with the FDA to seek approval in the United States.

        With respect to BHV-0223, which we are developing for the treatment of ALS, we believe our primary competitor is Covis Pharmaceuticals, which sells Rilutek, the brand name for riluzole, which is currently the only approved drug for the treatment of ALS in the United States. Riluzole is also generically available. At least two other companies are marketing or plan to market new formulations of riluzole: MonoSol Rx has filed an IND to begin clinical development of a riluzole oral soluble film, and Italfarmaco SpA, a private Italian company, markets an oral liquid suspension formulation of riluzole in the United Kingdom and elsewhere in Europe under the brand name Teglutik. We are aware of several companies that are exploring potential treatments for ALS, mostly agents with novel mechanisms of action being administered with riluzole. We are not aware of any company marketing or developing a sublingual formulation of riluzole.

        With respect to BHV-5000, which we are developing for the treatment of breathing irregularities associated with Rett syndrome, there are currently no approved treatments for Rett syndrome in the United States. We are aware of companies with clinical stage programs in development for potential treatments for Rett syndrome, including Newron Pharmaceuticals SpA which is launching a Phase 2/3 clinical trial of sarizotan, an agent with serotonin subtype-1A (5-HT1A) receptor agonist and dopamine subtype-2 (D2) receptor antagonist activities, and Neuren Pharma, which has completed a Phase 2a trial of trofinetide, in adult patients and a Phase 2 trial in pediatric patients with Rett syndrome.

        If we expand our development of trigriluzole, BHV-0223 or BHV-5000 into additional neuropsychiatric or other indications, we would face substantial competition from companies that develop or sell products that treat those indications.

Manufacturing

        We do not have any manufacturing facilities or personnel. We currently rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing, as well as for commercial manufacturing if our product candidates receive marketing approval.

        All of our product candidates are small molecules and are manufactured in reliable and reproducible synthetic processes from readily available starting materials. The chemistry does not require unusual equipment in the manufacturing process. We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities.

Commercialization

        We intend to develop and, if approved by the FDA, to commercialize our product candidates in the United States, and we may enter into distribution or licensing arrangements for commercialization rights

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for other regions. Members of our management team and board of directors have deep experience leading neuroscience research and have been involved in the development and commercialization of drugs such as Zoloft, Abilify, Opdivo and Soliris.

        With respect to rimegepant and BHV-3500, we plan to build a specialty team of sales and medical marketing professionals to focus on targeting neurological specialists and headache centers in the United States, potentially in combination with a larger pharmaceutical partner, to maximize patient coverage in the United States and to support global expansion.

        With respect to the product candidates in our glutamate modulation platform, we currently intend to build a neurological specialty sales force to manage orphan drug commercialization for these product candidates on our own.

Intellectual Property

        We strive to protect and enhance the proprietary technologies that we believe are important to our business, including seeking and maintaining patents intended to cover our products and compositions, their methods of use and any other inventions that are important to the development of our business. We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain the proprietary position of our products and our other development programs.

Patents and Patent Applications

        Our patent estate, on a worldwide basis, includes 10 families of patents and patent applications which contain claims directed to composition of matter, methods of use or formulations related to our product candidates.

Rimegepant and BHV-3500

        The intellectual property rights related to rimegepant and BHV-3500 are in-licensed from BMS and are covered by five families of U.S. and certain selected foreign patents, with statutory expiration dates ranging from 2023 to 2033. U.S. Patent 8,314,117 covers the composition of matter of rimegepant (BHV-3000), and has a statutory expiration date of October 12, 2030, not including patent term adjustment or any potential patent term extension. U.S. Patent 8,481,546 covers the composition of matter of BHV-3500, and has a statutory expiration date of March 2, 2031, not including patent term adjustment or any potential patent term extension. These or other patents cover rimegepant and BHV-3500 and their use in treating migraine and, in certain ex-U.S. jurisdictions, other neurological conditions. The license also includes several patent families of related compounds directed to the CGRP receptor. See "—License Agreement with Bristol-Myers Squibb Company" below.

Trigriluzole

        We own several families of patent applications containing claims directed to prodrugs of riluzole. These patent applications include several U.S. applications and corresponding PCT applications. These families of patent applications contain claims directed to trigriluzole and numerous other prodrugs of riluzole. In addition, the use of these compounds for treating ALS, spinocerebellar ataxia, depression and other diseases is described and claimed in these patent applications. We own these patent applications subject to a license agreement with ALS Biopharma, LLC and Fox Chase Chemical Diversity Center, Inc.

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See "—Agreement with ALS Biopharma and Fox Chase Chemical Diversity Center" below. If a patent covering trigriluzole issues from one of these pending patent application families, it would have a statutory expiration date in 2036. Other patent applications provide coverage for alternative formulations of riluzole prodrugs and their uses.

BHV-0223

        BHV-0223, a sublingual or ODT form of riluzole, and its use for treating various forms of pain, ALS and depression are currently covered in the United States by several pending U.S. patent applications, with corresponding PCT applications which we intend to nationalize in selected jurisdictions before the applicable deadlines. If a patent covering BHV-0223 issues from one of these pending patent application families, it would have a statutory expiration date in 2035. We have an agreement with Catalent whereby Catalent assigned its rights to a patent application family containing claims directed to the formula for BHV-0223, which is described above, as well as licensed to us certain rights to the Zydis ODT technology. See "—Agreements with Catalent" below. In addition to patent protection, although not an NCE, BHV-0223 may also be entitled to certain regulatory exclusivity. In addition to the patent applications we own, we have also licensed one issued patent and several pending patent applications from Yale University which provide protection for the use of riluzole in treating generalized anxiety disorder and other neurological uses, respectively. See "—License Agreement with Yale University" below. Further, we have licensed several patents from Rutgers University covering the use of riluzole for treating various forms of cancer and an animal model for tumors which may cover the use of BHV-0223 for treating the specific cancers. See "—License Agreement with Rutgers, The State University of New Jersey" below.

BHV-5000

        We have also in-licensed one patent family related to certain uses of lanicemine and a patent application family containing claims directed to BHV-5000 from AstraZeneca. See "—License Agreement with AstraZeneca" below. They contain claims directed to the use of the base compound, lanicemine, in treating depression, and the structure of the prodrug form, BHV-5000, as well as the use of the prodrug in treating a variety of neurological diseases including Rett syndrome and depression. The issued patents related to uses of lanicemine have a statutory expiration date in 2019 and the patent applications related to BHV-5000 would, if issued, have a statutory expiration date in 2033.

Additional Licensed Patent Applications

        We have also licensed a family of patent applications related to the treatment of depression with a combination of ketamine and scopolamine from Massachusetts General Hospital. See "—License Agreement with The General Hospital Corporation d/b/a Massachusetts General Hospital" below.

Patent Protection and Terms

        The term of individual patents depends on the legal term for patents in the countries in which they are granted. In most countries, including the United States, the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country. In the United States, a patent's term may, in certain cases, be extended by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration date of a U.S. patent as partial compensation for the length of time the drug is under regulatory review. Patent term extension is not available for all approved products and, even if an approved product is eligible, only one patent covering the approved product may be extended, the extension can only be based on a single approved product, and the total extension granted cannot extend the remaining term of the patent beyond 14 years from product approval.

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        Furthermore, the patent positions of biotechnology and pharmaceutical products and processes like those we intend to develop and commercialize are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in such patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries can diminish our ability to protect our inventions and enforce our intellectual property rights, can make it easier to challenge the validity, enforceability or scope of any patents that may issue, and, more generally, could affect the value of intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

Third-Party Patent Filings

        Numerous U.S. and foreign issued patents and patent applications owned by third parties exist in the fields in which we are developing products. In addition, because patent applications can take many years to issue, there may be applications unknown to us, which may later result in issued patents that our product candidates or proprietary technologies may infringe. Moreover, we may be aware of patent applications, but incorrectly predict the likelihood of those applications issuing with claims of relevance to us.

        Under U.S. law, a person may be able to patent a discovery of a new way to use a previously known compound, even if such compound itself is patented, provided the newly discovered use is novel and non-obvious. Such a method-of-use patent, however, if valid, only protects the use of a claimed compound for the specified methods claimed in the patent. This type of patent does not prevent persons from using the compound for any previously known use of the compound. Further, this type of patent does not prevent persons from making and marketing the compound for an indication that is outside the scope of the patented method.

License Agreements

License Agreement with Bristol-Myers Squibb Company

    Overview

        In July 2016, we entered into an exclusive, worldwide license agreement with BMS for the development and commercialization rights to rimegepant and BHV-3500, as well as other CGRP-related intellectual property. Subject to certain limitations and certain retained rights of BMS, the license included an exclusive license under certain BMS patent rights and BMS know-how to the extent necessary to research, discover, develop, make, have made, use, sell, offer to sell, export and import licensed compounds and licensed products in the field of prevention, treatment or control of any disease, disorder or condition in humans. In exchange for these rights, we agreed to pay BMS initial payments, milestone payments and tiered royalties on net sales of licensed products under the agreement. Our initial payments to BMS totaled $9.0 million and were paid within 90 days after entering into the agreement. The milestone payments due to BMS under the agreement consist of development and commercial milestones. The development milestones due under the agreement depend on the licensed product being developed. Development milestones due under the agreement with respect to rimegepant or a derivative thereof total up to $127.5 million, and, for any product other than rimegepant or a derivative thereof, total up to $74.5 million. Commercial milestones total up to $150.0 million for each licensed product. If we receive revenue from sublicensing any of our rights under the agreement, we are also obligated to pay a portion of that revenue to BMS as well. The tiered royalty payments are based on annual worldwide net sales of licensed products under the agreement, with percentages in the low to mid teens.

        Under the BMS agreement, we agreed to refrain, either ourselves or via our sublicensees or third parties, from engaging in the development and commercialization of specified competitive compounds for a period of seven years. Further, BMS has retained the right to use the licensed compounds for internal research purposes and for the generation of analogs and derivatives of licensed compounds. Our right to

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sublicense our rights under the BMS agreement, other than to an affiliate or to certain third-party manufacturers, is subject to BMS's prior written consent, which cannot be unreasonably withheld or delayed. While we will be responsible for preparing, prosecuting and maintaining the licensed patents and applications and for defending them in post-grant proceedings, BMS must consent before a licensed patent or application is abandoned in a major jurisdiction. We will also be responsible for listing licensed patents in the Orange Book and for determining which patents will be extended based on any regulatory delays.

    Our Development, Regulatory and Commercialization Obligations

        Under the agreement, we are obligated to use commercially reasonable efforts to develop licensed products using the patent rights we have licensed from BMS, including setting forth a development plan with specific development activities and timelines, updating the development plan each year, providing BMS with annual reports of our progress and keeping BMS informed of material changes that may affect the development plan. With respect to any of the licensed products, we are solely responsible for all development, regulatory and commercial activities and costs. We are also obligated to use commercially reasonable efforts to achieve specified regulatory and commercial milestones, and maintain a sufficient supply of our products to satisfy our expected commercialization efforts in each country in which we sell such products. Following our first commercial sale of a product, we must provide BMS with periodic reports of our commercial activities. In connection with the agreement, BMS agreed to use commercially reasonable efforts to assign and transfer any INDs for the licensed compounds to us.

    Equity Consideration

        As part of this agreement, we agreed to issue BMS common shares in the amount of $12.5 million upon the occurrence of specified events, including upon an initial public offering. In satisfaction of this obligation, we expect that we will issue 1,345,374 common shares to BMS in connection with the closing of this offering.

    Right of First Negotiation

        After we receive topline data from a Phase 3 trial of our most advanced product candidate licensed under the agreement, we must provide notice and a summary of the data to BMS. BMS will then have 60 days to exercise its right of first negotiation to regain its intellectual property rights or enter into a license agreement with us with respect to such product candidate. If we do not execute an agreement with BMS during this time period after using good faith efforts, we will have the right to retain our rights or sublicense our rights to third parties subject to the terms of the agreement.

    Non-Competition

        Until 2023, neither we nor our affiliates may, ourselves or through or in collaboration with a third party, engage directly or indirectly in the clinical development or commercialization of specified competitive compounds. In the event that we are or become non-compliant with this provision due to licensing, collaboration or acquisition activity, we must either divest ourselves of the competitive compound within a certain period of time or negotiate with BMS to have the competitive compound included as a licensed product under our agreement with BMS. The failure to so divest or reach terms with BMS may result in the termination of our license with BMS.

    Term and Termination

        The agreement will terminate on a licensed product-by-licensed product and country-by-country basis upon the expiration of the royalty term with respect to each licensed product in each country. The patents related to the licensed products have statutory expiration dates ranging from 2023 to 2033. BMS has the right to terminate the agreement upon our insolvency or bankruptcy, our uncured material breach,

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including our failure to meet our development and commercialization obligations, our challenge to any BMS patent rights, or our failure to close a financing within specified parameters. We have the right to terminate the agreement if BMS materially breaches the agreement or if, after we provide notice, we choose not to move forward with development and commercialization in a specific country. In the event that BMS exercises its right to terminate the agreement following our insolvency, our breach of the agreement or our failure to develop or commercialize the licensed compounds, or if we terminate the agreement after providing notice, all rights and licenses granted to us will terminate, and all patent rights and know-how transferred pursuant to the agreement will revert to BMS. In addition, upon such termination, we agree to, at BMS's election, (i) assign all regulatory filings, approvals and regulatory documents necessary to further develop and commercialize the reverted products or (ii) withdraw or inactivate such filings and approvals.

Agreement with ALS Biopharma, LLC and Fox Chase Chemical Diversity Center Inc.

        In August 2015, we entered into an agreement with ALS Biopharma and FCCDC pursuant to which ALS Biopharma and FCCDC assigned to us their worldwide patent rights to a family of over 300 prodrugs of glutamate modulating agents, including trigriluzole, as well as other innovative technologies. In addition, we received a non-exclusive license to certain trade secrets and know-how of ALS Biopharma. We took assignment of these patent rights subject to the provisions of the Bayh Dole Act, as applicable, to the extent that any invention included with the assigned patent rights was funded in whole or in part by the United States government. In addition, certain of the patent rights that do not cover trigriluzole were co-owned by Rutgers, and thus, we took assignment of these patent rights subject to the co-ownership interest of Rutgers. Under the agreement, we are obligated to use commercially reasonable efforts to diligently commercialize and develop markets for the patent products.

        As consideration for this assignment of patent rights, we paid ALS Biopharma $2.5 million between August 2015 and November 2016 as funding for research to be performed by ALS Biopharma in connection with a mutually agreed upon research plan. We are also obligated to pay regulatory milestone payments of $3.0 million upon a specified regulatory approval for the first licensed product under the agreement as well as additional milestone payments of $1.0 million for each licensed product that completes the specified regulatory milestone thereafter. We are also obligated to make royalty payments of a low single-digit percentage based on net sales of products licensed under the agreement, payable on a quarterly basis.

    Equity Consideration

        As part of the agreement, we also issued to ALS Biopharma 50,000 common shares as well as warrants to purchase a total of 600,000 common shares with an exercise price of $5.60 per share, of which 275,000 shares were immediately exercisable at issuance and the remaining 325,000 shares became exercisable upon our achievement of a specified regulatory milestone. In connection with the issuance of the warrants, ALS Biopharma became a party to our Shareholders Agreement and, upon achievement of a regulatory milestone, has received board observer rights. We also agreed to grant specified preemptive rights to ALS Biopharma to participate in equity offerings that are open to our other shareholders.

    Term and Termination

        The agreement terminates on a country-by-country basis as the last patent rights expire in each such country. Our current patent rights consist of owning several families of patent applications. If a patent covering trigriluzole issues from one of these pending patent applications, it would have a statutory expiration date in 2036. ALS Biopharma has the right to terminate the agreement or its applicability to one or more countries upon 30 days' prior written notice to us if we fail to make an undisputed payment within the 60-day period after receipt of a termination notice or if we commit a material breach of the agreement that is not cured within the 60-day period after receipt of a termination notice. We have the right to

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terminate the agreement if ALS Biopharma commits a material breach of the agreement that is not cured within the 60-day period after written notice thereof from us or, as to a specific country, if no valid claims exist in such country. Both we and ALS Biopharma may terminate the agreement as to a specific country if we are enjoined from exercising our patent rights under the agreement in such country. If we affirmatively abandon our development, research, licensing or sale of all products covered by one or more claims of any patent or patent application assigned under the agreement, or if we cease operations, we have agreed to reassign the applicable patent rights back to ALS Biopharma.

License Agreement with AstraZeneca AB

    Overview

        In October 2016, we entered into an exclusive license agreement with AstraZeneca pursuant to which AstraZeneca granted us a license to certain patent rights and know-how for all human uses for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, including BHV-5000 and lanicemine.

        Under the AstraZeneca agreement, we have the right to sublicense our rights under the agreement subject to AstraZeneca's prior written consent, such consent not to be unreasonably withheld, conditioned or delayed. We will be responsible for preparing, filing, prosecuting and maintaining the licensed patents and applications, and for Orange Book listing any listable patents. We have the right to enforce the licensed patents and to defend challenges to the validity or enforceability of the licensed patents. AstraZeneca, however, retains the right to apply for patent term extensions for the licensed patents. We may not assign our rights or delegate our obligations under the AstraZeneca agreement without AstraZeneca's consent, including in the event of a change of control.

        In exchange for these rights, in addition to the agreement to issue equity consideration noted below, we agreed to pay AstraZeneca an upfront payment, milestone payments and royalties on net sales of licensed products under the agreement. We made the upfront payment to AstraZeneca of $5.0 million upon signing the agreement. The milestone payments due to AstraZeneca under the agreement consist of regulatory and commercial milestones. The regulatory milestones due under the agreement depend on the indication of the licensed product being developed as well as the territory where regulatory approval is obtained. Development milestones due under the agreement with respect to Rett syndrome total up to $30.0 million, and, for any indication other than Rett syndrome, total up to $60.0 million. Commercial milestones are based on net sales of all products licensed under the agreement and total up to $120.0 million. We have agreed to pay tiered royalties of mid single-digit to low double-digit percentages based on net sales of products licensed under the agreement. If we receive revenue from sublicensing any of our rights under the agreement, we are also obligated to pay a portion of that revenue to AstraZeneca.

    Our Development, Regulatory and Commercialization Obligations

        Under the agreement, we are obligated to use commercially reasonable efforts to develop, and obtain and maintain regulatory approvals for, licensed products using the rights we have licensed from AstraZeneca, including providing AstraZeneca with annual reports of our development activities. With respect to any of the licensed products, we are solely responsible for all development, regulatory and commercial activities and costs. Following our first commercial sale of a product, we must provide AstraZeneca with periodic reports of our commercial activities. AstraZeneca agreed to use commercially reasonable efforts to transfer all of its regulatory documentation related to BHV-5000 and lanicemine in each country to us, including all INDs, NDAs and approvals, promptly following the effective date of the agreement.

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    Right of First Negotiation

        After we receive topline data from the first Phase 2b study of a product candidate licensed under the agreement, we must provide notice and a summary of the data to AstraZeneca. AstraZeneca will then have a period of time to exercise its right of first negotiation to regain its intellectual property rights or enter into a sublicense agreement with us. If AstraZeneca does not give notice of its intent to exercise its right of first negotiation during this time period, or we do not execute a definitive agreement within an additional time period, we will have the sole right, in our discretion, to negotiate and execute any agreement with third parties, or to retain our rights.

    Equity Consideration

        As part of the consideration, we agreed to issue to AstraZeneca common shares in the amount of $5.0 million if we completed a financing within specified parameters. This condition was satisfied upon the closing of our Series A preferred share financing, at which time we issued 538,150 Series A preferred shares to AstraZeneca. In addition, we agreed to issue to AstraZeneca common shares in the amount of $5.0 million upon the completion of specified events, including upon an initial public offering. In satisfaction of this obligation, we expect that we will issue an additional 538,149 common shares to AstraZeneca in connection with the closing of this offering.

    Term and Termination

        The agreement will terminate upon the expiration of the last royalty term for the last licensed product under the agreement. Each royalty term begins on the date of the first commercial sale of the applicable licensed product in the applicable country and ends on the later of 10 years from such first commercial sale or the expiration of the last to expire of the applicable patents in that country. The patent applications related to BHV-5000 would, if issued, have a statutory expiration date in 2033. Either party may terminate the agreement upon the other party's uncured material breach or upon insolvency or bankruptcy. AstraZeneca also has the right to terminate the agreement in certain circumstances. We have the right to terminate the agreement without cause. In the event the agreement is terminated in its entirety for any reason, all rights and licenses granted to us by AstraZeneca under the agreement, and all sublicenses granted by us under the agreement, immediately terminate, and we are required to assign to AstraZeneca all of the regulatory documentation applicable to any licensed compound or licensed product owned or controlled by us or our affiliates, to transfer control of any clinical studies involving licensed products to AstraZeneca and continue such studies at our cost for six months, and to assign to AstraZeneca all of our agreements with third parties that are reasonably necessary for the exploitation of the licensed products.

Agreement with Catalent U.K Swindon Zydis Limited

        In March 2015, we entered into a development and license agreement with Catalent pursuant to which we obtained certain license rights to the Zydis technology in BHV-0223. BHV-0223 was developed under this agreement. Catalent has manufactured BHV-0223 for clinical testing and we expect them to do so for commercial supply. We made an upfront payment of $0.3 million to Catalent upon entering into the agreement and are obligated to pay Catalent up to $1.6 million upon the achievement of specified regulatory and commercial milestones. We are also obligated to make royalty payments of a low single-digit percentage based on net sales of products licensed under the agreement.

        Under the agreement, we are responsible for conducting clinical trials and for preparing and filing regulatory submissions. We have the right to sublicense our rights under the agreement subject to Catalent's prior written consent. Catalent has the right to enforce the patents covering the Zydis technology and to defend any allegation that a formulation using Zydis technology, such as BHV-0223, infringes a third party's patent.

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        The development and license agreement terminates on a country-by-country basis upon the later of (i) 10 years after the launch of the most recently launched product in such country and (ii) the expiration of the last valid claim covering each product in such country, unless earlier voluntarily terminated by us. Our current patent rights with respect to BHV-0223 consist of owning several patent applications. If a patent covering BHV-0223 issues from one of these pending patent applications, it would have a statutory expiration date in 2035. The agreement automatically extends for one-year terms unless either party gives advance notice of intent to terminate. In addition, Catalent may terminate the agreement either in its entirety or terminate the exclusive nature of the agreement on a country-by-country basis if we fail to meet specified development timelines, which we may extend in certain circumstances.

License Agreement with Yale University

        In September 2013, we entered into an exclusive license agreement with Yale to obtain rights under certain patent rights for the commercial development, manufacture, distribution, use and sale of products and processes resulting from the development of those patent rights related to the use of riluzole in treating various neurological conditions such as general anxiety disorder, post-traumatic stress disorder and depression. As part of the consideration for this license, we issued Yale 250,000 of our common shares and granted Yale the right to purchase up to 10% of the securities issued in each of our equity offerings. Under the terms of the agreement, in the event of a change of control, as defined in the agreement to include our initial public offering, we will be obligated to pay to Yale the lesser of (i) 5% of the dollar value of all initial and future potential consideration paid or payable by the acquirer or (ii) $1.5 million as a change-of-control payment. In the event of an initial public offering, the change-of-control payment to Yale is reduced by the value of Yale's equity investment in our company.

        In addition, we agreed to pay Yale regulatory milestone payments of up to $2.0 million and annual royalty payments of a low-single digit percentage based on net sales of products from the licensed patents, subject to a minimum amount of up to $1.0 million per year. If we grant any sublicense rights under the agreement, we must pay Yale a low single-digit percentage of sublicense income that we receive.

        The agreement also requires us to meet certain due diligence requirements based upon specified milestones. We can elect to extend the due diligence requirements by a maximum of one year upon payments of up to $150,000 to Yale. We are also required to reimburse Yale for any fees that Yale incurs related to the filing, prosecution, defending and maintenance of patent rights licensed under the agreement. In the event that we fail to make any payments, commit a material breach, fail to maintain adequate insurance or if we challenge the patent rights of Yale, Yale can terminate the agreement. We can terminate the agreement with 90-days' notice if Yale commits a material breach or in a specific country if there are no valid patent rights. The agreement expires on a country-by-country basis upon the later of expiration of the patent rights or ten years from the date of first sale. Any patent that has issued or does issue from one of the pending patent applications under this agreement would have a statutory expiration date in 2026.

License Agreement with The General Hospital Corporation d/b/a Massachusetts General Hospital

        In September 2014, we entered into a license agreement with The General Hospital Corporation d/b/a Massachusetts General Hospital, or MGH, pursuant to which MGH granted us a license under certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, related to treating depression with a combination of ketamine and scopolamine. Under this agreement, we paid MGH an upfront license fee of $20,000. We are also obligated to pay MGH annual license maintenance fees up to $50,000, beginning in 2017. In addition, we are obligated to pay MGH future milestone payments of up to $750,000 upon the achievement of specified clinical and regulatory milestones and up to $2.5 million upon the achievement of specified commercial milestones. We have also agreed to pay MGH royalties of a low single-digit percentage based on net sales of products licensed under the agreement. We are also required to

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reimburse MGH for any fees that MGH incurs related to the filing, prosecution, defending and maintenance of patent rights licensed under the agreement. If we receive revenue from sublicensing any of our rights under the agreement, we are also obligated to pay a portion of that revenue to MGH.

        The agreement expires upon the expiration of the patent rights licensed under the agreement, which could occur as early as 2033, unless earlier terminated by either party.

License Agreement with Rutgers, The State University of New Jersey

        In June 2016, we entered into an exclusive license agreement with Rutgers, The State University of New Jersey, licensing several patents and patent applications related to the use of riluzole to treat various cancers. Certain of the Rutgers patent rights were developed using federal funding. Accordingly, the U.S. Government has certain rights in the Rutgers patents and applications. We have the right to sublicense our rights under the Rutgers Agreement. We are responsible for prosecuting and maintaining the patents and applications in the Rutgers patent rights, and Rutgers has an opportunity to review and comment on correspondences with government patent offices. We have the right to prepare any documents related to the application for an extension of the term of any licensed patent and to list any listable patents in the Orange Book. We have the first right to enforce the licensed patents.

        Under this agreement, we are required to pay Rutgers annual license maintenance fees of up to $25,000 per year until the first commercial sale of a licensed product. We are also obligated to pay Rutgers payments totaling up to $825,000 upon the achievement of specified clinical and regulatory milestones. We also agreed to pay Rutgers royalties of a low single-digit percentage based on net sales of licensed products sold by us, our affiliates or sublicensees, subject to a minimum of up to $100,000 per year. If we grant any sublicense rights under the license agreement, we must pay Rutgers a low double-digit percentage of sublicense income we receive. In the event that we experience a change of control or sale of substantially all of our assets prior to the initiation of a Phase 3 trial related to products licensed under the agreement, and such change of control or sale results in a full liquidation of our company, we will be obligated to pay Rutgers a change-of-control fee equal to 0.3% of the total value of the transaction, but not less than $100,000.

        The agreement also requires us to meet certain due diligence requirements based upon specified milestones. We can elect to extend the due diligence requirements by a maximum of one year upon payments to Rutgers of up to $500,000 in the aggregate.

        The agreement expires on a country-by-country basis upon the later of expiration of the last patent rights to expire in such country, which could occur as early as 2024, or ten years from the date of first commercial sale of a licensed product, unless terminated by either party.

Government Regulation

        In the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act, or FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including imposition of a clinical hold, refusal by the FDA to approve applications, withdrawal of an approval, import/export delays, issuance of warning letters and other types of enforcement letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice or other governmental entities.

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        The clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and marketing, among other things, of our product candidates are governed by extensive regulation by governmental authorities in the United States and other countries. The FDA, under the FDCA, regulates pharmaceutical products in the United States. The steps required before a drug may be approved for marketing in the United States generally include:

    preclinical laboratory tests and animal tests conducted under Good Laboratory Practices, or GLP;

    the submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials commence;

    approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;

    adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for each indication and conducted in accordance with Good Clinical Practices, or GCP;

    the preparation and submission to the FDA of an NDA;

    FDA acceptance, review and approval of the NDA, which might include an Advisory Committee review;

    satisfactory completion of an FDA inspection of the manufacturing facilities at which the product, or components thereof, are made to assess compliance with current Good Manufacturing Practices, or cGMPs.

        The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain. The FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

Preclinical and Human Clinical Trials in Support of an NDA

        Preclinical studies include laboratory evaluations of the product candidate, as well as in vitro and animal studies to assess the potential safety and efficacy of the product candidate. The conduct of preclinical trials is subject to federal regulations and requirements including GLP regulations. The results of the preclinical studies, together with manufacturing information and analytical data, among other things, are submitted to the FDA as part of the IND, which must become effective before clinical trials may be commenced. The IND will become effective automatically 30 days after receipt by the FDA, unless the FDA raises concerns or questions about the conduct of the trials as outlined in the IND prior to that time. In this case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed. The FDA may nevertheless initiate a clinical hold after the 30 days if, for example, significant public health risks arise.

        Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualified investigators in accordance with GCP requirements. Each clinical trial must be reviewed and approved by an independent institutional review board, or IRB, at each of the sites at which the trial will be conducted. The IRB will consider, among other things, ethical factors, the safety of human subjects and the possible liability of the institution.

        Clinical trials are typically conducted in three sequential phases prior to approval, but the phases may overlap or be combined. These phases generally include the following:

    Phase 1.     Phase 1 clinical trials represent the initial introduction of a product candidate into human subjects, frequently healthy volunteers. In Phase 1, the product candidate is usually tested for safety, including adverse effects, dosage tolerance, absorption, distribution, metabolism, excretion and pharmacodynamics.

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    Phase 2.     Phase 2 clinical trials usually involve studies in a limited patient population to (1) evaluate the efficacy of the product candidate for specific indications, (2) determine dosage tolerance and optimal dosage and (3) identify possible adverse effects and safety risks.

    Phase 3.     If a product candidate is found to be potentially effective and to have an acceptable safety profile in Phase 2 clinical trials, the clinical trial program will be expanded to Phase 3 clinical trials to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population at geographically dispersed clinical trial sites.

    Phase 4.     clinical trials may be conducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs approved under accelerated approval regulations, or when otherwise requested by the FDA in the form of post-market requirements or commitments. Failure to promptly conduct any required Phase 4 clinical trials could result in enforcement action or withdrawal of approval.

        A Phase 2/3 trial design, which we are using in our trigriluzole and BHV-5000 development programs, is often used in the development of pharmaceutical and biological products. The trial includes Phase 2 elements, such as an early interim analysis of safety or activity, and Phase 3 elements, such as larger patient populations with less restrictive enrollment criteria. The early interim analysis of clinical or physiologic activity and/or safety allows the study to be stopped, changed or continued before a large number of patients have been enrolled, while still allowing all data from enrolled patients to count in the analysis used to support approval.

Submission and Review of an NDA

        The results of preclinical studies and clinical trials, together with detailed information on the product's manufacture, composition, quality, controls and proposed labeling, among other things, are submitted to the FDA in the form of an NDA, requesting approval to market the product. The application must be accompanied by a significant user fee payment, which typically increases annually, although waivers may be granted in limited cases. The FDA has substantial discretion in the approval process and may refuse to accept any application or decide that the data is insufficient for approval and require additional preclinical, clinical or other studies.

        Once an NDA has been accepted for filing, which occurs, if at all, 60 days after submission, the FDA sets a user fee goal date that informs the applicant of the specific date by which the FDA intends to complete its review. We will be required to pay a user fee to the FDA to review the NDA, unless we receive a waiver or qualify for an exemption. This is typically 10 months from the date that the FDA receives the application-filing for standard review NDAs ( i.e. , NDAs seeking approval of drugs that are not new molecular entities). The review process can be extended by FDA requests for additional information or clarification. The FDA reviews NDAs to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMPs to assure and preserve the product's identity, strength, quality and purity. Before approving an NDA, the FDA typically will inspect the facilities at which the product is manufactured and will not approve the product unless the manufacturing facilities comply with cGMPs. Additionally, the FDA will typically inspect one or more clinical trial sites for compliance with GCP and integrity of the data supporting safety and efficacy.

        During the approval process, the FDA also will determine whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the application must submit a proposed REMS, and the FDA will not approve the application without an approved REMS, if required. A REMS can substantially increase the costs of obtaining approval. The FDA could also require a special warning, known as a boxed warning, to be included in the product label in order to highlight a particular safety risk. The FDA may also convene an advisory committee of external experts to provide input on certain review issues relating to risk, benefit and interpretation of clinical trial data. The FDA may delay approval of an NDA if applicable regulatory criteria are not satisfied and/or the FDA requires additional testing or information. The FDA may require post-marketing testing and surveillance to monitor safety or efficacy of a product.

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        On the basis of the FDA's evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA will issue either an approval of the NDA or a Complete Response Letter, detailing the deficiencies in the submission and the additional testing or information required for reconsideration of the application. Even with submission of this additional information, the FDA may ultimately decide that the application does not satisfy the regulatory criteria for approval.

Post-Approval Requirements

        Approved drugs that are manufactured or distributed in the United States pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims and some manufacturing and supplier changes are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for marketed products and the establishments at which such products are manufactured, as well as new application fees for certain supplemental applications.

        The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance programs to further assess and monitor the product's safety and effectiveness after commercialization. The FDA may also require a REMS, which could involve requirements for, among other things, medication guides, special trainings for prescribers and dispensers, patient registries, and elements to assure safe use.

        In addition, entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. The FDA has promulgated specific requirements for drug cGMPs. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

        Once an approval is granted, the FDA may issue enforcement letters or withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Corrective action could delay product distribution and require significant time and financial expenditures. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

    restrictions on the marketing or manufacturing of the product, suspension of the approval, complete withdrawal of the product from the market or product recalls;

    fines, warning letters or holds on post-approval clinical trials;

    refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of product approvals;

    product seizure or detention, or refusal to permit the import or export of products; or

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    injunctions or the imposition of civil or criminal penalties.

        The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state authorities.

Section 505(b)(2) NDAs

        As an alternative path to FDA approval for modifications to formulations or uses of drugs previously approved by the FDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA. Section 505(b)(2) was enacted as part of the Hatch-Waxman Amendments. A Section 505(b)(2) NDA is an application that contains full reports of investigations of safety and effectiveness, but where at least some of the information required for approval comes from studies not conducted by, or for, the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This type of application permits reliance for such approvals on literature or on an FDA finding of safety, effectiveness or both for an approved drug product. As such, under Section 505(b)(2), the FDA may rely, for approval of an NDA, on data not developed by the applicant. The FDA may also require companies to perform additional studies or measurements, including clinical trials, to support the change from the approved branded reference drug. The FDA may then approve the new product candidate for the new indication sought by the 505(b)(2) applicant.

        Our clinical programs for trigriluzole for the treatment of SCA and BHV-0223 for the treatment of ALS are each based on a regulatory pathway under section 505(b)(2) of the FDCA that allows reference to data on riluzole for the purpose of safety assessments.

Orange Book Listing

        In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list with the FDA certain patents whose claims cover the applicant's product or an approved method of using the product. Upon approval of an NDA, each of the patents listed in the application for the drug is then published in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, known as the Orange Book. Any applicant who files an Abbreviated New Drug Application, or ANDA, seeking approval of a generic equivalent version of a drug listed in the Orange Book or a 505(b)(2) NDA referencing a drug listed in the Orange Book must certify, for each patent listed in the Orange Book for the referenced drug, to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA, (2) such patent has expired, (3) if such patent has not expired, the date on which it expires or (4) such patent is invalid, unenforceable, or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. The fourth certification described above is known as a paragraph IV certification. A notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved NDA to which the ANDA or 505(b)(2) application refers. The applicant may also elect to submit a "section viii" statement certifying that its proposed label does not contain (or carves out) any language regarding the patented method-of- use rather than certify to a listed method-of-use patent. This section viii statement does not require notice to the patent holder or NDA owner. There might also be no relevant patent certification.

        If the reference NDA holder and patent owners assert a patent challenge directed to one of the Orange Book listed patents within 45 days of the receipt of the paragraph IV certification notice, the FDA is prohibited from approving the application until the earlier of 30 months from the receipt of the paragraph IV certification, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the applicant. Even if the 45 days expire, a patent infringement

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lawsuit can be brought and could delay market entry, but it would not extend the FDA-related 30-month stay of approval.

        The ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the branded reference drug has expired as described in further detail below.

Non-Patent Exclusivity

        In addition to patent exclusivity, the holder of the NDA for the listed drug may be entitled to a period of non-patent exclusivity, during which the FDA cannot approve an ANDA or 505(b)(2) application that relies on the listed drug.

        A drug, including one approved under a 505(b)(2) application, may obtain a three-year period of non-patent market exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant. Should this occur, the FDA would be precluded from approving any ANDA or 505(b)(2) application for the protected modification until after that three-year exclusivity period has run. However, the FDA can accept an application and begin the review process during the three-year exclusivity period. A 505(b)(2) NDA may also be subject to a five-year exclusivity period for a new chemical entity, whereby the FDA will not accept for filing, with limited exception, a product seeking to rely upon the FDA's findings of safety or effectiveness for such new chemical entity.

Orphan Drugs

        Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition affecting fewer than 200,000 individuals in the United States, or in other limited cases. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, though companies developing orphan drugs may be eligible for certain incentives, including tax credits for qualified clinical testing. In addition, an NDA for a product that has received orphan drug designation is not subject to a prescription drug user fee unless the application includes an indication other than the rare disease or condition for which the drug was designated. A Company must request orphan drug designation before submitting an NDA.

        Generally, if a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same active moiety for the same indication for seven years, except in limited circumstances, such as another drug's showing of clinical superiority over the drug with orphan exclusivity. Competitors, however, may receive approval of different active moieties for the same indication or obtain approval for the same active moiety for a different indication. In some cases, orphan drug status is contingent on a product with an orphan drug designation showing that it is clinically superior to a previously approved product or products.

        In May 2016, we received orphan drug designation from the FDA for trigriluzole for the treatment of SCA. In December 2016, the FDA granted orphan drug designation for BHV-0223 for the treatment of ALS, with eligibility for orphan drug exclusivity contingent on a showing that BHV-0223 is clinically superior to Rilutek, a previously approved form of riluzole, as well as any other versions of riluzole that may be approved for the same indication before BHV-0223 is approved. We intend to seek orphan drug designation and exclusivity for our other product candidates whenever it is available. However, we cannot guarantee that we will obtain orphan drug designation for any other products in any jurisdiction. Even if we are able to obtain orphan drug designation for a product, such as trigriluzole in the treatment of SCA and BHV-0223 in the treatment of ALS, we cannot be sure that such product will be approved, that we will be able to obtain orphan drug exclusivity upon approval, if ever, or that we will be able to maintain any

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exclusivity that is granted. In addition, doctors may prescribe products for off-label uses and undermine our exclusivity. Orphan drug exclusivity could also block the approval of one of our products for seven years if a competitor obtains approval for the same active moiety for the same indication before we do, unless we are able to demonstrate that our product is clinically superior.

Foreign Regulation

        In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the United States apply similarly in the context of the European Union and other geographies, the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

Coverage, Reimbursement and Pricing

        Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval. In the United States and foreign markets, sales of any products for which we receive regulatory approval for commercial sale will depend, in part, on the availability of coverage and the adequacy of reimbursement from third-party payors. Third-party payors include government authorities, and private entities, such as managed care organizations, private health insurers and other organizations. The process for determining whether a third-party payor will provide coverage for a product may be separate from the process for setting the reimbursement rate that the payor will pay for the product. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA-approved products for a particular indication. Moreover, a third-party payor's decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. For example, the payor's reimbursement payment rate may not be adequate or may require co-payments that patients find unacceptably high. Additionally, coverage and reimbursement for products can differ significantly from payor to payor. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs and biologics. However, one third-party payor's decision to cover a particular product does not ensure that other payors will also provide coverage for the product, or will provide coverage at an adequate reimbursement rate. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. Further, some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they provide reimbursement for use of such therapies.

        Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of products and services, in addition to their safety and efficacy. To obtain coverage and reimbursement for any product that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of our product. These studies will be in addition to the studies required to obtain regulatory approvals. If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not

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be sufficient to allow a company to sell its products at a profit. Thus, obtaining and maintaining reimbursement status is time-consuming and costly.

        The U.S. and foreign governments regularly consider reform measures that affect health care coverage and costs. For example, the U.S. and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription products. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, contains provisions that may reduce the profitability of products, including, for example, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies' share of sales to federal health care programs. The Centers for Medicare and Medicaid Services, or CMS, may develop new payment and delivery models, such as bundled payment models. For example, the U.S. Department of Health and Human Services, or HHS, set a goal of moving 30% of Medicare payments to alternative payment models tied to the quality or value of services by 2016 and 50% of Medicare payments into these alternative payment models by the end of 2018. Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for our products.

        The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, the focus on cost containment measures, particularly in the United States, has increased and we expect will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if we attain favorable coverage and reimbursement status for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

European Union Coverage Reimbursement and Pricing

        In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular drug candidate to currently available therapies, or so called health technology assessments, in order to obtain reimbursement or pricing approval. For example, the European Union provides options for its member states to restrict the range of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. European Union member states may approve a specific price for a drug product or may instead adopt a system of direct or indirect controls on the profitability of the company.

Healthcare Laws and Regulations

        Physicians, other healthcare providers, and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors are and will be subject to various federal, state and foreign fraud and abuse laws and other healthcare laws and regulations. These laws and regulations may impact, among other things, our arrangements with third-party payors, healthcare professionals who participate in our clinical research programs, healthcare professionals and others who purchase, recommend or prescribe our approved products, and our proposed sales, marketing, distribution, and education programs. The U.S.

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federal and state healthcare laws and regulations that may affect our ability to operate include, without limitation, the following:

    The federal Anti-Kickback Statute, which prohibits persons from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federally funded healthcare programs, such as Medicare and Medicaid. The term "remuneration" has been broadly interpreted to include anything of value;

    The federal civil and criminal false claims laws, including, without limitation, the federal civil monetary penalties law and the civil False Claims Act (which can be enforced by private citizens through qui tam actions), prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment of federal funds, and knowingly making, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government;

    The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal liability for executing or attempting to execute a scheme to defraud any healthcare benefit program and creates federal criminal laws that prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

    HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its implementing regulations, which imposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without the appropriate authorization by entities subject to the law, such as healthcare providers, health plans, and healthcare clearinghouses and their respective business associates;

    The federal transparency requirements under the Physician Payments Sunshine Act, created under the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or CHIP to report to HHS information related to payments and other transfers of value provided to physicians and teaching hospitals and physician ownership and investment interests; and

    Analogous state laws and regulations, such as state anti-kickback and false claims laws, that impose similar restrictions and may apply to items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or to track and report gifts, compensation and other remuneration provided to physicians and other health care providers; and state health information privacy and data breach notification laws, which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

        We will be required to spend substantial time and money to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations. Recent healthcare reform legislation has strengthened these federal and state healthcare laws. For example, the ACA amends the intent requirement of the federal Anti-Kickback Statute and criminal healthcare fraud statutes to clarify that liability under these statutes does not require a person or entity to have actual knowledge of the statutes or a specific intent to violate them. Moreover, the ACA provides that the government may assert

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that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

        Violations of these laws can subject us to criminal, civil and administrative sanctions including monetary penalties, damages, fines, disgorgement, individual imprisonment, and exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and reputational harm, we may be required to curtail or restructure our operations. Moreover, we expect that there will continue to be federal and state laws and regulations, proposed and implemented, that could impact our future operations and business.

Healthcare Reform

        The legislative landscape in the United States continues to evolve. There have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs. In March 2010, the ACA was enacted, which includes measures that have significantly changed health care financing by both governmental and private insurers. The provisions of the ACA of importance to the pharmaceutical and biotechnology industry are, among others, the following:

    an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drug agents or biologic agents, which is apportioned among these entities according to their market share in certain government healthcare programs;

    an increase in the rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for branded and generic drugs, respectively;

    a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts to negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D;

    extension of manufacturers' Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations, unless the drug is subject to discounts under the 340B drug discount program;

    a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

    expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers' Medicaid rebate liability;

    expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

    new requirements under the federal Physician Payments Sunshine Act for drug manufacturers to report information related to payments and other transfers of value made to physicians and teaching hospitals as well as ownership or investment interests held by physicians and their immediate family members;

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    a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

    creation of the Independent Payment Advisory Board, which, if and when impaneled, will have authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs; and

    establishment of a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.

        Some of the provisions of the ACA have yet to be implemented, and there have been judicial and Congressional challenges to certain aspects of the ACA. In addition, the current administration and Congress will likely continue to seek legislative and regulatory changes, including repeal and replacement of certain provisions of the ACA. In January 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In March 2017, following the passage of the budget resolution for fiscal year 2017, the U.S. House of Representatives introduced legislation known as the American Health Care Act, which, if enacted, would have amended or repealed significant portions of the ACA. However, consensus over the scope and content of the American Health Care Act could not be reached by its proponents in the U.S. House of Representatives. Thus, the proposed legislation has been withdrawn and the prospects for legislative action on this bill are uncertain. Congress could consider other legislation to repeal or replace certain elements of the ACA.

        In addition, other federal health reform measures have been proposed and adopted in the United States since the ACA was enacted. For example, as a result of the Budget Control Act of 2011, providers are subject to Medicare payment reductions of 2% per fiscal year through 2025 unless additional Congressional action is taken. Further, the American Taxpayer Relief Act of 2012 reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments from providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015 also introduced a quality payment program under which certain individual Medicare providers will be subject to certain incentives or penalties based on new program quality standards. Payment adjustments for the Medicare quality payment program will begin in 2019. At this time, it is unclear how the introduction of the quality payment program will impact overall physician reimbursement under the Medicare program. Further, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which have resulted in several recent Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

        Individual states in the United States have also become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

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The Foreign Corrupt Practices Act

        The Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts.

Employees

        As of December 31, 2016, we employed 12 employees, and as of February 28, 2017, we employed 18 employees. All of our employees are located in New Haven, Connecticut. None of our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

Facilities

        Our principal offices occupy approximately 2,000 square feet of leased office space in New Haven, Connecticut, pursuant to a lease agreement that expires in October 2018. We believe that our current facilities are suitable and adequate to meet our current needs. We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.

Legal Proceedings

        We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results or financial condition.

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MANAGEMENT

Directors and Executive Officers

        The following table sets forth information concerning our directors and executive officers, including their ages as of February 28, 2017:

Name
  Age   Position

Executive Officers:

       

Vlad Coric, M.D. 

  46   Chief Executive Officer and Director

Robert Berman, M.D. 

  54   Chief Medical Officer

James Engelhart

  53   Chief Financial Officer

John Tilton

  49   Chief Commercial Officer

Charles Conway, Ph.D. 

  55   Chief Scientific Officer

Kimberly Gentile

  51   Vice President of Operations

Non-Management Directors:

 

 

 

 

Declan Doogan, M.D. 

  64   Chairman of the Board of Directors

Gregory H. Bailey, M.D. 

  61   Director

John W. Childs

  75   Director

Albert Cha, M.D., Ph.D. 

  44   Director

Eric Aguiar, M.D. 

  55   Director

Executive Officers

Vlad Coric, M.D.

        Dr. Coric has served as our chief executive officer and director since October 2015. From January 2007 to September 2015, he served as a group director of global clinical research at Bristol-Myers Squibb Company, focusing both in oncology global clinical research and neuroscience global clinical research. He has been involved in multiple drug development programs including marketed drugs such as Abilify (aripiprazole; partial dopamine agonist), Opdivo (nivolumab; anti-PD1), Yervoy (Ipilimumab; anti-CTLA-4), Daklinza (daclatasvir; NS5A inhibitor) and Sunvepra (asunaprevir; NS3 inhibitor). Since July 2001, Dr. Coric has also continued to serve as an associate clinical professor of psychiatry at Yale School of Medicine. He previously served as the chief of the Yale Clinical Neuroscience Research Unit and the director of the Yale Obsessive-Compulsive Disorder Research Clinic. He has served as president of the Connecticut Psychiatric Society. Dr. Coric received his M.D. from Wake Forest University School of Medicine. He completed his internship at Yale-New Haven Hospital and residency training at the Yale Psychiatry Residency Training Program, where he also served as the program-wide chief resident for the Yale Department of Psychiatry, and chief resident on the PTSD firm at the West-Haven Connecticut Veterans Administration Hospital. Dr. Coric was an honors scholar in neurobiology and physiology at the University of Connecticut where he received a B.S. degree. We believe that Dr. Coric's operational experience with our company gained from serving as our chief executive officer, as well as his extensive experience in the biopharmaceutical industry, qualifies him to serve as a member of our board of directors.

Robert Berman, M.D.

        Dr. Berman has served as our chief medical officer since November 2015. From December 2013 to November 2015, he served as president of Biohaven Medical Services LLC and, prior to that, served as a group director of global clinical research at Bristol-Myers Squibb Company from September 2003 to November 2013. Prior to his time at BMS, Dr. Berman was an associate director of clinical sciences, early development at Pfizer from November 2000 to September 2003. Since October 2012, Dr. Berman has also continued to serve as an adjunct professor of psychiatry at Yale University of Medicine. Dr. Berman

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received his B.A. in molecular biophysics and biochemistry from Yale University and his M.D. from Mount Sinai School of Medicine of New York University.

James Engelhart

        Mr. Engelhart has served as our chief financial officer since May 2016. Prior to this, from August 2014 to May 2016, he served as executive director of finance, Americas for Alexion Pharmaceuticals, Inc., and from March 2006 to July 2014, he served as a finance director for Energizer Holdings, Inc. From May 1998 to March 2006, Mr. Engelhart served in increasingly senior finance roles for Bristol-Myers Squibb Company and held finance roles in R&D Operations and International Operations at Schering-Plough from 1992 to 1998. Mr. Engelhart started his career as an auditor with Coopers & Lybrand LLP from 1986 through 1991. Mr. Engelhart received his B.S. in accounting from Villanova University and is a CPA (inactive).

John Tilton

        Mr. Tilton has served as our chief commercial officer since April 2016. Prior to this, from November 2006 to March 2016, he served in increasingly senior marketing and business roles with Alexion Pharmaceuticals, Inc., including serving as its executive director, global sales and marketing operations from January 2011 to March 2016. Prior to Alexion Pharmaceuticals, Mr. Tilton served as a director, division operations at Pfizer from August 2005 to November 2006, as a regional sales manager for Agouron Pharmaceuticals from November 1999 to August 2005 and as division manager at Sanofi from 1993 to 1999. Mr. Tilton received his BSBA in finance from the University of South Carolina-Columbia.

Charles Conway, Ph.D.

        Dr. Conway has served as our chief scientific officer since January 2017. From January 2000 to January 2017, he held positions of increasing responsibility in drug discovery at Bristol-Myers Squibb Company, or BMS, most recently serving as associate director—biology analytics. Dr. Conway led BMS's biology program efforts working on the CGRP antagonist program for over 10 years and was part of the full development team advancing rimegepant into the clinic. Dr. Conway has extensive experience in the field of pain research and is an inventor on three granted U.S. patents for the treatment of pain. Prior to his time at BMS, Dr. Conway was a postgraduate research anesthesiologist at the University of California San Diego. Dr. Conway received his B.S. in experimental psychology from the University of Central Missouri and his Ph.D. in neuroscience from the University of California Santa Barbara.

Kimberly Gentile

        Ms. Gentile has served as our vice president, clinical operations since February 2014. Before coming to Biohaven, Ms. Gentile served as associate director, project manager, global clinical operations at Bristol-Myers Squibb Company from 2000 to February 2014. Prior to this, she was a senior clinical trial manager at SCIREX Corporation from 1996 to June 2000. Ms. Gentile received her B.S. in Psychology from Salem State University.

Non-Management Directors

Declan Doogan, M.D.

        Dr. Doogan has served as a director of our company since its inception in September 2013. Dr. Doogan has served as the chief executive officer and director of Portage Biotech, Inc. (PTGEF: OTCBB) since June 2013, a director of Portage Pharmaceuticals Limited since July 2013, and a director of Sosei Group Corporation since June 2007. Dr. Doogan has over 30 years of industry experience in both major pharma and biotech. He was the Senior Vice-President and Head of Worldwide Development at Pfizer. He has held a number of executive positions in Pfizer in the US, the UK and Japan. Since leaving

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Pfizer in 2007, he has been engaged in executive roles in small pharma. Dr. Doogan was chief medical officer and acting CEO of Amarin (AMRN: NASDAQ). He has also been Chief Medical Officer for Prometheus Laboratories, a molecular diagnostics company in San Diego. Dr. Doogan holds a number of board appointments, principally in pharma companies, and has also held professorship at Harvard School of Public Health, Glasgow University Medical School and Kitasato University (Tokyo). Dr. Doogan received his medical degree from Glasgow University in 1975. He is a Fellow of the Royal College of Physicians and the Faculty of Pharmaceutical Medicine and holds a Doctorate of Science at the University of Kent in the UK. We believe that Dr. Doogan's extensive operational experience in the pharmaceutical and biotech industries qualifies him to serve as a member of our board of directors.

Gregory H. Bailey, M.D.

        Dr. Bailey has served as a director of our company since January 2014. Dr. Bailey is a co-founder and has served as managing partner of MediqVentures since January 2014, the chairman and director of Portage Biotech, Inc. (PTGEF: OTCBB) since June 2013 and a director of Portage Pharmaceuticals Limited since June 2013. He has been a managing partner of Palantir Group, Inc., a merchant bank involved in a number of biotech company startups and financings since April 2002. Mr. Bailey was a founder of SalvaRx Group Plc (LSE: SALV) and has served on its board of directors since May 2015. Dr. Bailey was also the co-founder of Ascent Healthcare Solutions, VirnetX Inc. (VHC:AMEX), Portage Biotech Inc. and DuraMedic Inc. He was the initial financier and an independent director of Medivation, Inc. (MDVN:NASDAQ), from 2005 to December 2012. Dr. Bailey served as the Managing Director and co-Head of Life Sciences at MDB Capital Group LLC from May 2004 to December 2006. Dr. Bailey practiced emergency medicine for ten years before entering finance. He received his medical degree from the University of Western Ontario. We believe that Dr. Bailey's extensive venture capital industry experience and technical background, along with his experience with public companies and biopharmaceutical companies, qualifies him to serve as a member of our board of directors.

John W. Childs

        Mr. Childs has served as a director of our company since January 2014. Mr. Childs has been chairman and partner of J.W. Childs Associates, L.P., a private equity firm, since 1995. From 1991 to 1995, Mr. Childs was senior managing director of Thomas H. Lee Partners and from 1987 to 1990 was a managing director of Thomas H. Lee Partners. Prior to 1987, Mr. Childs was associated with the Prudential Insurance Company of America ("Prudential") for 17 years where he held various executive positions in the investment area, ultimately serving as senior managing director in charge of the Capital Markets Group at which time he was responsible for Prudential's approximately $77 billion fixed income portfolio, including all of the Capital Markets Group's investments in leveraged acquisitions. He is currently a director and chairman of the board of Sunny Delight Beverages Co., and serves as a director of Esselte Ltd., WS Packaging Group, Inc., and SIMCOM, Inc. Mr. Childs holds a B.A. from Yale University and an M.B.A. from Columbia University. We believe that Mr. Childs' extensive operational and capital markets experience qualifies him to serve as a member of our board of directors.

Albert Cha, M.D., Ph.D.

        Dr. Cha has served as a director of our company since February 2017. In 2000, Dr. Cha joined Vivo Capital, a healthcare investment firm, where he has served in various positions, and he currently serves as a managing partner. He currently serves on the boards of directors of Ascendis Pharma A/S (NASDAQ: ASND), Kalvista Pharmaceuticals (NASDAQ: KALV), and several private companies. Dr. Cha holds B.S. and M.S. degrees in Electrical Engineering from Stanford University and an M.D. degree and Ph.D. degree in Neuroscience from the University of California at Los Angeles. We believe that Dr. Cha's scientific background and experience as an investor in life science companies qualifies him to serve as a member of our board of directors.

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Eric Aguiar, M.D.

        Dr. Aguiar has served as a director of our company since February 2017. Dr. Aguiar has been a partner at Aisling Capital since January 2016 and prior to that was a partner at Thomas, McNerney and Partners, a healthcare venture capital and growth equity fund, since 2007. Prior to joining that firm, he was a Managing Director of HealthCare Ventures, a healthcare focused venture capital firm, from 2001 to 2007. Dr. Aguiar currently serves on the board of directors of Invitae Corporation (NYSE: NVTA). Dr. Aguiar is a member of the Board of Overseers of the Tufts School of Medicine and a member of the Council on Foreign Relations. Dr. Aguiar received his medical degree with honors from Harvard Medical School. He graduated with honors from Cornell University as a College Scholar. He was also a Luce Fellow and is a Chartered Financial Analyst. We believe that Dr. Aguiar's medical and finance background and experience as an investor in life science companies qualifies him to serve as a member of our board of directors.

Board Composition

        Our board of directors currently consists of six directors. Dr. Doogan is the chairman of the board. There are no family relationships between any of our executive officers and directors.

        Each director is currently elected to the board for a one-year term, to serve until the election and qualification of successor directors at the annual meeting of shareholders, or until the director's earlier removal, resignation or death.

        Our directors were elected to and currently serve on the board pursuant to a voting agreement among us and several of our largest shareholders. This agreement will terminate upon the closing of this offering, after which there will be no further contractual obligations regarding the election of our directors.

        In accordance with our memorandum and articles of association to be in effect upon the closing of this offering, our board of directors will be divided into three classes, each of which will consist, as nearly as possible, of one-third of the total number of directors constituting our entire board and which will serve staggered three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors will be divided among the three classes as follows:

        If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible. Any additional directors of a class elected to fill a vacancy resulting from an increase in such class will hold office for a term that coincides with the remaining term of that class. Decreases in the number of directors will not shorten the term of any incumbent director.

        These board provisions could make it more difficult for third parties to gain control of our company by making it difficult to replace members of the board of directors.

Director Independence

        Our board of directors has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his ability to exercise

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independent judgment in carrying out his responsibilities. As a result of this review, our board of directors has determined that            , representing            of our             directors, are "independent directors" as defined under applicable stock exchange rules.

        In addition, certain phase-in periods with respect to director independence will be available to us under New York Stock Exchange rules. We do expect to take advantage of certain of these provisions. The phase-in periods allow us to have only one independent member on the audit committee upon the listing date of our common shares, a majority of independent members on the audit committee within 90 days of the effective date of the registration statement and a fully independent audit committee within one year of the effective date of the registration statement. Our audit committee will consist of a majority of independent directors upon the listing date of our common shares and we will have a fully independent audit committee within one year of the effective date of this registration statement.

Committees of the Board of Directors

        Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition and responsibilities described below. From time to time, the board may establish other committees to facilitate the management of our business.

Audit Committee

        Our audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent registered public accountants. Our audit committee consists of three directors,            .            is the chairman of the audit committee and our board of directors has determined that             is an "audit committee financial expert" as defined by SEC rules and regulations. Under Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are permitted to phase in our compliance with the independent audit committee requirements set forth in New York Stock Exchange listing rules and Rule 10A-3 under the Exchange Act as follows: (1) one independent member at the time of listing, (2) a majority of independent members within 90 days of listing and (3) all independent members within one year of listing. Our board of directors has determined that each of            are independent directors under New York Stock Exchange listing rules and under Rule 10A-3 under the Exchange Act. We intend to continue to evaluate the requirements applicable to us and we intend to comply with the future requirements to the extent that they become applicable to our audit committee. The principal duties and responsibilities of our audit committee include:

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Compensation Committee

        Our compensation committee reviews and determines the compensation of all our executive officers. Upon completion of this offering, our compensation committee will consist of            directors,            , each of whom is a non-employee member of our board of directors as defined in Rule 16b-3 under the Exchange Act.            will be the chairman of the compensation committee. Our board of directors has determined that the composition of our compensation committee satisfies the applicable independence requirements under, and the functioning of our compensation committee complies with the applicable requirements of, the New York Stock Exchange rules and SEC rules and regulations. We intend to continue to evaluate and intend to comply with all future requirements applicable to our compensation committee. The principal duties and responsibilities of our compensation committee will include:

Nominating and Corporate Governance Committee

        Upon the completion of this offering, our nominating and corporate governance committee will consists of            directors,             .            will be the chairman of the nominating and corporate governance committee. Our board of directors has determined that the composition of our nominating and corporate governance committee satisfies the applicable independence requirements under, and the functioning of our nominating and corporate governance committee complies with the applicable requirements of, the New York Stock Exchange standards and SEC rules and regulations. We will continue to evaluate and will comply with all future requirements applicable to our nominating and corporate governance committee. The nominating and corporate governance committee's responsibilities will include:

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Code of Business Conduct and Ethics for Employees, Executive Officers and Directors

        Effective upon the effectiveness of the registration statement of which this prospectus forms a part, we will adopt a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors. Following the closing of this offering, the Code of Conduct will be available on our website at www.biohavenpharma.com . The nominating and corporate governance committee of our board of directors will be responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

Compensation Committee Interlocks and Insider Participation

        None of our directors who currently serve as members of our compensation committee is, or has at any time during the past year been, one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving on our board of directors or compensation committee.

Non-Employee Director Compensation

        We have not historically paid cash retainers or other compensation with respect to service on our board of directors, except for reimbursement of direct expenses incurred in connection with attending meetings of our board of directors or committees of our board of directors. Although prior to this offering we have never had a formal non-employee director compensation policy, we have typically granted stock options to our non-employee directors on an annual basis, as reflected in the tables below under "—2016 Director Compensation Table" and "—Non-Employee Director Equity Outstanding at 2016 Year End."

        We expect that our board of directors will adopt a director compensation policy for non-employee directors following the closing of this offering.

2016 Director Compensation Table

        The following table sets forth information regarding compensation earned for service on our board of directors during the year ended December 31, 2016 by our directors who were not also our employees. Our non-employee directors did not receive any cash compensation for their service on our board of directors during the year ended December 31, 2016. Dr. Coric, our Chief Executive Officer, is also a director, but does not receive any additional compensation for his service as a director. Dr. Coric's compensation as an executive officer is set forth below under "Executive Compensation—2016 Summary Compensation Table."

Name
  Option Awards
($) (1)
  All Other
Compensation
($) (2)
  Total
($)
 

Declan Doogan, M.D. 

    189,428         189,428  

Gregory H. Bailey, M.D. 

    142,829     467,036     609,865  

John W. Childs

    142,829     467,036     609,865  

Kamlesh Shah (3)

    56,828         56,828  

(1)
Each director received one option grant during the year ended December 31, 2016 under our 2014 Equity Incentive Plan. A quarter of the shares underlying each option vested upon issuance, and the remaining shares will vest in three equal installments on December 10, 2017, 2018 and 2019, subject to their continued service with us. The amounts in this column reflect the full grant-date fair value for awards granted. The grant-date fair value was computed in accordance with ASC Topic 718,

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    Compensation—Stock Compensation . The assumptions we used in valuing options are described in Note 12 to our consolidated financial statements included in this prospectus.

(2)
Represents the fair value of warrants issued to the director in exchange for a guaranty of our obligations under our credit agreement with Wells Fargo. The assumptions we used in valuing warrants are described in Notes 3 and 9 to our consolidated financial statements included in this prospectus.

(3)
Mr. Shah resigned as a director in February 2017.

Non-Employee Director Equity Outstanding at 2016 Year End

        The following table provides information about outstanding stock options and warrants held by each of our non-employee directors as of December 31, 2016. All of the options were granted under our 2014 Equity Incentive Plan.

Non-Employee Director
  Option Awards   Guarantor
Warrants
 

Declan Doogan, M.D. 

    475,000 (1)    

Gregory H. Bailey, M.D. 

    400,200 (2)   107,500 (5)

John W. Childs

    400,200 (2)   107,500 (5)

Kamlesh Shah (4)

    290,000 (3)    

(1)
These option awards consist of three grants: (a) an option to purchase 250,000 common shares, of which 187,500 of the underlying shares have vested and the remaining 62,500 shares will vest in full on November 26, 2017, (b) an option to purchase 175,000 common shares, of which 87,500 of the underlying shares have vested and the remaining 87,500 shares will vest in two equal installments on October 23, 2017 and 2018 and (c) an option to purchase 50,000 common shares, of which 12,500 of the underlying shares have vested and the remaining 37,500 shares will vest in three equal installments on December 10, 2017, 2018 and 2019.

(2)
These option awards consist of three grants: (a) an option to purchase 212,500 common shares, of which 159,375 of the underlying shares have vested and the remaining 53,125 shares will vest in full on November 26, 2017, (b) an option to purchase 150,000 common shares, of which 75,000 of the underlying shares have vested and the remaining 75,000 shares will vest in two equal installments on October 23, 2017 and 2018 and (c) an option to purchase 37,700 common shares, of which 9,425 of the underlying shares have vested and the remaining 28,275 shares will vest in three equal installments on December 10, 2017, 2018 and 2019.

(3)
These option awards consist of three grants: (a) an option to purchase 212,500 common shares, of which 159,375 of the underlying shares have vested and the remaining 53,125 shares will vest in full on November 26, 2017, (b) an option to purchase 62,500 common shares, of which 31,250 of the underlying shares have vested and the remaining 31,250 shares will vest in two equal installments on October 23, 2017 and 2018 and (c) an option to purchase 15,000 common shares, of which 3,750 of the underlying shares have vested and the remaining 11,250 shares will vest in three equal installments on December 10, 2017, 2018 and 2019.

(4)
Mr. Shah resigned as a director in February 2017.

(5)
We issued a warrant to each of Messrs. Childs and Bailey to purchase 107,500 of our common shares at an exercise price of $9.2911 per share in exchange for their guaranties relating to our credit agreement with Wells Fargo.

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EXECUTIVE COMPENSATION

        Our named executive officers for the year ended December 31, 2016 include our principal executive officer and the next two most highly compensated executive officers during the year ended December 31, 2016:

Summary Compensation Table

        The following table presents the compensation awarded to, earned by or paid to each of our named executive officers for the year ended December 31, 2016.

Name and Principal Position
  Year   Salary
($) (2)
  Bonus
($) (2)(3)
  Option
Awards
($) (4)
  All Other
Compensation
($) (2)(5)
  Total
($)
 

Vlad Coric, M.D. 

    2016     350,000     245,000     189,428         784,428  

Chief Executive Officer

                                     

Robert Berman, M.D. 

    2016     315,000     98,438     102,291     5,331     521,060  

Chief Medical Officer

                                     

James Engelhart

    2016     222,592 (1)   137,025     118,298     4,908     482,823  

Chief Financial Officer

                                     

(1)
This amount includes $27,400 paid to Mr. Engelhart for the consulting services he provided to us prior to becoming a full-time employee and executive officer of our company on May 2, 2016. The remaining amount of $195,192 is the pro-rated amount of Mr. Engelhart's base salary with respect to his services as our chief financial officer for the remainder of 2016.

(2)
These amounts were paid to the executive by Biohaven Pharmaceuticals, Inc., which, as of December 31, 2016, is our wholly owned subsidiary.

(3)
The amounts reflect the discretionary bonus paid for performance during 2016, as discussed further below under "—Narrative to Summary Compensation Table—Annual Bonus."

(4)
The amounts reflect the full grant-date fair value for stock option awards granted during the year ended December 31, 2016 under our 2014 Plan. The grant-date fair value was computed in accordance with ASC Topic 718, Compensation—Stock Compensation . The assumptions we used in valuing options are described in Note 12 to our consolidated financial statements included in this prospectus. See "—Narrative to Summary Compensation Table—Long-Term Incentives" below.

(5)
The amounts consist of company contributions to the executive officer's account under our 401(k) plan.

Narrative to Summary Compensation Table

        We review compensation annually for all employees, including our executives. In setting executive base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positions in the market, the historical compensation levels of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our shareholders, and a long-term commitment to our company. We do not target a specific competitive position or a specific mix of compensation among base salary, bonus or long-term incentives.

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        Our board of directors has historically determined our executives' compensation. Our board of directors typically reviews and discusses management's proposed compensation with our chief executive officer for all executives other than our chief executive officer. Based on those discussions and its discretion, our board of directors, without members of management present, discusses and ultimately approves the compensation of our executive officers. To date, our board of directors has not engaged a compensation consultant or adopted a peer group of companies for purposes of determining executive compensation.

Annual Base Salary

        We and our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., have each entered into employment agreements with each of our named executive officers that establish annual base salaries, which are generally determined, approved and reviewed periodically by our board of directors in order to compensate our named executive officers for the satisfactory performance of duties to our company. Annual base salaries are intended to provide a fixed component of compensation to our named executive officers, reflecting their skill sets, experience, roles and responsibilities. Base salaries for our named executive officers have generally been set by our board of directors at levels deemed necessary to attract and retain individuals with superior talent. The following table presents the base salaries for each of our named executive officers for 2016 and 2017. The 2016 base salaries became effective on January 1, 2016 and the 2017 base salaries became effective on January 1, 2017. Following the completion of this offering, our compensation committee will generally be responsible for approving base salaries for our executive officers.

Name
  2016 Annual
Base Salary ($)
  2017 Annual
Base Salary ($)
 

Vlad Coric, M.D. 

    350,000     364,000  

Robert Berman, M.D. 

    315,000     324,450  

James Engelhart (1)

    290,000     301,600  

(1)
Mr. Engelhart became an executive officer as of May 2, 2016. His 2016 base salary was pro-rated accordingly.

Annual Bonus

        We seek to motivate and reward our executive officers for achievements relative to our corporate goals and expectations for each fiscal year. Each named executive officer has a target bonus opportunity as specified in the officer's respective employment agreement, defined as a percentage of his annual salary. For 2016, the target bonus was as follows:

Name
  2016
Target Bonus
(% of Salary)
 

Vlad Coric, M.D. 

    35  

Robert Berman, M.D. 

    25  

James Engelhart

    35  

        For 2016, our board of directors considered a variety of factors and personal and corporate achievements in determining the discretionary bonus amounts to be paid to each named executive officer.

    With respect to Dr. Coric, the board considered factors such as his involvement in creating value for the company by leading our Series A preferred share financing, negotiating key in-license agreements for our product candidates, recruiting new talent, negotiating and supporting our investment in Kleo Pharmaceuticals, Inc., leading negotiations with other potential collaborators and providing strategy and oversight in the development of our product pipeline.

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    With respect to Dr. Berman, the board considered factors such as his involvement in performing key functions and making significant contributions related to our Series A preferred share financing.

    With respect to Mr. Engelhart, the board considered factors such as his establishment of a financial infrastructure for our company and his involvement and contributions related to our Series A preferred share financing and our preparations for this offering.

        Based on these factors, in its sole discretion, our board of directors determined to award the following bonuses to each of our named executive officers in December 2016:

Name
  2016
Bonus ($)
 

Vlad Coric, M.D. 

    245,000  

Robert Berman, M.D. 

    98,438  

James Engelhart

    137,025  

Long-Term Incentives

        Our equity-based incentive awards are designed to align our interests with those of our employees and consultants, including our executive officers. Our board of directors has historically been responsible for approving equity grants, although following the completion of this offering, our compensation committee will generally be responsible for approving equity grants. Vesting of equity awards is generally tied to continuous service with us and serves as an additional retention measure. Our executives generally are awarded an initial new hire grant upon commencement of employment. Additional grants may occur periodically in order to specifically incentivize executives with respect to achieving certain corporate goals or to reward executives for exceptional performance.

        Prior to this offering, we have granted all equity awards pursuant to the 2014 Plan, the terms of which are described below under "—Equity Benefit Plans." All options are granted with a per share exercise price equal to no less than the fair market value of a common share on the date of the grant of such award.

        In December 2016, our board of directors awarded the following options to purchase common shares to our named executive officers:

Name
  Number of
Common
Shares
Underlying
Option
 

Vlad Coric, M.D. 

    50,000  

Robert Berman, M.D. 

    27,000  

James Engelhart

    31,225  

        Each of these options has an exercise price of $9.2911 per share. Twenty-five percent of the shares underlying each option vested on the date of grant and the remaining shares vest in three equal installments on the first, second and third anniversary of the date of grant, subject to continued employment with us.

Other Compensation and Benefits

        Except for the benefits described above, we do not provide tax gross-ups, perquisites or personal benefits to our named executive officers. We do, however, pay the premiums for life, medical and dental insurance for all of our employees, including our named executive officers. We also sponsor a tax-qualified 401(k) retirement plan in which our eligible employees are entitled to participate. We match contributions by our employees, including our named executive officers, to our 401(k) plan.

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Employment Agreements

        We and our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., have each entered into employment agreements with each of our named executive officers. The key terms of the agreements with our named executive officers are described below. For a discussion of the severance pay and other benefits provided in connection with a termination of employment of our named executive officers, please see "—Payments Upon Termination or Change in Control" below.

Dr. Coric

        We and our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., each entered into an employment agreement with Dr. Coric, our chief executive officer, in October 2015. Each of the employment agreements provides for an initial three-year term of employment, with automatic one-year renewal periods, unless either party provides notice of non-renewal at least 90 days before the renewal date. In addition, Dr. Coric's employment is "at-will" and may be terminated at any time by us or Biohaven Pharmaceuticals, Inc., respectively, or Dr. Coric. Under the terms of the agreement with Biohaven Pharmaceuticals, Inc., Dr. Coric is entitled to receive an initial annual base salary of $350,000, an annual target bonus of 35% of his annual base salary and an allowance of up to 20% of his annual base salary for reimbursement for the cost of health, dental, welfare and retirement benefits. Under the terms of the agreement with us, Dr. Coric is entitled to stock options under our 2014 Equity Incentive Plan. The agreements include certain confidentiality, inventions assignment, non-competition and non-solicitation provisions.

Dr. Berman

        We and our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., each entered into an employment agreement with Dr. Berman, our chief medical officer, in November 2015. Each of the employment agreements provides for an initial three-year term of employment, with automatic one-year renewal periods, unless either party provides notice of non-renewal at least 90 days before the renewal date. In addition, Dr. Berman's employment is "at-will" and may be terminated at any time by us or Biohaven Pharmaceuticals, Inc., respectively, or Dr. Berman. Under the terms of the agreement with Biohaven Pharmaceuticals, Inc., Dr. Berman is entitled to receive an initial annual base salary of $315,000, an annual target bonus of 25% of his annual base salary and an allowance of up to 20% of his annual base salary for reimbursement for the cost of health, dental, welfare and retirement benefits. Under the terms of the agreement with us, Dr. Berman is entitled to stock options under our 2014 Equity Incentive Plan. The agreements include certain confidentiality, inventions assignment, non-competition and non-solicitation provisions.

Mr. Engelhart

        We and our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., each entered into an employment agreement with Mr. Engelhart, our chief financial officer, in May 2016. Each of the employment agreements provides for an initial three-year term of employment, with automatic one-year renewal periods, unless either party provides notice of non-renewal at least 90 days before the renewal date. In addition, Mr. Engelhart's employment is "at-will" and may be terminated at any time by us or Biohaven Pharmaceuticals, Inc., respectively, or Mr. Engelhart. Under the terms of the agreement with Biohaven Pharmaceuticals, Inc., Mr. Engelhart is entitled to receive an initial annual base salary of $290,000, an annual target bonus of 35% of his annual base salary and an allowance of up to 20% of his annual base salary for reimbursement for the cost of health, dental, welfare and retirement benefits. Under the terms of the agreement with us, Mr. Engelhart is entitled to stock options under our 2014 Equity Incentive Plan. The agreements include certain confidentiality, inventions assignment, non-competition and non-solicitation provisions.

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Payments upon Termination of Employment or Change in Control

        Each named executive officer is entitled to severance payments if his employment is terminated under specified circumstances.

Employment Agreements with Biohaven Pharmaceutical Holding Company Ltd.

        Under the employment agreements between us and each of Dr. Coric, Dr. Berman and Mr. Engelhart, if we terminate the executive's employment or fail to elect the executive to his respective officer position, or if the executive's employment is terminated due to death or disability, the executive is entitled to a lump sum severance payment in the amount of $350,000 for Dr. Coric, $157,500 for Dr. Berman and $290,000 for Mr. Engelhart, and all stock options held by the executive will be deemed to be fully vested and exercisable on the termination date, and the executive may exercise such stock options for a period of two years following the termination date (or if earlier, the end of the term of the option).

Employment Agreements with Biohaven Pharmaceuticals, Inc.

        Under the employment agreements between Biohaven Pharmaceuticals, Inc. and each of Dr. Coric, Dr. Berman and Mr. Engelhart, if the executive's employment with Biohaven Pharmaceuticals, Inc. is terminated without "just cause" or due to death or disability, the executive is entitled to receive severance payments, in equal monthly installments at the applicable base salary rate in effect on the first day of the calendar month immediately preceding the termination date, for 12 months following termination for each of Dr. Coric and Mr. Engelhart, and for six months following termination for Dr. Berman. In addition, upon such termination, each executive is entitled to continued health and life insurance coverage during the period during which the executive receives severance payments, reduced to the extent the executive receives comparable benefits elsewhere during the period, all stock options held by the executive will be deemed to be fully vested and exercisable on the termination date, and the executive may exercise such stock options for a period of two years following the termination date (or if earlier, the end of the term of the option). Upon termination due to disability, the amount of severance paid to the executive is reduced by any disability benefits the executive receives under Biohaven Pharmaceuticals, Inc.'s disability insurance policies.

        For purposes of these agreements, "just cause" means the executive's gross negligence, willful misconduct, conviction of a felony (including the entry of a plea of nolo contendere) for illegal or criminal behavior in carrying out his duties as required under the terms of his employment agreement. Termination without "just cause" also includes termination by the executive of his employment within 120 days after the occurrence of any of the following events that is not remedied within 10 business days after the executive provides written notice of the event: Biohaven Pharmaceuticals, Inc.'s (i) failure to maintain the executive's officer position or a substantially equivalent position; (ii) a significant adverse change in the nature or scope of the authority, powers, functions, base salary responsibilities or duties attached to the executive's position, or a reduction in the executive's then-applicable base salary and benefits under the employment agreement; (iii) the liquidation, dissolution, merger, consolidation or reorganization of Biohaven Pharmaceuticals, Inc. or transfer of all or a significant portion of its business and/or assets, unless the successor assumes all duties and obligations of Biohaven Pharmaceuticals, Inc. under the employment agreement; (iv) Biohaven Pharmaceutical, Inc. relocates its principal headquarters offices or requires the executive to have his principal location of work changed to any location that is more than 50 miles from his current location without his prior written consent; or (v) any material breach by Biohaven Pharmaceuticals, Inc. or its successors of the executive's employment agreement.

        We expect to enter into amended and restated employment agreements with each of our named executive officers prior to the closing of this offering. We will describe the material terms of those agreements once they become effective.

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Outstanding Equity Awards at End of 2016

        The following table provides information about outstanding stock options held by each of our named executive officers at December 31, 2016. All of these options were granted under our 2014 Equity Incentive Plan.

 
  Option Awards  
Name
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  Option
Exercise
Price ($)
  Option
Expiration
Date
 

Vlad Coric, M.D. 

    187,500     62,500 (1)   0.61     11/26/2024  

    50,000     50,000 (2)   5.60     10/23/2025  

    37,500     37,500 (2)   5.60     10/23/2025  

    12,500     37,500 (3)   9.29     12/10/2026  

Robert Berman, M.D. 

   
168,750
   
56,250

(1)
 
0.61
   
11/26/2024
 

    37,500     37,500 (2)   5.60     10/23/2025  

    37,500     37,500 (2)   5.60     10/23/2025  

    6,750     20,250 (3)   9.29     12/10/2026  

James Engelhart

   
46,875
   
15,625

(1)
 
0.61
   
11/26/2024
 

    12,500     12,500 (2)   5.60     10/23/2025  

    7,806     23,419 (3)   9.29     12/10/2026  

(1)
The unvested shares underlying this option vest in full on November 26, 2017, subject to the officer's continued service through such vesting date.

(2)
The unvested shares underlying this option vest in two equal installments on October 23, 2017 and 2018, subject to the officer's continued service through each applicable vesting date.

(3)
The unvested shares underlying this option vest in three equal installments on December 10, 2017, 2018 and 2019, subject to the officer's continued service through each applicable vesting date.

Stock Option Exercises and Stock Vested During 2016

        None of our named executive officers exercised stock options during 2016 or held stock awards that vested in 2016.

Pension Benefits

        Other than our 401(k) plan, our named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during 2016.

Nonqualified Deferred Compensation

        Our named executive officers did not participate in, or otherwise receive any benefits under, any nonqualified deferred compensation plan sponsored by us during 2016.

Equity Benefit Plans

2017 Equity Incentive Plan

        We expect that our board of directors will adopt, and our shareholders will approve, the 2017 Equity Incentive Plan, or 2017 Plan. The 2017 Plan will become effective as of the date of the underwriting agreement in connection with this offering pursuant to which the common shares is priced for this offering. Once the 2017 Plan is effective, no further grants will be made under the 2014 Plan.

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        Stock Awards.     The 2017 Plan provides for the grant of incentive stock options, or ISOs, nonstatutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation, which we refer to collectively as stock awards. Additionally, the 2017 Plan provides for the grant of performance cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of us and our affiliates.

        Share Reserve.     Initially, the aggregate number of common shares that may be issued pursuant to stock awards under the 2017 Plan after the 2017 Plan becomes effective is            shares which is the sum of (1)            new shares, plus (2) the number of shares reserved for issuance under the 2014 Plan, plus (3) any shares subject to outstanding stock awards that would have otherwise been returned to the 2014 Plan. Additionally, the number of common shares reserved for issuance under our 2017 Plan will automatically increase on January 1 of each year, beginning on January 1, 2018 (assuming the 2017 Plan becomes effective before such date) and continuing through and including January 1, 2027, by            % of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors. The maximum number of shares that may be issued upon the exercise of ISOs under our 2017 Plan is            shares.

        Section 162(m) Limits.     No person may be granted stock awards covering more than            common shares under our 2017 Plan during any calendar year pursuant to stock options, stock appreciation rights and other stock awards whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the fair market value on the date the stock award is granted. Additionally, no person may be granted in a calendar year a performance stock award covering more than            shares or a performance cash award having a maximum value in excess of $            . Such limitations are designed to help assure that any deductions to which we would otherwise be entitled with respect to such awards will not be subject to the $1,000,000 limitation on the income tax deductibility of compensation paid to any covered executive officer imposed by Section 162(m) of the Code.

        Reversion of Shares.     If a stock award granted under the 2017 Plan expires or otherwise terminates without being exercised in full, or is settled in cash, the common shares not acquired pursuant to the stock award again will become available for subsequent issuance under the 2017 Plan. In addition, the following types of shares under the 2017 Plan may become available for the grant of new stock awards under the 2017 Plan: (1) shares that are forfeited to or repurchased by us prior to becoming fully vested; (2) shares withheld to satisfy income or employment withholding taxes; or (3) shares used to pay the exercise or purchase price of a stock award. Shares issued under the 2017 Plan may be previously unissued shares or reacquired shares bought by us on the open market. As of the date hereof, no awards have been granted and no common shares have been issued under the 2017 Plan.

        Non-Employee Director Compensation Limit.     Under the 2017 Plan, the maximum number of common shares subject to stock awards granted under the 2017 Plan or otherwise during any one calendar year to any of our non-employee directors, taken together with any cash fees paid by the Company to such non-employee director during such calendar year for services on the Board of Directors, will not exceed $            in total value (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes), or, with respect to the calendar year in which a non-employee director is first appointed or elected to the Board, $            .

        Administration.     Our board of directors, or a duly authorized committee thereof, has the authority to administer the 2017 Plan. Our board of directors may also delegate to one or more of our officers the authority to (1) designate employees (other than other officers) to be recipients of certain stock awards, and (2) determine the number of common shares to be subject to such stock awards. Subject to the terms of the 2017 Plan, our board of directors or the authorized committee, referred to herein as the plan administrator, determines recipients, dates of grant, the numbers and types of stock awards to be granted and the terms and conditions of the stock awards, including the period of their exercisability and vesting

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schedule applicable to a stock award. Subject to the limitations set forth below, the plan administrator will also determine the exercise price, strike price or purchase price of awards granted and the types of consideration to be paid for the award.

        The plan administrator has the authority to modify outstanding awards under our 2017 Plan. Subject to the terms of our 2017 Plan, the plan administrator has the authority to reduce the exercise, purchase or strike price of any outstanding stock award, cancel any outstanding stock award in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any adversely affected participant.

        Stock Options.     ISOs and NSOs are granted pursuant to stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for a stock option, within the terms and conditions of the 2017 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common shares on the date of grant. Options granted under the 2017 Plan vest at the rate specified by the plan administrator.

        The plan administrator determines the term of stock options granted under the 2017 Plan, up to a maximum of 10 years. Unless the terms of an optionholder's stock option agreement provide otherwise, if an optionholder's service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionholder may generally exercise any vested options for a period of 3 months following the cessation of service. The option term may be extended in the event that exercise of the option following such a termination of service is prohibited by applicable securities laws or our insider trading policy. If an optionholder's service relationship with us or any of our affiliates ceases due to disability or death, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate immediately upon the termination of the individual for cause. In no event may an option be exercised beyond the expiration of its term.

        Acceptable consideration for the purchase of common shares issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of common shares previously owned by the optionholder, (4) a net exercise of the option if it is an NSO, and (5) other legal consideration approved by the plan administrator.

        Unless the plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order. An optionholder may designate a beneficiary, however, who may exercise the option following the optionholder's death.

        Tax Limitations on Incentive Stock Options.     The aggregate fair market value, determined at the time of grant, of our common shares with respect to ISOs that are exercisable for the first time by an optionholder during any calendar year under all of our stock plans and the stock plans of any of our affiliates may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant, and (2) the term of the ISO does not exceed five years from the date of grant.

        Restricted Stock Awards.     Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the plan administrator. Restricted stock awards may be granted in consideration for (1) cash, check, bank draft or money order, (2) services rendered to us or our affiliates, or (3) any other form of legal consideration. Common shares acquired under a restricted stock award may, but need not, be subject to a share repurchase option in our favor in accordance with a vesting schedule to be determined by the plan administrator. A restricted stock award may be transferred only upon such terms and conditions as set by the plan administrator. Except as otherwise provided in the applicable award agreement,

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restricted stock that has not vested will be forfeited or repurchased by us upon the participant's cessation of continuous service for any reason.

        Restricted Stock Unit Awards.     Restricted stock unit awards are granted pursuant to restricted stock unit award agreements adopted by the plan administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration. A restricted stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited upon the participant's cessation of continuous service for any reason.

        Stock Appreciation Rights.     Stock appreciation rights are granted pursuant to stock appreciation grant agreements adopted by the plan administrator. The plan administrator determines the strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common shares on the date of grant. Upon the exercise of a stock appreciation right, we will pay the participant an amount equal to the product of (1) the excess of the per share fair market value of our common shares on the date of exercise over the strike price, multiplied by (2) the number of common shares with respect to which the stock appreciation right is exercised. A stock appreciation right granted under the 2017 Plan vests at the rate specified in the stock appreciation right agreement as determined by the plan administrator.

        The plan administrator determines the term of stock appreciation rights granted under the 2017 Plan, up to a maximum of 10 years. Unless the terms of a participant's stock appreciation right agreement provides otherwise, if a participant's service relationship with us or any of our affiliates ceases for any reason other than cause, disability or death, the participant may generally exercise any vested stock appreciation right for a period of 3 months following the cessation of service. The stock appreciation right term may be further extended in the event that exercise of the stock appreciation right following such a termination of service is prohibited by applicable securities laws. If a participant's service relationship with us, or any of our affiliates, ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant or a beneficiary may generally exercise any vested stock appreciation right for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, stock appreciation rights generally terminate immediately upon the occurrence of the event giving rise to the termination of the individual for cause. In no event may a stock appreciation right be exercised beyond the expiration of its term.

        Performance Awards.     The 2017 Plan permits the grant of performance-based stock and cash awards that may qualify as performance-based compensation that is not subject to the $1,000,000 limitation on the income tax deductibility of compensation paid to a covered executive officer imposed by Section 162(m) of the Code. To help assure that the compensation attributable to performance-based awards will so qualify, our compensation committee can structure such awards so that stock or cash will be issued or paid pursuant to such award only after the achievement of certain pre-established performance goals during a designated performance period.

        The performance goals that may be selected include one or more of the following: (1) earnings (including earnings per share and net earnings); (2) earnings before interest and taxes; (3) earnings before interest, taxes and depreciation; (4) earnings before interest, taxes, depreciation and/or amortization; (5) earnings before interest, taxes, depreciation, amortization and legal settlements; (6) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (7) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense) and share-based compensation; (8) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), share-based compensation and changes in deferred revenue; (9) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), share-based

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compensation, other non-cash expenses and changes in deferred revenue; (10) total shareholder return; (11) return on equity or average stockholders' equity; (12) return on assets, investment, or capital employed; (13) return on operating revenue; (14) margin (including gross margin); (15) income (before or after taxes); (16) operating income (before or after taxes); (17) operating income after taxes; (18) operating income before interest and taxes; (19) operating income before interest, taxes, depreciation and amortization; (20) pre-tax profit; (21) operating cash flow; (22) sales or revenue targets; (23) increases in revenue or product revenue; (24) improvement in or attainment of working capital levels; (25) economic value added (or an equivalent metric); (26) cash flow; (27) cash flow per share; (28) cash balance; (29) cash burn; (30) cash collections; (31) debt reduction; (32) implementation or completion of projects or processes (including, without limitation, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, and product supply); (33) stockholder equity; (34) capital expenditures; (35) debt levels; (36) operating profit or net operating profit; (37) workforce diversity; (38) net income or growth of net income or operating income; (39) billings; (40) bookings; (41) employee retention; (42) initiation of studies by specific dates; (43) budget management; (44) submission to, or approval by, a regulatory body (including, but not limited to the U.S. Food and Drug Administration) of an applicable filing or a product; (45) regulatory milestones; (46) safety performance; (47) sustainability or environmental performance; (48) progress of internal research or development programs; (49) acquisition of new customers; (50) customer retention and/or repeat order rate; (51) improvements in sample and test processing times; (52) progress of partnered programs; (53) partner satisfaction; (54) timely completion of clinical trials; (55) submission of 510(k)s or pre-market approvals and other regulatory achievements; (56) milestones related to research development (including, but not limited to, preclinical and clinical studies), product development and manufacturing or new product innovation; (57) expansion of sales in additional geographies or markets; (58) research progress, including the development of programs; (59) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; (60) strategic corporate objectives relating to: increase in revenue with certain customers, customer groups, or customer types; (61) financings; (62) brand recognition or acceptance; (63) stock price; (64) share price performance; (65) market share; (66) expenses and cost reduction goals and (67) to the extent that an award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by our board of directors. The performance goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise (1) in the award agreement at the time the award is granted or (2) in such other document setting forth the performance goals at the time the goals are established, we will appropriately make adjustments in the method of calculating the attainment of performance goals as follows: (a) to exclude restructuring and/or other nonrecurring charges; (b) to exclude exchange rate effects; (c) to exclude the effects of changes to generally accepted accounting principles; (d) to exclude the effects of any statutory adjustments to corporate tax rates; (e) to exclude the effects of any items that are unusual in nature or occur infrequently as determined under generally accepted accounting principles; (f) to exclude the dilutive effects of acquisitions or joint ventures; (g) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (h) to exclude the effect of any change in the outstanding common shares by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common shareholders other than regular cash dividends; (i) to exclude the effects of stock based compensation and the award of bonuses under our bonus plans; (j) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (k) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; (l) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item; and (m) to exclude the effects of the timing of acceptance for review and/or approval of submissions to the FDA or any other regulatory body.

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In addition, we retain the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of the goals. The performance goals may differ from participant to participant and from award to award.

        Other Stock Awards.     The plan administrator may grant other awards based in whole or in part by reference to our common shares. The plan administrator will set the number of shares under the stock award and all other terms and conditions of such awards.

        Changes to Capital Structure.     In the event that there is a specified type of change in our capital structure, such as a stock split or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the 2017 Plan, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued upon the exercise of ISOs, (4) the class and maximum number of shares subject to stock awards that can be granted in a calendar year (as established under the 2017 Plan pursuant to Section 162(m) of the Code), (5) the class and maximum number of shares that may be awarded to any non-employee director and (6) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.

        Corporate Transactions.     In the event of certain specified significant corporate transactions, the plan administrator has the discretion to take any of the following actions with respect to stock awards:

    arrange for the assumption, continuation or substitution of a stock award by a surviving or acquiring entity or parent company;

    arrange for the assignment of any reacquisition or repurchase rights held by us to the surviving or acquiring entity or parent company;

    accelerate the vesting of the stock award and provide for its termination prior to the effective time of the corporate transaction;

    arrange for the lapse of any reacquisition or repurchase right held by us;

    cancel or arrange for the cancellation of the stock award in exchange for such cash consideration, if any, as our board of directors may deem appropriate; or

    make a payment equal to the excess of (a) the value of the property the participant would have received upon exercise of the stock award over (b) the exercise price otherwise payable in connection with the stock award, provided that the payment may be $0 if the value of the property is equal to or less than the exercise price, and payments may be delayed to the same extent that payment of consideration to the holders of common shares in connection with the corporate transaction is delayed as a result of escrows, earn outs, holdbacks or other contingencies.

        Our plan administrator is not obligated to treat all stock awards, even those that are of the same type, in the same manner.

        Under the 2017 Plan, a corporate transaction is generally the consummation of (1) a sale or other disposition of all or substantially all of our assets, (2) a sale or other disposition of at least 50% of our outstanding securities, (3) a merger, consolidation or similar transaction following which we are not the surviving corporation, or (4) a merger, consolidation or similar transaction following which we are the surviving corporation but the common shares outstanding immediately prior to such transaction are converted or exchanged into other property by virtue of the transaction.

        Change in Control.     The plan administrator may provide, in an individual award agreement or in any other written agreement between a participant and us that the stock award will be subject to additional acceleration of vesting and exercisability in the event of a change in control. Under the 2017 Plan, a change in control is generally (1) the acquisition by a person or entity of more than 50% of our combined voting power other than by merger, consolidation or similar transaction; (2) a consummated merger,

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consolidation or similar transaction immediately after which our shareholders cease to own more than 50% of the combined voting power of the surviving entity; (3) a consummated sale, lease or exclusive license or other disposition of all or substantially of our assets; (4) a complete dissolution or liquidation of the Company, except for a liquidation into a parent corporation, or (5) when a majority of our board of directors becomes comprised of individuals who were not serving on our board of directors on the date of adoption of the 2017 Plan, or the incumbent board, or whose nomination, appointment, or election was not approved by a majority of the incumbent board still in office.

        Amendment and Termination.     Our board of directors has the authority to amend, suspend, or terminate our 2017 Plan, provided that such action does not materially impair the existing rights of any participant without such participant's written consent. No ISOs may be granted after the 10th anniversary of the date our board of directors adopted our 2017 Plan.

2014 Equity Incentive Plan

        Our board of directors adopted and our shareholders approved the 2014 Equity Incentive Plan, or our 2014 Plan, on November 24, 2014. The 2014 Plan was subsequently amended by our board of directors, most recently as of October 28, 2016. As of February 28, 2017, options to purchase 4,335,344 common shares were outstanding under the 2014 Plan, with a weighted average exercise price per share of $        . As of February 28, 2017, 563,886 shares remained available for future issuance pursuant to the grant of options or other stock awards under the 2014 Plan. After the effective date of the 2017 Plan, no additional stock awards will be granted under the 2014 Plan, and all outstanding stock awards granted under the 2014 Plan that are repurchased, forfeited, expired or are cancelled will become available for grant under the 2017 Plan in accordance with its terms.

        Stock Awards.     The 2014 Plan provides for the grant of incentive stock options, or ISOs, nonqualified stock options, or NSOs, restricted stock awards and other share-based awards. ISOs may be granted only to employees. NSOs, restricted stock awards and other share-based awards may be granted to directors, officers and employees of the company. We have only granted stock options under the 2014 Plan.

        Share Reserve.     The aggregate number of common shares reserved for issuance pursuant to stock awards under the 2014 Plan is 4,889,230 shares. The maximum number of shares that may be issued upon the exercise of ISOs under our 2014 Plan is 4,889,230 shares. These amounts are subject to adjustment for stock splits, stock dividends and other changes in our capital structure. We may use authorized and unissued shares or reacquired shares in connection with grants under the 2014 Plan. Shares underlying the unexercised or undistributed portion of any terminated or expired award are available for further awards under the 2014 Plan.

        Administration.     The compensation committee of our board of directors (or if no compensation committee, the board) has the authority to administer the 2014 Plan. Subject to the terms of the 2014 Plan, the plan administrator determines recipients of awards, dates of grant, the purchase price of shares subject to awards, whether each option is a NSO or ISO, the numbers and types of awards to be granted and the terms and conditions of awards, including the period of their exercisability, the forms of award agreements and vesting schedule applicable to an award. The plan administrator has the authority to interpret and prescribe and rescind rules and regulations and make all other determinations regarding the administration of the 2014 Plan. The plan administrator has the authority to modify, amend or terminate outstanding stock awards under our 2014 Plan, including substituting another award of the same or a different type and changing the date of exercise or vesting, provided that the participant's consent will be required unless the plan administrator determines that the action would not materially adversely affect the participant.

        Stock Options.     ISOs and NSOs are granted pursuant to stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for a stock option, within the terms and conditions of the 2014 Plan, provided that the exercise price of a stock option cannot be less than

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100% of the fair market value of our common shares on the date of grant. Options granted under the 2014 Plan vest at the rate specified by the plan administrator.

        The plan administrator determines the term of stock options granted under the 2014 Plan, up to a maximum of 10 years. Unless the terms of an optionholder's stock option agreement provide otherwise, an option will terminate 30 days following cessation of the optionholder's service with us or an affiliate for any reason other than cause, death or disability, immediately upon cessation of service for cause, or one year following cessation of service due to death or disability. Acceptable consideration for the purchase of common shares issued upon the exercise of a stock option will be determined by the plan administrator, in its discretion, and may include (1) cash or a check, (2) a promissory note, to the extent permitted by applicable law, (3) consideration received under a cashless exercise program, (4) the tender of common shares previously owned by the optionholder, (5) net exercise or (6) any combination of these methods. Unless the plan administrator provides otherwise, options generally are not transferable except by will or the laws of descent and distribution.

        Tax Limitations On Incentive Stock Options.     The aggregate fair market value, determined at the time of grant, of our common shares with respect to ISOs that are exercisable for the first time by an optionholder during any calendar year under all of our stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant, and (2) the option is not exercisable after the expiration of five years from the date of grant.

        Changes to Capital Structure.     In the event that there is a specified type of change in our capital structure, such as a recapitalization, reorganization or stock split, appropriate adjustments will be made to the number and class of shares that may be delivered under the 2014 Plan, and/or the number, class and price of shares covered by each outstanding stock award.

        Change in Control.     In the event of certain change-in-control transactions affecting us (as described below), subject to the provisions of the applicable award agreement, the plan administrator may, in its discretion, provide that all outstanding unvested options will vest and become exercisable and any restrictions applicable to any restricted stock awards will terminate and lapse immediately prior to the consummation of the change in control. In addition, the plan administrator has the discretion to take any of the following actions with respect to stock awards:

    upon written notice, provide that any outstanding options must be exercised, to the extent then exercisable, within a specified number of days after the date of notice, at the end of which the options will terminate;

    if there is a surviving or acquiring entity, subject to the consummation of the transaction, cause that entity or its affiliate to grant replacement awards having such terms and conditions as the plan administrator determines to be appropriate in its sole discretion, and terminate and cancel the original awards upon replacement;

    terminate any outstanding options, or repurchase any restricted stock awards, in exchange for such amounts as the plan administrator determines appropriate in its sole discretion; or

    any combination of the foregoing actions.

        For purposes of the treatment above, a "change in control" generally means a single transaction or series of related transactions, other than an initial public offering of our shares, pursuant to which a person or persons unaffiliated with us, other than our existing shareholders:

    acquires shares of stock possessing the voting power to elect a majority of the members of our board of directors;

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    consummate a merger, amalgamation or consolidation with us as a result of which the holders of our common shares or other voting securities prior to the transaction(s) own, directly or indirectly, less than 50% of the voting securities of the surviving entity; or

    acquire all or substantially all of our assets.

        Our plan administrator is not obligated to treat all stock awards, all stock awards held by a participant, or all stock awards of the same type, in the same manner.

        Amendment and Termination.     The 2014 Plan will terminate on the tenth anniversary of the date it was adopted by our board of directors. However, our board of directors has the authority to amend, suspend, or terminate our 2014 Plan in whole or in part at any time, provided that any amendment that is necessary to comply with any applicable tax or regulatory requirement will be subject to approval by our shareholders, and such action does not materially adversely affect the existing rights of any participant without such participant's written consent.

Limitation of Liability and Indemnification of Officers and Directors

        We expect to adopt the amended memorandum and articles of association, which will become effective prior to the effectiveness of the registration statement of which this prospectus forms a part, and which will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by British Virgin Islands law.

        Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal.

        The amended memorandum and articles of association are expected to provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise. The amended memorandum and articles of association are also expected to provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit, or proceeding by reason of the fact that he is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust, or other enterprise. Our amended memorandum and articles of association will also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to very limited exceptions.

        Further, prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained under British Virgin Islands law. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

        The limitation of liability and indemnification provisions that are expected to be included in our amended memorandum and articles of association and in indemnification agreements that we enter into with our directors and executive officers may discourage shareholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other shareholders. Further, a shareholder's investment may be harmed to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding

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involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

        We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

        Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our board of directors. The underwriting agreement provides for indemnification by the underwriters of us and our officers, directors and employees for certain liabilities arising under the Securities Act, or otherwise.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Rule 10b5-1 Sales Plans

        Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell common shares on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from them. The director or officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time. Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with the terms of our insider trading policy. Prior to 180 days after the date of this offering, subject to early termination, the sale of any shares under such plan would be prohibited by the lock-up agreement that the director or officer has entered into with the underwriters.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        The following is a description of transactions since January 1, 2014 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under "Executive Compensation."

Relationship with Yale University

        In 2013, we entered into a license agreement with, and issued common shares to, Yale University, pursuant to which Yale became a holder of more than 5% of our outstanding voting securities. During the years ended December 31, 2014, 2015 and 2016, we made payments to Yale of $24,000, $84,000 and $4,000, respectively, under the Yale license agreement. Yale ceased to be a holder of 5% of our outstanding shares as of December 31, 2014.

        Dr. Coric, our Chief Executive Officer, is an associate clinical professor of psychiatry at Yale. While previously employed by Yale, Dr. Coric was a co-inventor of some of the patents that we license from Yale. Under Yale's policies, as a co-inventor Dr. Coric is entitled to receive a share of any royalties that we pay to Yale under the agreement with respect to the covered intellectual property. No royalty payments have been made to date.

Loan Guaranty Warrants

        In connection with our credit agreement with Wells Fargo entered into in August 2016, Wells Fargo required that we obtain a personal guaranty of our loan obligations from one of our directors, Mr. Childs. Another one of our directors, Mr. Bailey, provided a further guaranty related to the credit agreement. In exchange for their guaranties, in January 2017, we issued a warrant to each director to purchase 107,500 common shares at an exercise price of $9.2911 per share. At the time of our entering into the credit agreement, Mr. Childs was also the beneficial owner of more than 5% of our outstanding common shares.

Transactions with Portage Biotech, Inc.

        In January 2014, we sold and issued 5,752,000 common shares to Portage Biotech, Inc., or Portage, at a purchase price of $0.61 per share for gross proceeds of $3.5 million. As a result of this transaction, Portage became a beneficial owner of more than 5% of our outstanding shares. In July 2015, we sold and issued 446,500 common shares to Portage at a purchase price of $5.60 per share for gross proceeds of $2.5 million. In February 2016, we sold and issued 143,000 common shares to Portage at a purchase price of $7.00 per share for gross proceeds of $1.0 million. Declan Doogan, the chairman of our board of directors, is the chief executive officer of Portage. Kamlesh Shah, one of our former directors who resigned in February 2017, is the chief financial officer of Portage.

Purchases of Common Shares By Directors

        In July 2015, Mr. Childs, one of our directors and a beneficial owner of more than 5% of our common shares, purchased 268,000 common shares at a purchase price of $5.60 per share for gross proceeds to us of $1.5 million. In February 2016, Mr. Childs purchased 286,000 common shares at a purchase price of $7.00 per share for gross proceeds to us of $2.0 million. In May 2016, Mr. Childs purchased 714,500 common shares at a purchase price of $7.70 per share for gross proceeds to us of $5.5 million.

        In May 2016, Mr. Bailey, one of our directors, purchased 39,000 common shares at a purchase price of $7.70 per share for gross proceeds to us of $0.3 million.

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Transactions with Biohaven Pharmaceuticals, Inc.

        In January 2014, we entered into a Master Services Agreement, or MSA, with Biohaven Pharmaceuticals, Inc., or BPI, pursuant to which we engaged BPI as our clinical research organization, or CRO, to perform services on our behalf, including conducting clinical trials, performing scientific research and assisting with the preparation of regulatory filings. The MSA was amended and restated in June 2014. From January 2014 until December 31, 2016, the sole beneficial stockholders of BPI were Dr. Coric, our Chief Executive Officer; Dr. Berman, our Chief Medical Officer; and Dr. Doogan, the chairman of our board of directors.

        During the years ended December 31, 2014, 2015 and 2016, we made payments to BPI under the MSA in the amount of $1.2 million, $2.8 million and $13.3 million, respectively. The vast majority of these amounts funded the operations of BPI, including the costs of third-party service providers.

        On December 31, 2016, we entered into stock purchase agreements with each of the stockholders of BPI under which we acquired all of the outstanding capital stock of BPI for an aggregate purchase price of $0.6 million. We paid the purchase price by the issuance of a promissory note to each stockholder of BPI in the principal amount of $0.2 million. The notes, which bear interest at a fixed rate of 4.5% per year, are payable in five annual installments, the first four of which are interest only, with the final payment due on December 31, 2021 to include the principal balance outstanding and all accrued but unpaid interest, and are mandatorily payable upon the consummation of this offering.

        In addition, the stock purchase agreements require us to indemnify and hold harmless (on an after-tax basis) each of the selling stockholders of BPI from and against, among other things, all federal, state and local income, self-employment, withholding and other similar taxes, plus any related liabilities, interest, penalties, losses, damages, costs, expenses (including fees for legal or accounting services) (whether or not such claim for taxes by a taxing authority is ultimately successful), other than U.S. federal capital gains taxes and state and local income taxes on the purchase price received by the selling stockholder and any U.S. federal, state and local income taxes on the stated interest on the promissory notes delivered to the selling stockholders of BPI in payment of the purchase price.

Sales of Series A Preferred Shares

        In October 2016 and February 2017, we sold an aggregate of 8,610,391 of our Series A preferred shares at a price of $9.2911 per share for an aggregate purchase price of $80.0 million, 2,113,313 shares of which were sold to directors, executive officers and entities affiliated with our directors. The table below summarizes these sales.

Purchaser
  Series A
Preferred
Shares
Purchased
  Aggregate
Purchase Price
 

John W. Childs 2013 Revocable Trust

    1,035,938   $ 9,625,004  

Gregory H. Bailey, M.D. 

    1,076,299     10,000,002  

James Engelhart

    1,076     9,997  

Total

    2,113,313   $ 19,635,003  

Investor Rights Agreement and Shareholders' Agreement

        In connection with our Series A preferred share financing described above, we entered into an investor rights agreement and an amended and restated shareholders' agreement with the holders of preferred shares, including each of the persons and entities listed in the table above, as well as certain of our officers, directors and holders of 5% of our shares.

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        The investors' rights agreement, among other things:

        For more information regarding the registration rights provided in this agreement, please refer to the section titled "Description of Share Capital—Registration Rights." The provisions of this agreement other than those relating to registration rights will terminate upon the closing of this offering.

        The shareholders' agreement, among other things:

        The shareholders' agreement will terminate upon the closing of this offering.

Indemnification Agreements

        Our amended and restated memorandum and articles of association will contain provisions limiting the liability of directors and providing that we will indemnify each of our directors to the fullest extent permitted under the BVI Companies Act. Our amended and restated memorandum and articles of association will also provide our board of directors with discretion to indemnify our officers and employees when determined appropriate by the board.

        In addition, we intend to enter into indemnification agreements with each of our directors and executive officers prior to the completion of this offering. For more information regarding these agreements, see "Executive Compensation—Limitations on Liability and Indemnification Matters."

Related Person Transaction Policy

        Prior to this offering, we have not had a formal policy regarding approval of transactions with related parties. Prior to the completion of this offering, we intend to adopt a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. The policy will become effective immediately upon the execution of the underwriting agreement for this offering. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.

        Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit

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committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant shareholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our Code of Business Conduct and Ethics, which we intend to adopt prior to the completion of this offering, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:

        The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.

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PRINCIPAL SHAREHOLDERS

        The following table sets forth the beneficial ownership of our common shares as of February 28, 2017 for:

        The percentage ownership information shown in the column titled "Before Offering" in the table is based upon 22,447,060 common shares outstanding as of February 28, 2017, after giving effect to the conversion of all of our Series A preferred shares into 9,358,560 common shares, which will occur automatically upon the closing of this offering. The percentage ownership information shown in the column titled "After Offering" in the table is based on            common shares outstanding after this offering, assuming            common shares being sold in the offering and after giving effect to the issuance of an aggregate of 1,883,523 common shares to BMS and AstraZeneca in connection with the offering.

        We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include common shares issuable pursuant to the exercise of stock options or warrants that are exercisable on or before April 29, 2017, which is 60 days after February 28, 2017. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

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        Except as otherwise noted below, the address for persons listed in the table is c/o Biohaven Pharmaceutical Holding Company Ltd., 234 Church Street, New Haven, CT 06510.

 
   
  Percentage of
Shares Beneficially
Owned
 
 
  Number of
Shares
Beneficially
Owned
 
Name of Beneficial Owner
  Before
Offering
  After
Offering
 

Principal Shareholders:

                   

Portage Biotech, Inc. (1)

    6,341,500     28.3 %      

Vivo Capital Fund VIII, L.P. (2)

    1,506,818     6.7        

RA Capital Healthcare Fund, L.P. (3)

    1,143,137     5.1        

Executive Officers and Directors:

   
 
   
 
   
 
 

Vlad Coric, M.D. (4)

    1,587,500     7.0        

Robert Berman, M.D. (5)

    1,550,500     6.8        

James Engelhart (6)

    97,955     *        

John Tilton (7)

    34,948     *        

Charles Conway, Ph.D. (7)

    13,500     *        

Kimberly Gentile (7)

    65,250     *        

Declan Doogan, M.D. (8)

    1,587,500     7.0        

Gregory H. Bailey, M.D. (9)

    1,466,599     6.4        

John W. Childs (10)

    2,655,738     11.6        

Albert Cha, M.D., Ph.D. (2)(7)

    1,514,318     6.7        

Eric Aguiar, M.D. (7)

    7,500     *        

All current directors and executive officers as a group (11 persons) (11)

    10,581,308     43.7        

*
Represents beneficial ownership of less than 1%.

(1)
Consists of 6,341,500 common shares. Portage Biotech, Inc. is a publicly-traded company listed on the Canadian Securities Exchange (PBT.U). The principal business address of Portage Biotech, Inc. is c/o Portage Services Ltd., 47 Avenue Road., Suite 200, Toronto, ON M5R 2G3 Canada.

(2)
Consists of (a) 1,323,990 common shares issuable upon conversion of Series A preferred shares held by Vivo Capital Fund VIII, L.P. and (b) 182,828 common shares issuable upon conversion of Series A preferred shares held by Vivo Capital Surplus Fund VIII, L.P. Vivo Capital VIII LLC is the general partner of both Vivo Capital Fund VIII L.P. and Vivo Capital Surplus Fund VIII L.P. The voting members of Vivo Capital VIII, LLC are Frank Kung, Albert Cha, Edgar Engleman, Chen Yu and Shan Fu, none of whom has individual voting or investment power with respect to these shares and each of whom disclaims beneficial ownership of such shares. The principal business address of Vivo Capital is 505 Hamilton Avenue, Suite 207, Palo Alto, CA 94301.

(3)
Consists of 1,143,137 common shares issuable upon conversion of Series A preferred shares. RA Capital Healthcare Fund, L.P., whose general partner is RA Capital Management, LLC and Peter Kolchinsky is Managing Member of RA Capital Management, LLC. Shared voting or investment power is held by RA Capital Management, LLC, as the General Partner of RA Capital Healthcare Fund, L.P., and Mr. Kolchinsky as Managing Member of RA Capital Management, LLC. The address for RA Capital Healthcare Fund, L.P. is 20 Park Plaza, Ste. 1200, Boston, MA 02116.

(4)
Consists of (a) 287,500 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017, (b) 650,000 common shares held by The Vladimir Coric Family Trust 2013 and (c) 650,000 common shares held by The Vladimir Coric Marital Trust 2013.

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(5)
Consists of (a) 250,500 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017, (b) 650,000 common shares held by The Berman Family Trust 2013 and (c) 650,000 common shares held by The Berman Marital Trust 2013.

(6)
Consists of (a) 1,076 common shares issuable upon conversion of Series A preferred shares and (b) 96,879 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017.

(7)
Consists of common shares underlying options that are vested and exercisable within 60 days of February 28, 2017.

(8)
Consists of (a) 1,300,000 common shares and (b) 287,500 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017.

(9)
Consists of (a) 39,000 common shares, (b) 1,076,299 common shares issuable upon conversion of Series A preferred shares, (c) 243,800 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017 and (d) 107,500 common shares underlying immediately exercisable warrants. 538,150 of the Series A preferred shares are pledged as collateral by Dr. Bailey to John Childs, another director, to secure Dr. Bailey's obligation to reimburse Mr. Childs for one-half of any guaranty obligations that Mr. Childs pays to Wells Fargo pursuant to Mr. Childs' guaranty of our credit agreement with Wells Fargo. This pledge will terminate upon our repayment of outstanding borrowings under the credit agreement, which we expect will occur upon completion of this offering.

(10)
Consists of (a) 1,268,500 common shares, (b) 1,035,938 common shares issuable upon conversion of Series A preferred shares held by the John W. Childs 2013 Revocable Trust, (c) 243,800 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017 and (d) 107,500 common shares underlying immediately exercisable warrants.

(11)
Consists of (a) 5,207,500 common shares, (b) 3,620,131 common shares issuable upon conversion of Series A preferred shares, (c) 1,538,677 common shares underlying options that are vested and exercisable within 60 days of February 28, 2017 and (d) 215,000 common shares underlying immediately exercisable warrants.

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DESCRIPTION OF SHARE CAPITAL

         The following descriptions are summaries of the material terms of our amended memorandum and articles of association to be in effect following the closing of this offering. Reference is made to the more detailed provisions of, and the descriptions are qualified in their entirety by reference to, the memorandum and articles of association. Please note that this summary is not intended to be exhaustive. For further information, please refer to the full version of our memorandum and articles of association which is included as an exhibit to the registration statement of which this prospectus is part.

General

        We are a company incorporated in the British Virgin Islands on September 25, 2013, and our affairs are governed by the provisions of our memorandum of association and articles of association, as amended and restated from time to time, and by the provisions of applicable British Virgin Islands law.

Authorized Share Capital

        Upon the completion of this offering, our amended and restated memorandum and articles of association will authorize us to issue up to                         common shares, no par value, and                        preferred shares, no par value, all of which preferred shares will be undesignated. Our board of directors may establish the rights and preferences of the preferred shares from time to time. As of                        , 2016, after giving effect to the conversion of all outstanding preferred shares into common shares, there would have been                                     common shares issued and outstanding, held of record by                        shareholders.

Common Shares

        Holders of common shares are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the election of directors.

        Holders of common shares are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally available therefor, subject to the preferential rights in respect of any preferred shares. See "Dividend Policy." Holders of common shares do not have any preemptive or other rights to subscribe for additional shares pursuant to our memorandum and articles of association.

        All holders of common shares are entitled to share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the company, subject to the preferential rights in respect of any preferred shares.

        The memorandum and articles of association permit the board of directors to authorize the redemption, purchase or other acquisition of the common shares. All outstanding common shares are fully paid and nonassessable.

        Holders of common shares have no conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common shares. The rights, preferences and privileges of the holders of common shares are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred shares that we may designate in the future.

Preferred Shares

        Following the completion of this offering, our board of directors will have the authority, without further action by our shareholders, to issue up to                        preferred shares in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or

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restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

        Our board of directors may authorize the issuance of preferred shares with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common shares. The purpose of authorizing our board of directors to issue preferred shares and determine its rights and preferences is to eliminate delays associated with a shareholder vote on specific issuances. The issuance of preferred shares, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of us and may adversely affect the market price of our common shares and the voting and other rights of the holders of our common shares. It is not possible to state the actual effect of the issuance of any preferred shares on the rights of holders of common shares until the board of directors determines the specific rights attached to the preferred shares.

Options

        Our 2014 Equity Incentive Plan, as amended, or the 2014 Plan, provides for us to sell or issue common shares or restricted common shares, or to grant incentive stock options or nonqualified stock options for the purchase of common shares, to employees, members of the board of directors and consultants. As of December 31, 2016, options to purchase 3,864,425 common shares were outstanding. For additional information regarding the terms of the 2014 Plan, see "Executive Compensation—Equity Incentive Plans."

Warrants

        On August 10, 2015, as partial consideration in connection with a license agreement, we issued a warrant to ALS Biopharma LLC, or ALS Biopharma, to purchase 275,000 common shares at an exercise price of $5.60 per share. The warrant was immediately exercisable upon issuance and is exercisable for a period of 10 years from the issuance date.

        On August 10, 2015, as partial consideration in connection with a license agreement, we issued a warrant to ALS Biopharma to purchase 325,000 common shares at an exercise price of $5.60 per share. The warrant became exercisable in May 2016 upon the achievement of a specified regulatory milestone and is exercisable for a period of 10 years from the issuance date.

        In connection with our credit agreement with Wells Fargo, we issued warrants to two of our directors, John Childs and Gregory Bailey, to purchase 107,500 common shares each, at an exercise price of $9.2911 per share. The warrants were immediately exercisable upon issuance and may be exercised from the issuance date through the earlier of (i) the fifth anniversary of the issuance date or (ii) the second anniversary of our initial public offering.

Registration Rights

        We and the holders of our existing convertible preferred shares and certain holders of our common shares have entered into an amended and restated investors' rights agreement. The registration rights provisions of this agreement provide those holders with demand, piggyback and Form S-3 registration rights with respect to the common shares currently held by them, acquired by them in the future and issuable to them upon conversion of our convertible preferred shares.

Demand Registration Rights

        At any time beginning October 28, 2021, the holders of at least 50% of the registrable securities then outstanding have the right to demand that we file a registration statement on Form S-1 with respect to at least 40% of the registrable securities then outstanding, or a less percent if the anticipated offering price, net of selling expenses, would exceed $10.0 million. These registration rights are subject to specified

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conditions and limitations, including the right of the underwriters, if any, to limit the number of shares included in any such registration under specified circumstances. Upon such a request, we are required to effect the registration as soon as practicable, but in any event no later than 60 days after the receipt of such request. Because the investor rights agreement terminates on the third anniversary of this offering, no common shares will be entitled to these demand registration rights.

Piggyback Registration Rights

        If we propose to register any of our securities under the Securities Act either for our own account or for the account of other stockholders, the holders of registrable securities will each be entitled to notice of the registration and will be entitled to include their common shares in the registration statement. These piggyback registration rights are subject to specified conditions and limitations, including the right of the underwriters to limit the number of shares included in any such registration under specified circumstances. An aggregate of            common shares will be entitled to these piggyback registration rights.

Registration on Form S-3

        At any time after we become eligible to file a registration statement on Form S-3, the holders of at least 10% of the registrable securities then outstanding will each be entitled, upon any such holders' written request, to have such shares registered by us on a Form S-3 registration statement at our expense. These Form S-3 registration rights are subject to other specified conditions and limitations, including the condition that the anticipated aggregate offering price, net of selling expenses, exceeds $5.0 million. Upon receipt of this request, the holders of all registrable securities then outstanding will each be entitled to participate in this registration, and we will be required to effect the registration within 45 days after the receipt of such request from the initiating holders. An aggregate of            common shares will be entitled to these S-3 registration rights.

Expenses of Registration

        We will pay all expenses relating to any demand, piggyback or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.

Termination of Registration Rights

        The registration rights granted under the investors' rights agreement will terminate upon the earlier of the third anniversary of the closing of this offering, the closing of a deemed liquidation event as defined in our memorandum and article of association or at such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all such holders of registrable securities' shares without limitation during a three-month period without registration.

Limitations on the Right to Own Shares

        There are no limitations on the right to own our common shares.

Disclosure of Shareholder Ownership

        There are no provisions in the memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

Differences in Corporate Law

        The BVI Business Companies Act, or the BVI Act, and the laws of the British Virgin Islands, or the BVI, affecting BVI business companies like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between

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the provisions of the laws of the BVI applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

Mergers and Similar Arrangements

        Under the laws of the BVI, two or more companies may merge or consolidate in accordance with Section 170 of the BVI Act. A merger means the merging of two or more constituent companies into one of the constituent companies and a consolidation means the uniting of two or more constituent companies into a new company. In order to merge or consolidate, the directors of each constituent company must approve a written plan of merger or consolidation, which must be authorized by a resolution of shareholders.

        While a director may vote on the plan of merger or consolidation even if he has a financial interest in the plan, the interested director must disclose the interest to all other directors of the company promptly upon becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the company.

        A transaction entered into by our company in respect of which a director is interested (including a merger or consolidation) is voidable by us unless the director's interest was (a) disclosed to the board prior to the transaction or (b) the transaction is (i) between the director and the company and (ii) the transaction is in the ordinary course of the company's business and on usual terms and conditions.

        Notwithstanding the above, a transaction entered into by the company is not voidable if the material facts of the interest are known to the shareholders and they approve or ratify it or the company received fair value for the transaction.

        Shareholders not otherwise entitled to vote on the merger or consolidation may still acquire the right to vote if the plan of merger or consolidation contains any provision which, if proposed as an amendment to the M&A, would entitle them to vote as a class or series on the proposed amendment. In any event, all shareholders must be given a copy of the plan of merger or consolidation irrespective of whether they are entitled to vote at the meeting to approve the plan of merger or consolidation.

        The shareholders of the constituent companies are not required to receive shares of the surviving or consolidated company but may receive debt obligations or other securities of the surviving or consolidated company, other assets, or a combination thereof. Further, some or all of the shares of a class or series may be converted into a kind of asset while the other shares of the same class or series may receive a different kind of asset. As such, not all the shares of a class or series must receive the same kind of consideration.

        After the plan of merger or consolidation has been approved by the directors and authorized by a resolution of the shareholders, articles of merger or consolidation are executed by each company and filed with the Registrar of Corporate Affairs in the BVI.

        A shareholder may dissent from a mandatory redemption of his shares, an arrangement (if permitted by the court), a merger (unless the shareholder was a shareholder of the surviving company prior to the merger and continues to hold the same or similar shares after the merger) or a consolidation. A shareholder properly exercising his dissent rights is entitled to a cash payment equal to the fair value of his shares.

        A shareholder dissenting from a merger or consolidation must object in writing to the merger or consolidation before the vote by the shareholders on the merger or consolidation, unless notice of the meeting was not given to the shareholder. If the merger or consolidation is approved by the shareholders, the company must give notice of this fact to each shareholder within 20 days who gave written objection. These shareholders then have 20 days to give to the company their written election in the form specified by the BVI Act to dissent from the merger or consolidation, provided that in the case of a merger, the 20 days starts when the plan of merger is delivered to the shareholder.

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        Upon giving notice of his election to dissent, a shareholder ceases to have any shareholder rights except the right to be paid the fair value of his shares. As such, the merger or consolidation may proceed in the ordinary course notwithstanding his dissent.

        Within seven days of the later of the delivery of the notice of election to dissent and the effective date of the merger or consolidation, the company must make a written offer to each dissenting shareholder to purchase his shares at a specified price per share that the company determines to be the fair value of the shares. The company and the shareholder then have 30 days to agree upon the price. If the company and a shareholder fail to agree on the price within the 30 days, then the company and the shareholder shall, within 20 days immediately following the expiration of the 30-day period, each designate an appraiser and these two appraisers shall designate a third appraiser. These three appraisers shall fix the fair value of the shares as of the close of business on the day prior to the shareholders' approval of the transaction without taking into account any change in value as a result of the transaction.

Shareholders' Suits

        There are both statutory and common law remedies available to our shareholders as a matter of BVI law. These are summarized below:

Prejudiced Members

        A shareholder who considers that the affairs of the company have been, are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, likely to be oppressive, unfairly discriminatory or unfairly prejudicial to him in that capacity, can apply to the court under Section 184I of the BVI Act, among other things, for an order that his shares be acquired, that he be provided compensation, that the Court regulate the future conduct of the company, or that any decision of the company which contravenes the BVI Act or our memorandum and articles of association be set aside.

Derivative Actions

        Section 184C of the BVI Act provides that a shareholder of a company may, with the leave of the Court, bring an action in the name of the company to redress any wrong done to it.

Just and Equitable Winding Up

        In addition to the statutory remedies outlined above, shareholders can also petition for the winding up of a company on the grounds that it is just and equitable for the court to so order. Save in exceptional circumstances, this remedy is only available where the company has been operated as a quasi partnership and trust and confidence between the partners has broken down.

Indemnification of Directors and Executive Officers and Limitation of Liability

        Under our M&A, we indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings for any person who:

        These indemnities only apply if the person acted honestly and in good faith with a view to our best interests and, in the case of criminal proceedings, the person had no reasonable cause to believe that his

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conduct was unlawful. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Anti-takeover Provisions in Our Memorandum and Articles of Association

        Some provisions of our M&A may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable. Yet, under BVI law, our directors may only exercise the rights and powers granted to them under our M&A, as they believe in good faith to be in the best interests of our company.

Directors' Fiduciary Duties

        Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.

        Under BVI law, our directors owe the company certain statutory and fiduciary duties including, among others, a duty to act honestly, in good faith, for a proper purpose and with a view to what the directors believe to be in the best interests of the company. Our directors are also required, when exercising powers or performing duties as a director, to exercise the care, diligence and skill that a reasonable director would exercise in comparable circumstances, taking into account without limitation, the nature of the company, the nature of the decision and the position of the director and the nature of the responsibilities undertaken. In the exercise of their powers, our directors must ensure neither they nor the company acts in a manner which contravenes the BVI Act or our M&A. A shareholder has the right to seek damages for breaches of duties owed to us by our directors.

Shareholder Action by Written Consent

        Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. BVI law provides that shareholders may approve corporate matters by way of a written resolution without a meeting signed by or on behalf of shareholders sufficient to constitute the requisite majority of shareholders who would have been entitled to vote on such matter at a general meeting; provided that if the consent is less than unanimous, notice must be given to all non-consenting shareholders.

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Shareholder Proposals

        Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. Our memorandum and articles of association allow our shareholders holding not less than 10% of the votes of the outstanding voting shares to requisition a shareholders' meeting. We are not obliged by law to call shareholders' annual general meetings, but our memorandum and articles of association do permit the directors to call such a meeting and we intend to hold annual meetings of shareholders following the completion of this offering. The location of any shareholders' meeting can be determined by the board of directors and can be held anywhere in the world.

Cumulative Voting

        Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. As permitted under BVI law, our memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors

        Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our memorandum and articles of association, directors can be removed from office, with cause, by a resolution of shareholders passed at a meeting called for the purpose of removing the director or for purposes including the removal of the director.

Transactions with Interested Shareholders

        The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15% or more of the target's outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target's board of directors. BVI law has no comparable statute.

Dissolution; Winding Up

        Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the

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corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under the BVI Act and our memorandum and articles of association, we may appoint a voluntary liquidator by a resolution of the shareholders or by resolution of directors.

Variation of Rights of Shares

        Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.

Amendment of Governing Documents

        Under the Delaware General Corporation Law, a corporation's governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by BVI, our memorandum and articles of association may be amended by a resolution of shareholders and by a resolution of directors. Any amendment is effective from the date it is registered at the Registry of Corporate Affairs in the BVI.

Transfer Agent and Registrar

        The transfer agent and registrar for our common shares is            . The transfer agent's address is            .

Stock Exchange Listing

        We have applied to list our common shares on the New York Stock Exchange under the trading symbol "BHVN."

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, no public market existed for our common shares. Future sales of our common shares in the public market after this offering, or the perception that these sales could occur, could adversely affect prevailing market prices for our common shares and could impair our future ability to raise equity capital.

        Based on the number of shares outstanding as of February 28, 2017, upon completion of this offering and assuming no exercise of the underwriters' option to purchase additional shares,            common shares will be outstanding, assuming no outstanding options or warrants are exercised, except for the exercise of warrants to purchase an aggregate of             common shares that would otherwise expire upon the closing of this offering. For a description of the impact of changes in the offering price, see "Prospectus Summary—The Offering." All of the common shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, except for any shares sold to our "affiliates," as that term is defined under Rule 144 under the Securities Act. The remaining common shares held by existing shareholders are "restricted securities," as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if their resale qualifies for exemption from registration described below under Rule 144 promulgated under the Securities Act.

        As a result of contractual restrictions described below and the provisions of Rules 144 and 701, the shares sold in this offering and the restricted securities will be available for sale in the public market as follows:

Rule 144

        In general, persons who have beneficially owned restricted common shares for at least six months, and any affiliate of the company who owns either restricted or unrestricted common shares, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act.

Non-Affiliates

        Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of restricted securities under Rule 144 if:

        Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

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Affiliates

        Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to the restrictions described above. They are also subject to additional restrictions, by which such person would be required to comply with the manner of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

        Additionally, persons who are our affiliates at the time of, or any time during the three months preceding, a sale may sell unrestricted securities under the requirements of Rule 144 described above, without regard to the six month holding period of Rule 144, which does not apply to sales of unrestricted securities.

Rule 701

        Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers or directors who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling their shares. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and in the section of this prospectus titled "Underwriting" and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Form S-8 Registration Statements

        As soon as practicable after the completion of this offering, we intend to file with the SEC one or more registration statements on Form S-8 under the Securities Act to register the common shares that are issuable pursuant to the 2014 Plan and the 2017 plan. These registration statements will become effective immediately upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to vesting restrictions, any applicable lock-up agreements described below and Rule 144 limitations applicable to affiliates.

Lock-Up Agreements

        We and the holders of substantially all of our common shares outstanding on the date of this prospectus, including each of our executive officers and directors, have entered into lock-up agreements with the underwriters or otherwise agreed, subject to certain exceptions, that we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of or hedge any of our common shares, any options or warrants to purchase common shares, or any securities convertible into, or exchangeable for or that represent the right to receive common shares, without the prior written consent of the representatives of the underwriters for a period of 180 days from the date of this prospectus.

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MATERIAL UNITED STATES FEDERAL INCOME CONSIDERATIONS FOR U.S. HOLDERS

        The following is a summary of material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of our common shares by a U.S. holder (as defined below). This summary addresses only the U.S. federal income tax considerations for U.S. holders that are initial purchasers of our common shares pursuant to this offering and that will hold such common shares as capital assets for U.S. federal income tax purposes. This summary does not address all U.S. federal income tax matters that may be relevant to a particular U.S. holder. This summary does not address tax considerations applicable to a holder of our common shares that may be subject to special tax rules including, without limitation, the following:

        Further, this summary does not address the U.S. federal estate, gift, or alternative minimum tax considerations, or any U.S. state, local, or non-U.S. tax considerations of the acquisition, ownership and disposition of our common shares.

        This description is based on the Code; existing, proposed and temporary U.S. Treasury Regulations promulgated thereunder; and administrative and judicial interpretations thereof, in each case as in effect and available on the date hereof. All the foregoing is subject to change, which change could apply retroactively, and to differing interpretations, all of which could affect the tax considerations described below. There can be no assurances that the U.S. Internal Revenue Service, or the IRS, will not take a contrary or different position concerning the tax consequences of the acquisition, ownership and disposition of our common shares or that such a position would not be sustained. Holders are urged to consult their own tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of acquiring, owning, and disposing of our common shares in their particular circumstances.

        For the purposes of this summary, a "U.S. holder" is a beneficial owner of our common shares that is (or is treated as), for U.S. federal income tax purposes:

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        If a partnership (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common shares, the U.S. federal income tax consequences relating to an investment in the common shares will depend in part upon the status of the partner and the activities of the partnership. Such a partner or partnership is urged to consult its tax advisor regarding the U.S. federal income tax considerations of acquiring, owning and disposing of our common shares in its particular circumstances.

        As indicated below, this discussion is subject to U.S. federal income tax rules applicable to a "passive foreign investment company," or a PFIC.

        Persons considering an investment in our common shares are urged to consult their own tax advisors as to the particular tax consequences applicable to them relating to the acquisition, ownership and disposition of our common shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Tax Residence

        Generally, for U.S. federal tax purposes, a corporation is considered a "domestic corporation" if it is incorporated or organized in the United States, and a "foreign corporation" if it is incorporated or organized in a non-U.S. jurisdiction. Because we are a British Virgin Islands incorporated entity, we would be classified as a foreign corporation under these general rules. Section 7874 of the Code, or Section 7874, however, contains rules that can result in a foreign corporation being treated as a domestic corporation for U.S. federal tax purposes. Under Section 7874, a foreign corporation will nevertheless be treated as a domestic corporation for U.S. federal tax purposes if (1) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a domestic corporation (including the indirect acquisition of assets by acquisition of all the outstanding shares of a domestic corporation), (2) the shareholders of the acquired domestic corporation hold at least 80% (by either vote or value) of the shares of the acquiring foreign corporation after the acquisition by reason of holding shares in the acquired domestic corporation (including the receipt of the foreign corporation's shares in exchange for the domestic corporation's shares) (the "ownership test"), and (3) the foreign corporation's "expanded affiliated group" does not have substantial business activities in the foreign corporation's country of organization or incorporation relative to the expanded affiliated group's worldwide activities. For purposes of Section 7874, "expanded affiliated group" means the foreign corporation and all subsidiaries in which the foreign corporation, directly or indirectly, owns more than 50% of the shares by vote and value.

        On December 31, 2016, we entered into an agreement with the stockholders of Biohaven Pharmaceuticals, Inc., a Delaware corporation, or BPI, to purchase all of the outstanding capital stock of BPI for an aggregate purchase price of $0.6 million, payable by the issuance of promissory notes to each BPI stockholder (see "Certain Relationships and Related Party Transactions—Transactions with Biohaven Pharmaceuticals, Inc."). Although we and BPI had certain shareholders in common before December 31, 2016, based on the rules for determining share ownership under Section 7874, we believe the stockholders of BPI owned less than 80% of our shares. Accordingly, we do not believe that this transaction meets the ownership test under Section 7874 and therefore do not believe that we should be treated as a domestic corporation for U.S. federal tax purposes. However, the tax law in this area could be changed, including changed on a retroactive basis, and the application of Section 7874 to our acquisition of BPI could substantially increase our effective tax rate. The remainder of this discussion assumes that we are properly classified as a foreign corporation for U.S. federal tax purposes.

Distributions

        Although we do not currently plan to pay dividends, and subject to the discussion under "Passive Foreign Investment Company Considerations," below, a U.S. Holder generally will be required to treat the

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gross amount of any distribution actually or constructively received with respect to our common shares as a dividend to the extent of the U.S. holder's pro rata share of our current and accumulated earnings and profits as determined under U.S. federal income tax principles. Distributions in excess of earnings and profits generally will be non-taxable to the U.S. holder to the extent of, and will be applied against and reduce, the U.S. holder's adjusted tax basis in the common shares. Distributions in excess of earnings and profits and such adjusted tax basis will generally be taxable to the U.S. holder as either long-term or short-term capital gain depending upon whether the U.S. holder has held the common shares for more than one year as of the time such distribution is received. However, since we may not calculate our earnings and profits under U.S. federal income tax principles, a U.S. holder should assume that any distribution with respect to our common shares will constitute ordinary dividend income.

        Non-corporate U.S. holders may qualify for the preferential rates of taxation with respect to dividends on our common shares applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) applicable to qualified dividend income (as discussed below) if we are a "qualified foreign corporation" and certain other requirements (discussed below) are met. A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation with respect to any dividend it pays on shares of stock that are readily tradable on an established securities market in the United States. We expect that our common shares will be listed and readily tradable on the New York Stock Exchange, which is an established securities market in the United States. However, there can be no assurance that our common shares will be considered readily tradable on an established securities market in the United States in later years. If they are, and subject to the discussion under "Passive Foreign Investment Company Considerations," below, such dividends paid by us will generally be "qualified dividend income" in the hands of individual U.S. holders, provided that a holding period requirement (more than 60 days of ownership, without protection from the risk of loss, during the 121-day period beginning 60 days before the ex-dividend date) and certain other requirements are met. Any dividend income that a U.S. holder realizes generally will be treated as foreign source income for foreign tax credit limitation purposes and generally will constitute passive category income. Dividends paid on our common shares will not be eligible for the dividends received deduction allowed to corporate U.S. holders.

Sale, Exchange or Other Taxable Disposition of our Common Shares

        A U.S. holder will generally recognize gain or loss for U.S. federal income tax purposes upon the sale, exchange or other taxable disposition of our common shares in an amount equal to the difference between the U.S. dollar value of the amount realized from such sale or exchange (i.e., the amount of cash plus the fair market value of any property received) and the U.S. holder's tax basis for those common shares. Subject to the discussion under "Passive Foreign Investment Company Considerations," below, this gain or loss will generally be a capital gain or loss. The initial tax basis in the common shares generally will be equal to the cost of such common shares. Capital gain from the sale, exchange or other taxable disposition of our common shares by a non-corporate U.S. holder is generally eligible for a preferential rate of taxation applicable to capital gains, if the non-corporate U.S. holder's holding period determined at the time of such sale, exchange or other taxable disposition for such common shares exceeds one year (i.e., such gain is long-term taxable gain and will be taxable at ordinary income rates if not long-term capital gain). The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations under the Code. Any such gain or loss that a U.S. holder recognizes generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes. U.S. holders are encouraged to consult their own tax advisors regarding the availability of the U.S. foreign tax credit in their particular circumstances.

Medicare Tax

        Certain U.S. holders that are individuals, estates or trusts and whose income exceeds certain thresholds are subject to a 3.8% tax on all or a portion of their "net investment income," which may

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include all or a portion of their dividend income and net gains from the disposition of our common shares. Each U.S. holder that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in our common shares.

Passive Foreign Investment Company Considerations

        We do not believe we were a PFIC for our taxable year ended December 31, 2016 and based on the current and anticipated value of our assets and the composition of our income, assets and operations, we do not expect to be a PFIC for the current taxable year or the foreseeable future. However, the application of the PFIC rules is subject to uncertainty in several respects, and therefore we cannot provide any assurance regarding our PFIC status for any past, current or future taxable years. A non-U.S. corporation will be classified as a PFIC for any taxable year in which, after applying certain look-through rules, either (i) at least 75% of its gross income is passive income; or (ii) at least 50% of the average quarterly value of its total gross assets (which, after this offering may be determined in part by reference to the quarterly market value of our common shares, which may be volatile) is attributable to assets that produce passive income or are held for the production of passive income. Moreover, for purposes of determining if a non-U.S. corporation is a PFIC, if the non-U.S. corporation owns, directly or indirectly, at least 25%, by value, of the shares of another corporation, it will be treated as if it holds directly its proportionate share of the assets and receives directly its proportionate share of the income of such other corporation.

        The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies which in some circumstances are unclear and subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans which are subject to change. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our shares from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which, in our current and future taxable years, we may not be able to control, for example, with respect to income attributed to us from entities owned 25% or more by us. The composition of our income and assets is also affected by how, and how quickly, we spend the cash we raise in any offering, including this offering.

        If we are classified as a PFIC for any taxable year during which a U.S. holder owns our common shares, the U.S. holder, absent certain elections (including the Purging Election and the Mark-to-Market Election described below), generally will be subject to special, adverse tax rules (regardless of whether we continue to be clssified as a PFIC) with respect to (a) any "excess distribution" (generally, any distributions received by the U.S. holder on its common shares in a taxable year that are greater than 125% of the average annual distributions received by the U.S. holder in the three preceding taxable years or, if shorter, the U.S. holder's holding period for its common shares) and (b) any gain realized from a sale or other disposition (including a pledge) of its common shares. Under these special tax rules (i) the excess distribution or gain will be allocated ratably over a U.S. holder's holding period for the common shares, (ii) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income, and (iii) the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. If we are classified as a PFIC in any year with respect to which a U.S. holder owns our common shares, absent the "purging" election described below, we will continue to be treated as a PFIC with respect to such U.S. holder in all succeeding years during which the U.S. holder owns our common shares, regardless of whether we continue to meet the tests described above.

        Certain elections may be available to a U.S. holder that would result in alternative treatments. If we are a PFIC at any time when a U.S. holder holds our common shares, we will generally continue to be treated as a PFIC with respect to the U.S. holder for all succeeding years during which the U.S. holder holds our common shares even if we cease to qualify as a PFIC under the income and asset tests described above. However, if we cease to meet these tests, a U.S. holder can avoid the continuing impact of the PFIC

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rules by making a special election (a "Purging Election") to recognize gain in the manner described above as if our common shares had been sold on the last day of the last taxable year during which we were a PFIC. In addition, for a U.S. holder making such an election, a new holding period would be deemed to begin for our common shares for purposes of the PFIC rules. After the Purging Election, the common shares with respect to which the Purging Election was made would not be treated as shares in a PFIC unless we were subsequently to qualify as a PFIC. U.S. holders should consult their tax advisers regarding the potential availability of a Purging Election that would allow them to eliminate PFIC status under certain circumstances.

        In certain circumstances, a U.S. holder of shares in a PFIC may alleviate some of the adverse tax consequences described above by making a "qualified electing fund" election to include in income its pro rata share of the corporation's income on a current basis. However, a U.S. holder may make a qualified electing fund election with respect to our common shares only if we agree to furnish such U.S. holder annually with a PFIC annual information statement as specified in the applicable U.S. Treasury Regulations. We currently do not intend to prepare or provide the information that would enable U.S. holders to make a QEF election if we are treated as a PFIC for any taxable year, and prospective investors should assume that a QEF election will not be available.

        Alternatively, a U.S. holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election ("Mark-to-Market Election") with respect to such stock to elect out of the tax treatment discussed above. A Mark-to-Market Election generally is effective for the taxable year in which it is made and all subsequent years and cannot be revoked without the consent of the IRS. An electing U.S. holder generally would take into account as ordinary income, for each year that we are a PFIC, the excess of the fair market value of our common shares held at the end of the taxable year over the U.S. holder's adjusted tax basis in such common shares at that time. The U.S. holder would also take into account, as an ordinary loss for each year that we are a PFIC, the excess of the U.S. holder's adjusted tax basis in such common shares at the end of the taxable year over the fair market value of the shares at that time, but only to the extent of the aggregate of the amounts previously included in income as a result of the Mark-to-Market Election. The U.S. holder's tax basis in our common shares would be adjusted to reflect any income or loss resulting from the Mark-to-Market Election. Any gain from a sale, exchange or other disposition of the common shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss to the extent of any net mark-to-market gains previously included in income and thereafter as capital loss. If, after having been a PFIC for one or more taxable years, we cease to be classified as a PFIC, the U.S. holder would not be required to take into account any latent gain or loss in the manner described above and any realized gain or loss would be classified as a capital gain or loss. A Mark-to-Market Election will not apply to our common shares for any taxable year during which we are not a PFIC, but it will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any subsidiary that we own. A Mark-to-Market Election is available to a U.S. holder only if the common shares are considered "marketable stock." Generally, stock will be considered marketable stock if it is "regularly traded" on a "qualified exchange" within the meaning of applicable U.S. Treasury Regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. We expect that our common shares will be marketable stock as long as they remain listed on the New York Stock Exchange and are regularly traded. There can be no assurance that our common shares will continue to be so traded. U.S. holders should consult their tax advisers regarding the availability and advisability of making a Mark-to-Market Election in their particular circumstances.

        Moreover, if we are treated as a PFIC with respect to any taxable year, to the extent any of our subsidiaries are also PFICs, a U.S. holder may be deemed to own shares in such lower-tier PFICs, and an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries. U.S. holders are urged to consult their own tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

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        If we are a PFIC with respect to a U.S. holder of our common shares, such U.S. holder will generally be required to file an annual information return on IRS Form 8621 with respect to our common shares and the shares of any of subsidiaries that also qualify as a PFIC. U.S. holders should consult their own tax advisers concerning annual filing requirements.

        NO ASSURANCE CAN BE GIVEN REGARDING OUR PFIC STATUS FOR ANY PAST, CURRENT OR FUTURE TAXABLE YEARS. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE OPERATION OF THE PFIC RULES AND RELATED REPORTING REQUIREMENTS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE ADVISABILITY OF MAKING ANY ELECTION THAT MAY BE AVAILABLE.

Backup Withholding and Information Reporting

        U.S. holders generally will be subject to information reporting requirements with respect to dividends on our common shares and on the proceeds from the sale, exchange or disposition of our common shares that are paid within the United States or through U.S.-related financial intermediaries, unless the U.S. holder is an "exempt recipient." In addition, U.S. holders may be subject to backup withholding on such payments, unless the U.S. holder provides a taxpayer identification number and a duly executed IRS Form W-9 or otherwise establishes an exemption. Backup withholding is not an additional tax, and the amount of any backup withholding will be allowed as a credit against a U.S. holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

Foreign Asset Reporting

        Certain U.S. holders (and to the extent provided in IRS guidance, certain non-U.S. holders) who hold interests in "specified foreign financial assets" (as defined in Section 6038D of the Code) are generally required to file an IRS Form 8938 as part of their U.S. federal income tax returns with information relating to such assets for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable IRS guidance). "Specified foreign financial assets" generally include, among other assets, financial accounts maintained by foreign financial institutions, and our common shares, unless the shares are held through an account maintained by a financial institution. Substantial penalties may apply to any failure to timely file a complete and correct IRS Form 8938. Additionally, in the event an applicable U.S. holder (and to the extent provided in IRS guidance, a non-U.S. holder) that is required to file IRS Form 8938 either fails to file or fails to report a relevant asset, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed. Prospective investors are encouraged to consult with their own tax advisors regarding the possible reporting obligations under these and other disclosure requirements in light of their individual circumstances.

         THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN OUR COMMON SHARES IN LIGHT OF THE INVESTOR'S OWN CIRCUMSTANCES.

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UNDERWRITING

        Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and Piper Jaffray & Co. are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

Name
  Number of
Shares
 

Morgan Stanley & Co. LLC

       

Piper Jaffray & Co. 

       

Barclays Capital Inc. 

       

William Blair & Company, L.L.C. 

       

Needham & Company, LLC

       

Total

       

        The underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the common shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the common shares offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the common shares offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below.

        The underwriters initially propose to offer part of the common shares directly to the public at the public offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $            per share under the public offering price. After the initial offering of the common shares, the offering price and other selling terms may from time to time be varied by the representatives.

        We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to                    additional common shares at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the common shares offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional common shares as the number listed next to the underwriter's name in the preceding table bears to the total number of common shares listed next to the names of all underwriters in the preceding table.

        The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option to purchase up to an additional                common shares.

 
   
  Total  
 
  Per Share   No Exercise   Full Exercise  

Public offering price

  $     $     $    

Underwriting discounts and commissions

  $     $     $    

Proceeds, before expenses

  $     $     $    

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        The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $            . We have agreed to reimburse the underwriters up to $            for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority.

        The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of common shares offered by them.

        We have applied to list our common shares on the New York Stock Exchange under the trading symbol "BHVN."

        We and all of our directors and officers and the holders of substantially all of our outstanding stock and stock options have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus, or the restricted period:

whether any such transaction described above is to be settled by delivery of common common shares or such other securities, in cash or otherwise, or publicly disclose the intention to do any of the foregoing. In addition, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, (i) our directors and officers and such holders will not, during the restricted period, make any demand for, or exercise any right, or publicly disclose its intention to make any demand or exercise any right, with respect to the registration of any common shares or any security convertible into or exercisable or exchangeable for common shares and (ii) we will not file any registration statement with the Securities and Exchange Commission relating to the offering of any common shares or any securities convertible into or exercisable or exchangeable for common shares. In addition, our directors and officers and such holders agreed and consented to the entry of stop transfer instructions with our transfer agent and registrar against the transfer of each such person's common shares except in compliance with the below restrictions.

        The restrictions described in the immediately preceding paragraph to do not apply to:

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        The representatives, in their sole discretion, may release the common shares and other securities subject to the lock-up agreements described above at any time.

        In order to facilitate this offering of the common shares, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common shares. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, common shares in the open market to stabilize the price of the common shares. These activities may raise or maintain the market price of the common shares above independent market levels or prevent or retard a decline in the market price of the common shares. The underwriters are not required to engage in these activities and may end any of these activities at any time.

        We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

        A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of common shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

        The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed,

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and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

        William Blair & Company, L.L.C., or William Blair, served as one of our placement agents in connection with our Series A preferred share financing in October 2016. As a component of its compensation for serving as placement agent, William Blair received 26,235 Series A preferred shares at the closing of the second tranche of such financing, which occurred in February 2017.

        In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

Pricing of the Offering

        Prior to this offering, there has been no public market for our common shares. The initial public offering price was determined by negotiations among us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

Selling Restrictions

Canada

        The common shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations . Any resale of the common shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

        Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

        Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts ( NI 33-105 ), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

European Economic Area

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any of our common shares may not be made in that Relevant Member State, except that an offer to the public in that Relevant

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Member State of any of our common shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

        For the purposes of this provision, the expression an "offer to the public" in relation to any of our common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any of our common shares to be offered so as to enable an investor to decide to purchase any of our common shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

United Kingdom

        Each underwriter has represented and agreed that:

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LEGAL MATTERS

        The validity of the common shares and certain other matters of British Virgin Islands law will be passed upon for us by Maples and Calder, our special BVI counsel. Certain other legal matters will be passed upon for us by Cooley LLP, Reston, Virginia, and for the underwriters by Ropes & Gray LLP, Boston, Massachusetts.


EXPERTS

        The financial statements as of December 31, 2015 and 2016 and for each of the two years in the period ended December 31, 2016 included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the Company's ability to continue as a going concern as described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


WHERE YOU CAN FIND ADDITIONAL INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the common shares being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information in the registration statement and its exhibits. For further information with respect to our company and the common shares offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

        You can read our SEC filings, including the registration statement, over the internet at the SEC's website at www.sec.gov . You may also read and copy any document we file with the SEC at its public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

        Upon completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above. We also maintain a website at www.biohavenpharma.com , at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
  Page  

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Balance Sheets

    F-3  

Consolidated Statements of Operations and Comprehensive Loss

    F-4  

Consolidated Statements of Convertible Preferred Shares and Shareholders' Equity (Deficit)

    F-5  

Consolidated Statements of Cash Flows

    F-6  

Notes to Consolidated Financial Statements

    F-7  

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Management of
Biohaven Pharmaceutical Holding Company Ltd.

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive loss, of convertible preferred shares and shareholders' equity (deficit) and of cash flows present fairly, in all material respects, the financial position of Biohaven Pharmaceutical Holding Company Ltd. and its subsidiaries as of December 31, 2015 and 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses from operations since inception, has an accumulated deficit, and will require additional financing to fund future operations. These circumstances raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut
April 3, 2017

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

 
  December 31,    
 
 
  Pro Forma
December 31,
2016
 
 
  2015   2016  
 
   
   
  (unaudited)
 

Assets

                   

Current assets:

                   

Cash

  $ 1,460   $ 23,565   $ 23,565  

Restricted cash

        67     67  

Prepaid expenses and other current assets

    427     403     403  

Total current assets

    1,887     24,035     24,035  

Property and equipment, net

    5     26     26  

Deferred offering costs

        134     134  

Equity method investment (Note 5)

        2,753     2,753  

Restricted cash

        60     60  

Deferred tax assets

        9     9  

Total assets

  $ 1,892   $ 27,017   $ 27,017  

Liabilities, Convertible Preferred Shares and Shareholders' Equity (Deficit)

                   

Current liabilities:

                   

Notes payable, net of discount

  $   $ 4,216   $ 4,216  

Accounts payable

    68     746     746  

Accrued expenses

    261     2,980     2,980  

Total current liabilities

    329     7,942     7,942  

Warrant liability

        780     780  

Derivative liability

    447     512     512  

Contingent equity liability

        18,938      

Notes payable to related parties

        595     595  

Other long-term liabilities

    29     13     13  

Total liabilities

    805     28,780     9,842  

Commitments and contingencies (Note 16)

                   

Series A convertible preferred shares, no par value; no and 11,242,172 shares authorized as of December 31, 2015 and 2016, respectively; no and 4,948,369 shares issued and outstanding as of December 31, 2015 and 2016, respectively; aggregate liquidation preference of $45,976 as of December 31, 2016; no shares issued or outstanding, pro forma as of December 31, 2016 (unaudited)

        43,270      

Shareholders' equity (deficit):

                   

Common shares, no par value; 17,500,000 and 38,000,000 shares authorized as of December 31, 2015 and 2016, respectively; 11,569,000 and 13,088,500 shares issued and outstanding as of December 31, 2015 and 2016, respectively; 19,920,392 shares issued and outstanding, pro forma as of December 31, 2016 (unaudited)

    8,665     19,944     82,152  

Additional paid-in capital

    4,258     10,479     10,479  

Accumulated deficit

    (11,779 )   (75,456 )   (75,456 )

Total Biohaven Pharmaceutical Holding Company Ltd. shareholders' equity (deficit)

    1,144     (45,033 )   17,175  

Non-controlling interests

    (57 )        

Total shareholders' equity (deficit)

    1,087     (45,033 )   17,175  

Total liabilities, convertible preferred shares and shareholders' equity (deficit)

  $ 1,892   $ 27,017   $ 27,017  

   

The accompanying notes are an integral part of these consolidated financial statements.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Amounts in thousands, except share and per share amounts)

 
  Year Ended
December 31,
 
 
  2015   2016  

Operating expenses:

             

Research and development

  $ 7,559   $ 55,529  

General and administrative

    2,137     5,109  

Total operating expenses

    9,696     60,638  

Loss from operations

    (9,696 )   (60,638 )

Other income (expense):

             

Interest expense

        (385 )

Change in fair value of warrant liability

        154  

Change in fair value of derivative liability

    (370 )   (65 )

Change in fair value of contingent equity liability

        (2,263 )

Loss from equity method investment

        (247 )

Total other income (expense), net

    (370 )   (2,806 )

Loss before provision for income taxes

    (10,066 )   (63,444 )

Provision for income taxes

        90  

Net loss and comprehensive loss

    (10,066 )   (63,534 )

Less: Net income (loss) attributable to non-controlling interests

    (4 )   143  

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (10,062 ) $ (63,677 )

Net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted

  $ (0.91 ) $ (5.05 )

Weighted average common shares outstanding—basic and diluted

    11,009,277     12,608,366  

Pro forma net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted (unaudited)

        $ (4.48 )

Pro forma weighted average common shares outstanding—basic and diluted (unaudited)

          14,215,323  

   

The accompanying notes are an integral part of these consolidated financial statements.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands, except share and per share amounts)

 
   
   
 





   
   
   
   
   
   
   
   
 
 
  Series A
Convertible
Preferred
Shares
   
   
   
   
   
  Total Biohaven
Pharmaceutical
Holding
Company Ltd.
Shareholders'
Equity
(Deficit)
   
   
 
 
  Common Shares    
  Note
Receivable
from
Shareholder
   
   
  Total
Shareholders'
Equity
(Deficit)
 
 
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Non-
Controlling
Interests
 
 
  Shares   Amount    
  Shares   Amount  

Balances as of December 31, 2014

      $         10,652,000   $ 3,587   $ 190   $ (500 ) $ (1,717 ) $ 1,560   $ (53 ) $ 1,507  

Issuance of common shares, net of offering costs of $37

                867,000     4,816                 4,816         4,816  

Issuance of common shares in connection with license agreement (Note 13)

                50,000     262                 262         262  

Issuance of common share warrant in connection with license agreement (Note 13)

                        1,231             1,231         1,231  

Collection of note receivable from shareholder

                            500         500         500  

Share-based compensation expense

                        2,837             2,837         2,837  

Net loss

                                (10,062 )   (10,062 )   (4 )   (10,066 )

Balances as of December 31, 2015

                11,569,000     8,665     4,258         (11,779 )   1,144     (57 )   1,087  

Issuance of common shares, net of offering costs of $120

                1,519,500     11,279                 11,279         11,279  

Issuance of common share warrant in connection with license agreement (Note 13)

                        2,127             2,127         2,127  

Issuance of Series A convertible preferred shares, net of cash offering costs of $1,730

    4,305,209     38,270                                      

Issuance of Series A convertible preferred shares as payment of related offering costs

    105,010                                          

Issuance of Series A convertible preferred shares in settlement of contingent equity liability (Note 13)

    538,150     5,000                                      

Acquisition of BPI (Note 18)

                        (509 )           (509 )   (86 )   (595 )

Share-based compensation expense

                        4,603             4,603         4,603  

Net loss

                                (63,677 )   (63,677 )   143     (63,534 )

Balances as of December 31, 2016

    4,948,369   $ 43,270         13,088,500   $ 19,944   $ 10,479   $   $ (75,456 ) $ (45,033 ) $   $ (45,033 )

The accompanying notes are an integral part of these consolidated financial statements.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except share and per share amounts)

 
  Year Ended
December 31,
 
 
  2015   2016  

Cash flows from operating activities:

             

Net loss

  $ (10,066 ) $ (63,534 )

Adjustments to reconcile net loss to net cash used in operating activities:

             

Share-based compensation expense

    2,837     4,603  

Depreciation expense

    2     5  

Non-cash interest expense

        374  

Benefit from deferred income taxes

        (9 )

Fair value of contingent equity liability under license agreements

        21,675  

Issuance of common shares as consideration for license agreement

    262      

Fair value of warrants issued as consideration for license agreement

    1,231     2,127  

Change in fair value of warrant liability

        (154 )

Change in fair value of derivative liability

    370     65  

Change in fair value of contingent equity liability

        2,263  

Loss from equity method investment

        247  

Changes in operating assets and liabilities:

             

Prepaid expenses and other current assets

    (423 )   24  

Accounts payable

    23     678  

Accrued expenses

    132     2,148  

Other long-term liabilities

    7     (16 )

Net cash used in operating activities

    (5,625 )   (29,504 )

Cash flows from investing activities:

             

Purchases of property and equipment

    (3 )   (26 )

Purchase of equity method investment

        (3,000 )

Increase in restricted cash

        (127 )

Net cash used in investing activities

    (3 )   (3,153 )

Cash flows from financing activities:

             

Proceeds from issuance of Series A convertible preferred shares

        40,000  

Proceeds from issuance of common shares

    4,853     11,399  

Payments of offering costs

    (37 )   (1,507 )

Proceeds from issuance of notes payable

        5,000  

Payments of debt issuance costs

        (197 )

Collection of note receivable from shareholder

    500      

Advanced payment received for the second closing of Series A convertible preferred shares

        67  

Net cash provided by financing activities

    5,316     54,762  

Net increase (decrease) in cash

    (312 )   22,105  

Cash at beginning of year

    1,772     1,460  

Cash at end of year

  $ 1,460   $ 23,565  

Supplemental disclosure of cash flow information:

             

Cash paid for interest

  $   $ 11  

Supplemental disclosure of non-cash investing and financing activities:

             

Deferred offering costs included in accrued expenses

  $   $ 134  

Series A convertible preferred share offering costs included in accrued expenses

  $   $ 343  

Issuance of warrants to guarantor and co-guarantor of notes payable

  $   $ 934  

Issuance of Series A convertible preferred shares in settlement of contingent equity liability

  $   $ 5,000  

Issuance of Series A convertible preferred shares as payment of related offering costs

  $   $ 975  

Issuance of notes payable to related parties in connection with acquisition of BPI

  $   $ 595  

   

The accompanying notes are an integral part of these consolidated financial statements.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share amounts)

1. Nature of the Business and Basis of Presentation

        Biohaven Pharmaceutical Holding Company Ltd. (the "Company") was incorporated in Tortola, British Virgin Islands in September 2013. The Company is a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting neurologic diseases, including rare disorders. The Company's product candidates are small molecules based on two distinct mechanistic platforms—calcitonin gene-related peptide ("CGRP") receptor antagonists and glutamate modulators—which the Company believes have the potential to significantly alter existing treatment approaches across a diverse set of neurological indications with high unmet need in both large markets and orphan indications. The most advanced product candidate from the Company's CGRP receptor antagonist platform is rimegepant, which the Company is developing for the acute treatment of migraine and for which it intends to initiate two Phase 3 clinical trials in the second half of 2017. The most advanced product candidate from the Company's glutamate modulation platform is trigriluzole, which the Company is developing for the treatment of ataxias with an initial focus on spinocerebellar ataxia ("SCA"). The Company has received orphan drug designation from the U.S. Food and Drug Administration ("FDA") for trigriluzole in SCA, and the Company began a Phase 2/3 clinical trial in SCA in December 2016. The Company's second most advanced product candidate from its glutamate modulation platform is BHV-0223, which the Company is developing for the treatment of amyotrophic lateral sclerosis ("ALS"), a neurodegenerative disease that affects nerve cells in the brain and spinal cord. The Company has received orphan drug designation from the FDA for BHV-0223 in ALS.

        The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company's product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

        The Company has historically outsourced all of the research and clinical development for its programs under a master services agreement (the "MSA") with Biohaven Pharmaceuticals, Inc. ("BPI"). BPI was incorporated in the state of Delaware in July 2013. The three founders of BPI, each of whom beneficially owned one-third of the equity of BPI prior to the Company's acquisition of BPI on December 31, 2016 (see Note 18), are shareholders of the Company and also serve as the Company's Chairman of the board of directors, Chief Executive Officer, and Chief Medical Officer, respectively (see Note 17). BPI is a contract research organization ("CRO") whose only customer is the Company. Since its incorporation, substantially all of the operations of BPI have been performed in service to the Company under the terms of the MSA, and substantially all of the funding for the operations of BPI was provided by the Company. The Company has determined that (i) it has the authority to direct the activities of BPI that most significantly impact the economics of the entity and (ii) the equity at risk in BPI is insufficient to finance its operations. As a result, the Company is deemed to have had a variable interest in BPI, and BPI is deemed to be a variable interest entity ("VIE") of which the Company is the primary beneficiary. Accordingly, since the date of the Company's incorporation in September 2013, the Company has consolidated the results of BPI. Upon original consolidation, the Company applied purchase accounting by recording the fair values of BPI's assets acquired and liabilities assumed, which were determined to be zero because BPI had not yet

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

1. Nature of the Business and Basis of Presentation (Continued)

commenced any operations. For periods prior to December 31, 2016, 100% of the equity in BPI was reflected as non-controlling interest within shareholders' deficit on the consolidated balance sheet. On December 31, 2016, the Company acquired 100% of the issued and outstanding shares of BPI (see Note 18), and as a result, for periods subsequent to the acquisition, the Company no longer reports any non-controlling interest related to BPI.

        The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its subsidiaries as well as BPI, a variable interest entity, after elimination of all significant intercompany accounts and transactions.

        In October 2016, the Company effected a 500-for-one stock split of its issued and outstanding common shares. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split.

    Going Concern

        In accordance with Accounting Standards Update ("ASU") 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

        Through December 31, 2016, the Company has funded its operations primarily with proceeds from sales of preferred and common shares and borrowings under a credit agreement. The Company has incurred recurring losses since its inception, including net losses of $10,066 and $63,534 for the years ended December 31, 2015 and 2016, respectively. In addition, as of December 31, 2016, the Company had an accumulated deficit of $75,456. The Company expects to continue to generate operating losses for the foreseeable future. As of April 3, 2017, the issuance date of these consolidated financial statements, the Company expects that its cash of $23,565 as of December 31, 2016, together with the $38,635 of net cash proceeds received from the second closing of the Company's sale of Series A convertible preferred shares ("Series A preferred shares") in February 2017 (see Note 20), will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments through July 31, 2017. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

        The Company is seeking to complete an initial public offering of its common shares. In the event the Company does not complete an initial public offering, the Company expects to seek additional funding through private equity financings, debt financings, or other capital sources, including collaborations with other companies or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders.

        If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

1. Nature of the Business and Basis of Presentation (Continued)

unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

        Based on its recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and need to raise additional capital to finance its future operations, the Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

        The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

2. Summary of Significant Accounting Policies

    Use of Estimates

        The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of common shares, stock options, warrants, derivative instruments and contingent equity instruments. In addition, management's assessment of the Company's ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

    Unaudited Pro Forma Information

        The accompanying unaudited pro forma consolidated balance sheet as of December 31, 2016 has been prepared to give effect, upon the closing of a qualified initial public offering, to the conversion of all outstanding convertible preferred shares into 4,948,369 common shares and the issuance of an aggregate of 1,883,523 common shares to AstraZeneca AB ("AstraZeneca") and Bristol Myers-Squibb Company ("BMS") pursuant to the Company's license agreements with AstraZeneca and BMS (see Note 13) as if the proposed initial public offering had occurred on December 31, 2016.

        In the accompanying consolidated statements of operations and comprehensive loss, the unaudited pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. for the year ended December 31, 2016 have been prepared to give effect, upon the closing of a qualified initial public offering, to the conversion of all outstanding convertible preferred shares into 4,948,369 common shares and the issuance of an aggregate of 1,883,523 common shares to AstraZeneca and BMS pursuant to the Company's license agreements with AstraZeneca and BMS (see Note 13) as if the proposed initial public offering had occurred on the latest of January 1, 2016,

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

the issuance date of the convertible preferred shares or the date the Company entered into each respective license agreement.

    Restricted Cash

        As of December 31, 2016, current restricted cash consisted of $67 of cash received from investors as an advance payment for their participation in the second closing of the Company's sale of Series A preferred shares and non-current restricted cash consisted of a $60 certificate of deposit held as a security deposit in connection with the Company's corporate credit card.

    Concentrations of Credit Risk

        Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

    Deferred Offering Costs

        The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders' equity (deficit) as a reduction of proceeds generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations and comprehensive loss. The Company did not record any deferred offering costs as of December 31, 2015. The Company recorded deferred offering costs of $134 as of December 31, 2016.

    Equity Method Investments

        Investments in non-public companies in which the Company owns less than a 50% equity interest and where it exercises significant influence over the operating and financial policies of the investee are accounted for using the equity method of accounting. The Company's proportionate share of the net income or loss of the equity method investment is included in other income (expense), net in the consolidated statement of operations and comprehensive loss and results in a corresponding adjustment to the carrying value of the investment on the consolidated balance sheet. Dividends received reduce the carrying value of the investment. The Company periodically reviews the carrying value of its investment to determine if there has been an other-than-temporary decline in carrying value. A variety of factors are considered when determining if a decline in carrying value is other than temporary, including, among other factors, the financial condition and business prospects of the investee as well as the Company's intent with regard to the investment.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

    Property and Equipment

        Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the respective assets. As of December 31, 2015 and 2016, the Company's property and equipment consisted of computer equipment, which has an estimated useful life of three years. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred.

    Impairment of Long-Lived Assets

        Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. To date, the Company has not recorded any impairment losses on long-lived assets.

    Fair Value Measurements

        Certain assets of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

    Level 1—Quoted prices in active markets for identical assets or liabilities.

    Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

    Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

        The Company's warrant liability, derivative liability and contingent equity liability are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

of other current assets, accounts payable, accrued expenses and notes payable under a credit agreement approximate their fair values due to the short-term nature of these assets and liabilities.

    Segment Information

        The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company's singular current focus is on a pipeline of product candidates that represent two distinct mechanistic platforms—CGRP receptor antagonists, and glutamate modulators. All of the Company's tangible assets are held in the United States.

    Research and Development Costs

        Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, share-based compensation and benefits, facilities costs, depreciation, third-party license fees, and external costs of outside vendors engaged to conduct clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

    Research Contract Costs and Accruals

        The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. These agreements are cancelable, and related payments are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs.

    Patent Costs

        All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

    Share-Based Compensation

        The Company measures stock options granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. Generally, the Company issues stock options with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company has not issued any stock options with performance-based vesting conditions.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

        For share-based awards granted to consultants and non-employees, compensation expense is recognized over the period during which services are rendered by such consultants and non-employees until completed. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company's common shares and updated assumption inputs in the Black-Scholes option-pricing model.

        The Company classifies share-based compensation expense in its consolidated statement of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified.

        The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company's stock options has been determined utilizing the "simplified" method for awards that qualify as "plain-vanilla" options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.

    Warrant Liability

        In connection with entering into a credit agreement (see Note 8), the Company agreed to issue warrants to purchase common shares to the guarantor and co-guarantor of its obligations under the agreement (see Note 8). The Company classifies the warrants as a liability on its consolidated balance sheet because each warrant represents a freestanding financial instrument that is not indexed to the Company's own shares. The warrant liability was initially recorded at fair value upon entering into the credit agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the warrant liability will continue to be recognized until the warrants are exercised, expire or qualify for equity classification.

    Derivative Liability

        The Company's license agreement with Yale University ("Yale") (see Note 13) provides for a change-of-control payment to Yale upon the occurrence of a change-of-control event, as defined in the agreement, including an initial public offering. The Company classifies the change-of-control payment obligation as a liability on its consolidated balance sheet because it represents a contingent obligation to pay a variable amount of cash that may be based, in part, on the value of the Company's own shares. The derivative liability was initially recorded at fair value upon entering into the license agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the derivative liability are recognized as a component of other income (expense), net in the consolidated statement of

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

operations and comprehensive loss. Changes in the fair value of the derivative liability will continue to be recognized until a change-of-control event occurs.

    Contingent Equity Liability

        The Company's license agreements with AstraZeneca and BMS (see Note 13) require the Company to issue shares of capital stock upon the occurrence of specified financing or change-of-control events or development milestones, as defined in the agreements. In each agreement, the class and number of shares to be issued upon a triggering event were not known upon entering into the license agreements; however, the dollar amount of the shares to be issued upon a triggering event is fixed. The Company classifies these contingent obligations to issue shares as a liability on its consolidated balance sheet because each represents an obligation to issue a variable number of shares for a fixed dollar amount. Each contingent equity liability was initially recorded at fair value upon entering into each respective agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair values of the contingent equity liabilities are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent equity liabilities will continue to be recognized until the occurrence of a respective triggering event.

    Comprehensive Loss

        Comprehensive loss includes net loss as well as other changes in shareholders' equity (deficit) that result from transactions and economic events other than those with shareholders. There was no difference between net loss and comprehensive loss for each of the periods presented in the accompanying consolidated financial statements.

    Income Taxes

        The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company's tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

        The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

    Net Loss per Share Attributable to Common Shareholders of Biohaven Pharmaceutical Holding Company Ltd.

        The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Net income (loss) per share attributable to common shareholders is calculated based on net income (loss) attributable to Biohaven Pharmaceutical Holding Company Ltd. and excludes net income (loss) attributable to non-controlling interests.

        Basic net income (loss) per share attributable to common shareholders is computed by dividing the net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) attributable to common shareholders is computed by adjusting net income (loss) attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common shareholders is computed by dividing the diluted net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options, warrants to purchase common shares, convertible preferred shares and contingently issuable equity are considered potential dilutive common shares.

        The Company's convertible preferred shares contractually entitle the holders of such shares to participate in dividends but contractually do not require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

    Recently Adopted Accounting Pronouncements

        In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Certain of these changes are required to be applied retrospectively, while other changes are required to be applied prospectively. The new standard will be effective for the Company on January 1, 2017 with early adoption permitted. The Company has elected to early adopt ASU 2016-09 and has reflected the adoption in the consolidated financial statements of the Company. The adoption of ASU 2016-09 had no impact on the Company's financial position, results of operations or cash flows.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

        In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 requires deferred tax liabilities and assets to be classified as non-current in the consolidated balance sheet. ASU 2015-17 is required to be adopted for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. The amendment may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company elected to early adopt this guidance retrospectively to all periods presented, and its adoption had no impact on the Company's financial position, results of operations or cash flows.

        In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), which requires that debt issuance costs related to a debt liability be presented in the balance sheet as a direct reduction in the carrying amount of that debt liability. The amendments in ASU 2015-03 are effective for the annual periods ending after December 15, 2015. The Company adopted the standard retrospectively to all periods presented on the required effective date of January 1, 2016, and its adoption had no impact on the Company's financial position, results of operations or cash flows.

        In November 2014, the FASB issued ASU No. 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity ("ASU 2014-16"). The guidance requires an entity to determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of the relevant facts and circumstances (commonly referred to as the whole-instrument approach). The Company adopted the standard retrospectively to all periods presented on the required effective date of January 1, 2016, and its adoption had no impact on the Company's financial position, results of operations or cash flows.

        In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (Subtopic 205-40) ("ASU 2014-15"). The amendments in this update explicitly require a company's management to assess an entity's ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. The new standard is effective in the first annual period ending after December 15, 2016. The Company adopted ASU 2014-15 as of the required effective date of December 31, 2016. This guidance relates to footnote disclosure only (see Note 1), and its adoption had no impact on the Company's financial position, results of operations or cash flows.

    Recently Issued Accounting Pronouncements

        In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory ("ASU 2016-16"), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2016-16 will have on its consolidated financial statements.

        In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2016-15 will have on its consolidated financial statements.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

        In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU 2016-02 (Accounting Standards Codification ("ASC") Topic 842) supersedes the previous leases standard, ASC 840, Leases . The standard is effective for public entities for annual periods beginning after December 15, 2018 and for interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements.

        In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which supersedes existing revenue recognition guidance under GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. The Company expects that these judgments and estimates will include identifying performance obligations in the customer contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which delays the effective date of ASU 2014-09 such that the standard is effective for public entities for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. Early adoption of the standard is permitted for annual periods beginning after December 15, 2016. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ("ASU 2016-08"), which further clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , clarifying the implementation guidance on identifying performance obligations and licensing. Specifically, the amendments in this update reduce the cost and complexity of identifying promised goods or services and improve the guidance for determining whether promises are separately identifiable. The amendments in this update also provide implementation guidance on determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ("ASU 2016-12"), which clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in ASU 2014-09 is retrospectively applied. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective dates and transition requirements as ASU 2014-09. The

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Company is currently evaluating the impact that the adoption that these standards will have on its consolidated financial statements, if and when it generates revenue.

3. Fair Value of Financial Assets and Liabilities

        The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

 
  Fair Value Measurements as of
December 31, 2015 Using:
 
 
  Level 1   Level 2   Level 3   Total  

Liabilities:

                         

Derivative liability

  $   $   $ 447   $ 447  

  $   $   $ 447   $ 447  

 

 
  Fair Value Measurements as of
December 31, 2016 Using:
 
 
  Level 1   Level 2   Level 3   Total  

Liabilities:

                         

Warrant liability

  $   $   $ 780   $ 780  

Derivative liability

            512     512  

Contingent equity liability

            18,938     18,938  

  $   $   $ 20,230   $ 20,230  

        During the years ended December 31, 2015 and 2016, there were no transfers between Level 1, Level 2 and Level 3.

    Valuation of Warrant Liability

        The warrant liability in the table above is composed of the fair value of warrants to purchase common shares that the Company agreed to issue to the guarantor and co-guarantor of its obligations under a credit agreement (see Note 8). The fair value of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company utilized a Monte Carlo simulation, which is a statistical method used to generate a defined number of share price paths to develop a reasonable estimate of the range of the future expected share prices, to value the warrant liability. The Monte Carlo simulation incorporated assumptions and estimates to value the warrant liability. Estimates and assumptions impacting the fair value measurement included the estimated probability of adjusting the exercise price of the warrants, the number of shares for which the warrants will be exercisable, the fair value per share of the underlying common shares issuable upon exercise of the warrants, the remaining contractual term of the warrants, the risk-free interest rate, the expected dividend yield, and the expected volatility of the price of the underlying common shares. The Company estimated the fair value per share of its common shares by taking into consideration the most recent arm's-length sale of its common shares or third-party valuation of its common shares as well as additional factors that the Company deemed relevant. The Company historically has been a private

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

3. Fair Value of Financial Assets and Liabilities (Continued)

company and lacks company-specific historical and implied volatility information of its shares. Therefore, it estimated its expected share volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company estimated a 0% expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future.

    Valuation of Derivative Liability

        The fair value of the derivative liability recognized in connection with the Company's license agreement with Yale (see Note 13) was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the derivative liability was determined using the probability-weighted expected return method ("PWERM"), which considered as inputs the type and probability of occurrence of a change-of-control event, the amount of the payment, the expected timing of a change-of-control event and a risk-adjusted discount rate.

    Valuation of Contingent Equity Liability

        BMS.     The fair value of the contingent equity liability recognized in connection with the Company's license agreement with BMS (see Note 13) was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent equity liability was determined using the PWERM, which considered as inputs the probability of occurrence of events that would trigger the issuance of shares, the expected timing of such events, the value of the contingently issuable equity and a risk-adjusted discount rate. As of July 8, 2016, the assumed probability of occurrence of the event that was most probable of triggering the issuance of shares was 70%, the expected timing of such an event was estimated to be less than one year, the value of the contingently issuable equity was $18,750 and the discount rate was assessed to be 0%. As of December 31, 2016, the assumed probability of occurrence of the event that was most probable of triggering the issuance of shares was 75%, the expected timing of such an event was estimated to be less than one year, the value of the contingently issuable equity was $18,750 and the discount rate was assessed to be 0%. Based on these inputs, the Company determined that the fair value of the contingent equity liability was $13,125 as of July 8, 2016, the date the Company entered into the license agreement with BMS, and $14,063 as of December 31, 2016.

        AstraZeneca.     The fair value of the contingent equity liability recognized in connection with the Company's license agreement with AstraZeneca (see Note 13) was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent equity liability was determined using the PWERM, which considered as inputs the probability of occurrence of events that would trigger the issuance of shares, the expected timing of such events, the value of the contingently issuable equity and a risk-adjusted discount rate. The contingently issuable equity is issuable in two tranches, each for a fixed dollar amount of $5,000, for a total amount of $10,000. Using the PWERM, the Company assessed the fair value of each tranche of the contingent equity liability separately.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

3. Fair Value of Financial Assets and Liabilities (Continued)

        The shares related to the first tranche become issuable if the Company completes an equity financing transaction with aggregate proceeds of at least $30,000 prior to December 31, 2016. As of October 5, 2016, the date the Company entered into the license agreement with AstraZeneca, the Company determined that the fair value of the first tranche contingent equity liability was $4,500. In determining this fair value, the assumed probability of completing a qualifying equity financing transaction prior to December 31, 2016 was 90%, the expected timing of such event was estimated to be three months, the value of the contingently issuable equity was $5,000 and the discount rate was assessed to be 0%. In October 2016, upon completion of the Series A First Closing (see Note 10), the first tranche of contingently issuable equity became issuable to AstraZeneca. As a result, the Company issued to AstraZeneca 538,150 Series A preferred shares with an aggregate fair value of $5,000, or $9.2911 per share, in satisfaction of the obligation to issue the first tranche of equity under the agreement. Immediately prior to the completion of the Series A First Closing, the Company remeasured the contingent equity liability to fair value, resulting in recognition of other expense of $500 in the consolidated statement of operations and comprehensive loss in the year ended December 31, 2016. Upon the issuance of the 538,150 Series A preferred shares to AstraZeneca in October 2016, the Company reclassified the carrying value of the first tranche contingent equity liability, equal to the then-current fair value of $5,000, to the carrying value of Series A preferred shares.

        The shares related to the second tranche become issuable upon the earlier of (i) the initiation of a Phase 2b or equivalent clinical trial of a product candidate based on the licensed patent rights and (ii) any liquidity event, including an initial public offering, any change of control or any assignment of the Company's rights or obligations under the license agreement. As of October 5, 2016, the date the Company entered into the license agreement with AstraZeneca, the Company determined that the fair value of the second tranche contingent equity liability was $4,050. In determining this fair value, the assumed probability of occurrence of the event that was most probable of triggering the issuance of shares was 60%, the expected timing of such an event was estimated to be less than one year, the value of the contingently issuable equity was $7,500 and the discount rate was assessed to be 0%. As of December 31, 2016, the Company determined that the fair value of the second tranche contingent equity liability was $4,875. In determining this fair value, the assumed probability of occurrence of the event that was most probable of triggering the issuance of shares was 65%, the expected timing of such an event was estimated to be less than one year, the value of the contingently issuable equity was $7,500 and the discount rate was assessed to be 0%.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

3. Fair Value of Financial Assets and Liabilities (Continued)

        The following table provides a roll forward of the aggregate fair values of the Company's warrant liability, derivative liability and contingent equity liability, for which fair value is determined by Level 3 inputs:

 
  Warrant
Liability
  Derivative
Liability
  Contingent
Equity Liability
 

Balance at December 31, 2014

  $   $ 77   $  

Change in fair value

        370      

Balance at December 31, 2015

        447      

Initial fair value of warrant liability

    934          

Initial fair value of contingent equity liability

            21,675  

Issuance of Series A preferred shares in settlement of first tranche of contingent equity liability to AstraZeneca

            (5,000 )

Change in fair value

    (154 )   65     2,263  

Balance at December 31, 2016

  $ 780   $ 512   $ 18,938  

4. Prepaid Expenses and Other Current Assets

        Prepaid expenses and other current assets consisted of the following:

 
  December 31,  
 
  2015   2016  

Prepaid clinical trial costs

  $ 387   $ 388  

Other

    40     15  

  $ 427   $ 403  

5. Equity Method Investment

        On August 29, 2016, the Company executed a stock purchase agreement with Kleo Pharmaceuticals, Inc. ("Kleo") to purchase 3,000,000 shares of common stock in an initial closing, with a commitment to purchase an aggregate of 5,500,000 additional shares of common stock, in each case at a share price of $1.00 per share (the "Kleo SPA"). Kleo is a development-stage biopharmaceutical company focused on advancing the field of immunotherapy by developing small molecules that emulate biologics. Under the terms of the Kleo SPA, the Company committed to purchase 3,000,000 shares upon the initial closing on August 31, 2016, and the remaining 5,500,000 shares are to be purchased in four equal tranches of 1,375,000 shares beginning six months from the initial closing and then every three months thereafter.

        In connection with the Kleo SPA, the Company agreed to purchase an additional 500,000 shares of Kleo common stock from an officer and stockholder of Kleo. In March 2017, the Company completed the purchase of these shares. The consideration paid for these shares consisted of a cash payment of $250 and the Company's issuance of 32,500 common shares (see Note 20).

        The Company has a variable interest in Kleo through its equity investment. Kleo is a variable interest entity due to the equity investment at risk being insufficient to finance its activities. An assessment of

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

5. Equity Method Investment (Continued)

whether or not the Company has the power to direct activities that most significantly impact Kleo's economic performance and to identify the party that obtains the majority of the benefits of the investment was performed as of the investment date and as of December 31, 2016, and will be performed as of each subsequent reporting date. The Company concluded that the activities that most significantly impact Kleo's economic performance are the ability to direct the research activities, the ability to select vendors to perform the research, the ability to maintain research staff and the ability to raise additional funds. Based on the outcome of this assessment, the Company concluded that consolidation of Kleo is not appropriate, and has therefore accounted for the investment under the equity method.

        The Company's purchase of 3,000,000 shares of Kleo's common stock represented a 21.7% interest and an 18.6% interest in the outstanding shares of Kleo as of August 29, 2016 and December 31, 2016, respectively. In connection with the investment, the Company also received the right to designate two of the five members of Kleo's board of directors. The Company accounts for its investment in Kleo under the equity method of accounting. The Company recorded its initial investment in Kleo based on the $3,000 cost of the investment. The difference between the cost of the Company's investment in Kleo and its proportionate share of the net assets of Kleo was allocated to goodwill and indefinite-lived intangible assets. The Company will record future adjustments to the carrying value of its investment at each reporting date equal to its proportionate share of Kleo's net income or loss for the corresponding period. The Company recorded other expense of $247 for the year ended December 31, 2016, and a corresponding reduction in the carrying value of its investment in Kleo at December 31, 2016, for its proportionate share of Kleo's net loss for the period in which the investment was held.

        The carrying value of the Company's investment in Kleo was $2,753 as of December 31, 2016 and is reported as equity method investment on the consolidated balance sheet. The carrying value of the investment represents the Company's maximum loss exposure as of December 31, 2016.

        Summarized financial information for Kleo was as follows:

 
  December 31, 2016  

Current assets

  $ 4,269  

Total assets

  $ 4,317  

Current liabilities

  $ 413  

Total liabilities

  $ 656  

 

 
  Year Ended
December 31, 2016
 

Revenue

  $  

Loss from operations

  $ (2,815 )

Net loss

  $ (2,835 )

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

6. Property and Equipment, Net

        Property and equipment, net consisted of the following:

 
  December 31,  
 
  2015   2016  

Computer equipment

  $ 8   $ 34  

Less: Accumulated depreciation

    (3 )   (8 )

  $ 5   $ 26  

        Depreciation expense was $2 and $5 for the years ended December 31, 2015 and 2016, respectively.

7. Accrued Expenses

        Accrued expenses consisted of the following:

 
  December 31,  
 
  2015   2016  

Accrued clinical trial costs

  $ 104   $ 2,204  

Accrued professional fees

    82     516  

Accrued employee compensation and benefits

    9     27  

Accrued income taxes

        99  

Other

    66     134  

  $ 261   $ 2,980  

8. Notes Payable

    Credit Agreement

        On August 30, 2016, the Company entered into a one-year credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association ("Wells Fargo") providing for a term loan in the principal amount of $5,000 (the "Loan") and borrowed the full $5,000 available under the agreement. Borrowings under the Credit Agreement bear interest at a rate equal to monthly LIBOR plus 1.50% per annum, and the agreement requires monthly, interest-only payments beginning on September 30, 2016 through August 30, 2017 (the "Maturity Date"), when all amounts of unpaid principal and interest become due. The monthly LIBOR rate is reset each month ("LIBOR Period"). As of December 31, 2016, the interest rate applicable to the Loan was 2.27% per annum. In the event of a default, the interest rate applicable is equal to the monthly LIBOR rate then in effect, increased by 4.0% per annum. The Company's obligations under the Credit Agreement are guaranteed by an outside director and shareholder of the Company (the "Guarantor"). A second outside director and shareholder of the Company entered into a guaranty agreement with the Guarantor under which the second director agreed to reimburse the Guarantor for one-half of any guaranty obligations that the Guarantor pays to Wells Fargo.

        The Credit Agreement also provides that the Company may voluntarily prepay the Loan at any time; however, if the Company elects to prepay the Loan or the Loan otherwise is accelerated and becomes payable prior to the Maturity Date, the Company will pay a prepayment premium, which will be the

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

8. Notes Payable (Continued)

additional interest that would have accrued if the Loan remained outstanding through the end of the current monthly LIBOR Period. The Credit Agreement contains affirmative and negative covenants, but does not contain any financial covenants.

        The Loan is guaranteed by the Guarantor pursuant to a continuing guaranty agreement entered into between the Guarantor and Wells Fargo. The Guarantor entered into a separate guaranty agreement with another outside director and shareholder of the Company (the "Co-Guarantor"), pursuant to which the Co-Guarantor agreed to reimburse the Guarantor for one half of any guaranty obligations paid by the Guarantor to Wells Fargo.

        There were no principal payments due or paid under the Credit Agreement during the year ended December 31, 2016.

        In connection with entering into the Credit Agreement on August 30, 2016, the Company agreed to issue warrants to purchase $1,000 of common shares to each of the Guarantor and Co-Guarantor. The number of common shares issuable upon exercise of each warrant is determined by dividing $1,000 by the price per share paid by investors in the Series A First Closing (see Note 10). On January 26, 2017, the Company issued the warrants to the Guarantor and Co-Guarantor (see Note 9).

        The Company determined that the obligation to issue the warrants represented a liability that was considered outstanding for accounting purposes on August 30, 2016, the date of the Credit Agreement (see Note 9). The fair value of the warrant liability upon issuance represented a premium paid for the guaranty of the Loan, and, accordingly, the Company recorded the issuance-date fair value of the warrant liability of $934 as a debt discount and as a warrant liability in the Company's consolidated balance sheet. In addition, the Company paid an arrangement fee of $150 to the lender and incurred legal costs of $47, both of which were recorded as a debt discount. The debt discount is reflected as a reduction of the carrying value of the notes payable on the Company's consolidated balance sheet and is being amortized to interest expense over the term of the note using the effective interest method.

        The Company recognized interest expense of $385 during the year ended December 31, 2016, including $347 related to the accretion of the debt discount. As of December 31, 2016, the unamortized debt discount was $784.

    Notes Payable to Related Parties

        On December 31, 2016, the Company entered into stock purchase agreements with each of the stockholders of BPI, acquiring 100% of the issued and outstanding shares of BPI for aggregate purchase consideration of $595. The Company funded the acquisition through the issuance of promissory notes to each of the former stockholders of BPI. The former beneficial stockholders of BPI are shareholders of the Company and also serve as the Company's Chairman of the board of directors, Chief Executive Officer, and Chief Medical Officer, respectively. The notes are payable in five annual payments, the first four of which are interest only, with the final payment to include the principal balance outstanding plus any accrued and unpaid interest. The notes bear interest at a rate of 4.5% per annum and mature on December 31, 2021. The notes become immediately due and payable upon specified events, including immediately prior to the consummation of an initial public offering of the Company's common shares or upon the occurrence of a change of control of the Company. There are no affirmative, negative or financial covenants associated with the notes.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

8. Notes Payable (Continued)

        As of December 31, 2016, the aggregate minimum future principal payments of the Company's debt are summarized as follows:

Year Ending December 31,
   
 

2017

  $ 5,000  

2018

     

2019

     

2020

     

2021

    595  

  $ 5,595  

9. Warrants

    ALS Biopharma Warrants

        On August 10, 2015, as partial consideration issued in connection with a license agreement with ALS Biopharma LLC ("ALS Biopharma") (see Note 13), the Company issued to ALS Biopharma a warrant to purchase 275,000 common shares at an exercise price of $5.60 per share. The warrant was immediately exercisable upon issuance and expires 10 years from the issuance date. The warrant was classified as equity and recorded at its fair value on the date of issuance, which was estimated to be $1,231 using the Black-Scholes option-pricing model with the following assumptions: 89.9% volatility; 2.20% risk-free interest rate; 10-year expected term; and no dividend yield. The issuance-date fair value of the warrant was recorded as research and development expense in the consolidated statement of operations and comprehensive loss, and as additional paid-in capital in the consolidated balance sheet.

        On August 10, 2015, in connection with the same license agreement, the Company issued to ALS Biopharma a warrant to purchase 325,000 common shares at an exercise price of $5.60 per share. The warrant became exercisable upon the Company's filing of an investigational new drug application ("IND") for a patented product under the license agreement, and expires 10 years from the issuance date. On May 31, 2016, the Company filed an IND for a patented product under the license agreement. The warrant was classified as equity and recorded at its fair value on May 31, 2016, which was estimated to be $2,127 using the Black-Scholes option-pricing model with the following assumptions: 85.7% volatility; 1.84% risk-free interest rate; 10-year expected term; and no dividend yield. The issuance-date fair value of the warrant was recorded as research and development expense in the consolidated statement of operations and comprehensive loss, and as additional paid-in capital in the consolidated balance sheet.

    Guarantor and Co-Guarantor Warrants

        The Company agreed to issue warrants to purchase $1,000 of common shares to each of the Guarantor and Co-Guarantor of the Credit Agreement (see Note 8), who are members of the Company's board of directors (see Note 17). The number of common shares issuable upon exercise of each warrant is determined by dividing $1,000 by the price per share paid by investors in the Series A First Closing (see Note 10). As of December 31, 2016, the warrants had not yet been issued.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

9. Warrants (Continued)

        The Company determined that the obligation to issue the warrants represented a liability that was considered outstanding for accounting purposes on August 30, 2016, the date the Company entered into the Credit Agreement. The Company classifies the warrants as a liability on its consolidated balance sheet because each warrant represents a freestanding financial instrument that is not indexed to the Company's own shares. The warrant liability was initially recorded at fair value upon entering into the Credit Agreement and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability are recognized as a component of other income (expense), net in the Company's consolidated statement of operations and comprehensive loss. Changes in the fair value of the warrant liability will continue to be recognized until the warrants are exercised, expire or qualify for equity classification.

        The fair value of the warrant liability was determined to be $934 on the date of issuance. The Company remeasured the liability as of December 31, 2016 and determined that the fair value of the warrant liability was $780, resulting in a gain of $154 recorded within other income (expense), net in the consolidated statements of operations for the year ended December 31, 2016.

        On January 26, 2017, the Company issued the warrants to the Guarantor and Co-Guarantor, pursuant to which each director received a warrant to purchase 107,500 common shares at an exercise price of $9.2911 per share. The warrants were immediately exercisable and expire upon the earlier to occur of (i) the fifth anniversary of the issuance date of the warrants and (ii) the second anniversary of the Company's initial public offering. Upon issuance, the Company continued to classify these warrants as a liability on the consolidated balance sheet because the warrants contain anti-dilution price protection provisions through January 26, 2018. As a result, changes in the fair value of the warrant liability will continue to be recognized as a component of other income (expense), net until the earliest of (i) the exercise of the warrants, (ii) the expiration of the warrants or (iii) January 26, 2018.

10. Convertible Preferred Shares

        As of December 31, 2016, the Company's memorandum and articles of association, as amended and restated, authorized the Company to issue 11,242,172 Series A preferred shares. The holders of Series A preferred shares have liquidation rights in the event of a deemed liquidation that, in certain situations, is not solely within the control of the Company. Therefore, the Series A preferred shares are classified outside of shareholders' equity (deficit).

        In October 2016, the Company issued and sold an aggregate of 4,305,209 Series A preferred shares, at an issuance price of $9.2911 per share, for proceeds of $37,295, net of offering costs of $2,705 (the "Series A First Closing"). The $2,705 of offering costs consisted of $1,730 payable in cash and 105,010 shares of the Company's Series A preferred shares valued at $975, or $9.2911 per share. The preferred share purchase agreement provides for the issuance of additional Series A preferred shares in a second and final tranche (the "Series A Second Closing"). The Series A Second Closing was contingent upon the results of the Company's oral contraceptive drug-drug interaction study for rimegepant. One of the investors was designated to review the results of the study and within 21 days notify the Company if it elected to proceed with the Series A Second Closing. The Company determined that the future tranche obligation did not meet the definition of a freestanding financial instrument because, while separately exercisable, it was not legally detachable. Further, the Company determined that the embedded future

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

10. Convertible Preferred Shares (Continued)

tranche obligation did not meet the definition of a derivative, which would require bifurcation for accounting purposes, as it does not provide for net settlement.

        In February 2017, the Company completed the Series A Second Closing through the issuance and sale of an aggregate of 4,305,182 Series A preferred shares at an issuance price of $9.2911 per share for net cash proceeds of $38,635 (see Note 20). The offering costs for the second tranche consisted of $1,365 payable in cash and 105,009 shares of the Company's Series A preferred shares.

        In October 2016, the Company issued to AstraZeneca 538,150 Series A preferred shares with an aggregate fair value of $5,000, or $9.2911 per share, in satisfaction of the obligation to issue the first tranche of contingently issuable equity under the Company's license agreement with AstraZeneca (see Note 13).

        The holders of the Series A preferred shares have the following rights and preferences:

    Voting

        The holders of Series A preferred shares are entitled to vote, together with the holders of common shares, on all matters submitted to shareholders for a vote. The holders of Series A preferred shares are entitled to the number of votes equal to the number of common shares into which their Series A preferred shares could convert.

    Conversion

        Each Series A preferred share is convertible into common shares at the option of the shareholder at any time after the date of issuance. In addition, each Series A preferred share will be automatically converted into common shares, at the applicable conversion ratio then in effect, upon the earlier of (i) a firm commitment public offering with proceeds to the Company of at least $50,000, before deducting underwriting discounts and commissions or (ii) the date specified by the vote or written consent of the holders of a majority of the then outstanding Series A preferred shares.

        The conversion ratio of Series A preferred shares is determined by dividing the Original Issue Price by the Conversion Price. The Original Issue Price of the Series A preferred shares is $9.2911 per share. The Conversion Price of the Series A preferred shares is $9.2911 per share, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization and other adjustments as set forth in the Company's memorandum and articles of association, as amended and restated. On the date of issuance, each Series A preferred share is convertible into one common share. In the event that any Series A preferred stock investor does not participate in the second and final tranche of the Series A preferred financing, that investor's shares will be convertible into common shares at a ratio of one common share for every 1,000 Series A preferred shares. In addition, if the Company decides not to move forward with a Phase 3 clinical trial on its product candidate, rimegepant, or if the Company fails to initiate a Phase 3 clinical trial prior to October 1, 2017, the Conversion Price of the Series A preferred shares will be reduced to $7.0613 per share.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

10. Convertible Preferred Shares (Continued)

    Dividends

        The holders of Series A preferred shares are entitled to receive dividends in preference to any dividend on common shares at the rate of 8.0% per year of the Original Issue Price. Dividends shall accrue daily and compound annually, whether or not declared, shall be payable when, as and if declared by the board or directors of the Company and shall be noncumulative. The Company may not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company unless the holders of Series A preferred shares then outstanding first receive, or simultaneously receive, dividends on each outstanding Series A preferred share.

        Accruing dividends, whether or not declared, shall be payable upon any liquidation event. Declared but unpaid dividends are payable upon the conversion of the Series A preferred shares into common shares.

    Liquidation

        In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company or a Deemed Liquidation Event (as described below), the holders of Series A preferred shares then outstanding will receive, in preference to holders of common shares, an amount equal to the greater of (i) the Original Issue Price per share, plus all dividends declared but unpaid on such shares or (ii) the amount such holders would have received had all of their Series A preferred shares been converted into common shares immediately prior to such liquidation event. If upon any such liquidation event, the assets of the Company available for distribution are insufficient to permit payment in full to the holders of Series A preferred shares, the proceeds will be ratably distributed among the holders of Series A preferred shares in proportion to the respective amounts that they would have received if they were paid in full.

        After payments have been made in full to the holders of Series A preferred shares, the remaining assets of the Company available for distribution shall be distributed among the holders of common shares ratably in proportion to the number of shares held by each such holder.

        Unless a majority of the holders of the then outstanding Series A preferred shares elect otherwise, a Deemed Liquidation Event shall include a merger or consolidation (other than one in which shareholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

    Redemption

        The Company's memorandum and articles of association, as amended and restated, does not provide redemption rights to the holders of Series A preferred shares.

11. Common Shares

        As of December 31, 2015 and 2016, the Company's memorandum and articles of association, as amended and restated, authorized the Company to issue 17,500,000 shares and 38,000,000 shares, respectively, of no par value common shares.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

11. Common Shares (Continued)

        Each common share entitles the holder to one vote on all matters submitted to a vote of the Company's shareholders. Common shareholders are entitled to receive dividends, as may be declared by the board of directors, if any. Through December 31, 2016, no dividends have been declared.

        In September 2013, the Company issued 250,000 common shares to Yale in connection with a license agreement (see Note 13). Also in September 2013, the Company issued 3,350,000 common shares to Company founders and inventors and 1,300,000 common shares to the Chairman of the Company's board of directors and co-founder of BPI.

        In January 2014, the Company issued 5,752,000 common shares at an issuance price of $0.61 per share for proceeds of $3,435, net of issuance costs of $65. Pursuant to the terms of the securities purchase agreement, the purchase price for the common shares was payable in four installments, with $1,750 due at closing, $750 due on August 1, 2014, $500 due on December 3, 2014 and $500 due on February 4, 2015. As of December 31, 2014, the Company reported a note receivable from shareholder for the final installment of $500 on its consolidated balance sheet. The investor paid the final installment of $500 in 2015.

        In July 2015, the Company issued 867,000 common shares at an issuance price of $5.60 per share for proceeds of $4,816, net of issuance costs of $37.

        In August 2015, the Company issued 50,000 common shares valued at $262 in partial settlement of consideration due under a license agreement.

        In February 2016, the Company issued 429,000 common shares at an issuance price of $7.00 per share for proceeds of $2,980, net of issuance costs of $23.

        In May 2016 and July 2016 the Company issued an aggregate of 1,090,500 common shares at an issuance price of $7.70 per share for proceeds of $8,299, net of issuance costs of $97.

        In July 2016, concurrently with the issuance of the Company's common shares to Connecticut Innovations Incorporated ("CII"), the Company and CII entered into a put agreement (the "Put Agreement"). The Put Agreement grants CII the right to sell (the "Put Option") to the Company all or any part of CII's warrant rights (if any), shares (if any) or notes (if any). The Put Option becomes exercisable upon the Company's breach of the covenant to maintain a presence in Connecticut, as defined in the Put Agreement. Upon CII's exercise of the Put Option, the Company would be obligated to purchase CII's shares for a price that is the greater of (i) the current market price of such share and (ii) the original purchase price of such share. The right to put the shares will terminate at such time that the shares may be sold (i) pursuant to an effective registration statement under the Securities Act of 1933 (the "Securities Act"), (ii) pursuant to Rule 144 promulgated under the Securities Act, but in each case, only after the termination of any applicable "lock-up" restrictions and, in the case of (ii), only if the common shares are then listed for trading on a national securities exchange. The fair value of the Put Option was determined to be $0 upon execution of the agreement and as of December 31, 2016 because the ability to maintain a presence in Connecticut is within the Company's control.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

12. Share-Based Compensation

    2014 Equity Incentive Plan

        The Company's 2014 Equity Incentive Plan, as amended, (the "2014 Plan") provides for the Company to sell or issue common shares or restricted common shares, or to grant incentive stock options or nonqualified stock options for the purchase of common shares, to employees, members of the board of directors and consultants of the Company. The 2014 Plan is administered by the board of directors, or at the discretion of the board of directors, by a committee of the board. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or their committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the common share on the date of grant and the term of stock option may not be greater than ten years.

        The total number of common shares that may be issued under the 2014 Plan was 4,000,000 shares as of December 31, 2015. In January 2017, the Company effected an increase, effective October 28, 2016, in the number of common shares reserved for issuance under the 2014 Plan from 4,000,000 to 4,899,230 shares. As of December 31, 2016, 1,034,805 shares remained available for future grant under the 2014 Plan.

        Vesting periods are determined at the discretion of the board of directors. Stock options granted to employees and directors typically vest over three years. Stock options granted to non-employees typically vest over three years. The Company measures and records the value of these options over the period of time services are provided and, as such, unvested portions are subject to remeasurement at subsequent reporting periods.

        During the years ended December 31, 2015 and 2016, the Company granted options to purchase 637,500 common shares and 417,875 common shares, respectively, to employees and directors. The Company recorded share-based compensation expense for options granted to employees and directors of $1,137 and $2,284 during the years ended December 31, 2015 and 2016, respectively.

        During the years ended December 31, 2015 and 2016, the Company granted options to purchase 610,000 common shares and 199,050 common shares, respectively, to non-employees. The Company recorded share-based compensation expense for options granted to non-employees of $1,700 and $2,319 during the years ended December 31, 2015 and 2016, respectively.

    Stock Option Valuation

        The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors were as follows, presented on a weighted average basis:

 
  Year Ended
December 31,
 
 
  2015   2016  

Risk-free interest rate

    1.62 %   2.19 %

Expected term (in years)

    5.75     5.75  

Expected volatility

    58.51 %   70.58 %

Expected dividend yield

    0 %   0 %

Exercise price

  $ 5.60   $ 9.29  

Fair value of common share

  $ 5.23   $ 6.73  

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

12. Share-Based Compensation (Continued)

        The assumptions that the Company used to determine the grant-date fair value of stock options granted to non-employees were as follows, presented on a weighted average basis:

 
  Year Ended
December 31,
 
 
  2015   2016  

Risk-free interest rate

    2.09 %   2.54 %

Expected term (in years)

    10.0     10.0  

Expected volatility

    61.61 %   67.16 %

Expected dividend yield

    0 %   0 %

Exercise price

  $ 5.60   $ 9.29  

Fair value of common share

  $ 5.23   $ 6.73  

    Stock Options

        Stock option activity under the 2014 Plan is summarized as follows:

 
  Number of
Shares
  Weighted
Average
Exercise
Price
  Weighted
Average
Remaining
Contractual
Term
  Aggregate
Intrinsic
Value
 
 
   
   
  (in years)
   
 

Outstanding as of December 31, 2015

    3,247,500   $ 2.53     9.68   $ 9,983  

Granted

    616,925   $ 9.29              

Exercised

                     

Forfeited

                     

Outstanding as of December 31, 2016

    3,864,425   $ 3.61     9.21   $ 15,991  

Options exercisable as of December 31, 2016

    2,277,981   $ 2.56     8.30   $ 11,416  

Options unvested as of December 31, 2016

    1,586,444   $ 5.10     8.87   $ 4,575  

        The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common shares for those stock options that had exercise prices lower than the fair value of the Company's common shares. There have been no exercises as of December 31, 2016.

        The weighted average grant-date fair value per share of stock options granted during the years ended December 31, 2015 and 2016 was $3.22 and $4.09, respectively.

        The total fair value of options vested during the years ended December 31, 2015 and 2016 was $2,345 and $3,381, respectively.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

12. Share-Based Compensation (Continued)

    Share-Based Compensation

        Share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:

 
  Year Ended
December 31,
 
 
  2015   2016  

Research and development expense

  $ 1,527   $ 2,382  

General and administrative expense

    1,310     2,221  

  $ 2,837   $ 4,603  

        As of December 31, 2016, total unrecognized compensation cost related to the unvested share-based awards was $5,258, which is expected to be recognized over a weighted average period of 1.53 years.

13. License Agreements

    Yale Agreement

        In September 2013, the Company entered into an exclusive license agreement with Yale (the "Yale Agreement") to obtain a license to certain patent rights for the commercial development, manufacture, distribution, use and sale of products and processes resulting from the development of those patent rights, related to the use of riluzole in treating various neurological conditions, such as general anxiety disorder, post-traumatic stress disorder and depression. As part of the consideration for this license, the Company issued Yale 250,000 common shares and granted Yale the right to purchase up to 10% of the securities issued in specified future equity offerings by the Company. In the event that Yale's fully diluted ownership position following the closing of the Company's first two financings with institutional investors resulting in an investment of at least $3,500 fell below 1% of the Company's fully diluted common shares outstanding, the Company would be required to issue to Yale an additional number of shares of common shares such that Yale's ownership position is restored to no less than 1%. The obligation to contingently issue equity to Yale was determined to be a liability, which was accounted for at fair value and remeasured at each reporting date. The fair value of the obligation at inception of the Yale Agreement was $0 based on the Company's assessment that the probability of issuing additional shares that would reduce Yale's ownership percentage below 1% was remote. The fair value of the liability remained at $0 through the completion of the Company's common share issuances in January 2014 and July 2015, at which time the contingent obligation terminated, as Yale's ownership position remained above 1%.

        The Yale Agreement provides for a change-of-control payment to Yale upon the occurrence of a change-of-control event, as defined in the agreement, including an initial public offering. Upon the occurrence of a change-of-control event, the Company is obligated to pay to Yale the lesser of (i) 5% of the dollar value of all initial and future potential consideration paid or payable by the acquirer and (ii) $1,500. If the change-of-control event is as an initial public offering, the amount the Company will be obligated to pay to Yale will be reduced by the value of Yale's equity investment in the Company on the first day that Yale is free to sell its equity interest. The Company classifies the change-of-control payment obligation as a liability on its consolidated balance sheet because it represents a contingent obligation to pay a variable amount of cash that may be based, in part, on the value of the Company's own shares. The issuance-date

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

fair value of the derivative liability of $14 was recognized as research and development expense in the consolidated statement of operations and comprehensive loss upon entering into the agreement with Yale. The derivative liability is remeasured to fair value at each reporting date. Changes in the fair value of the derivative liability are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the derivative liability will continue to be recognized until a change-of-control event occurs.

        For the years ended December 31, 2015 and 2016, the Company recorded other expense of $370 and $65, respectively, for the change in the fair value of the derivative liability. The fair value of the derivative liability was $447 and $512 as of December 31, 2015 and 2016, respectively.

        In addition, the Company agreed to pay Yale up to $2,000 upon the achievement of specified regulatory milestones and annual royalty payments of a low single-digit percentage based on net sales of products from the licensed patents, subject to a minimum amount of up to $1,000 per year. If the Company grants any sublicense rights under the Yale Agreement, it must pay Yale a low single-digit percentage of sublicense income that it receives.

        The Yale Agreement also requires the Company to meet certain due diligence requirements based upon specified milestones. The Company can elect to extend the deadline for its compliance with the due diligence requirements by a maximum of one year upon the payment to Yale of up to $150. The Company is also required to reimburse Yale for any fees that Yale incurs related to the filing, prosecution, defending and maintenance of patent rights licensed under the Yale Agreement. The Company also agreed to reimburse Yale for its past costs related to the licensed patents, which were estimated to be $18 in the aggregate. In the event that the Company fails to make any payments, commits a material breach, fails to maintain adequate insurance or challenges the patent rights of Yale, Yale can terminate the Yale Agreement. The Company can terminate the Yale Agreement (i) upon 90 days' notice to Yale, (ii) if Yale commits a material breach of the Yale Agreement or (iii) as to a specific country if there are no valid patent rights in such country. The Yale Agreement expires on a country-by-country basis upon the later of the date on which the last patent rights expire in such country or ten years from the date of the first sale of a product incorporating the licensed patents.

        The Company recorded research and development expenses of $84 and $4 for the years ended December 31, 2015 and 2016 for reimbursement of patent fees in connection with the Yale Agreement.

    MGH Agreement

        In September 2014, the Company entered into a license agreement (the "MGH Agreement") with The General Hospital Corporation d/b/a Massachusetts General Hospital ("MGH"), pursuant to which MGH granted the Company a license to certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, related to treating depression with a combination of ketamine and scopolamine. Under the MGH Agreement, the Company paid MGH an upfront license fee of $20. The Company is also obligated to pay MGH annual license maintenance fees of between $30 and $50, beginning in 2017, future milestone payments of up to $750 upon the achievement of specified clinical and regulatory milestones and up to $2,500 upon the achievement of specified commercial milestones. The Company has also agreed to pay MGH royalties of a low single-digit percentage based on net sales of products licensed under the

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

agreement. If the Company receives revenue from sublicensing any of its rights under the agreement, the Company is also obligated to pay a portion of that revenue to MGH.

        The MGH Agreement also requires the Company to meet certain due diligence requirements based upon specified milestones. The Company can elect to extend the deadline for its compliance with the due diligence requirements by a maximum of one year by making payments to MGH of up to $300 in the aggregate. The Company is required to reimburse MGH for any fees that MGH incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the agreement. The Company also agreed to reimburse MGH for its past costs related to the licensed patents, which were estimated to be $13 in the aggregate. The MGH Agreement expires upon expiration of the patent rights under the MGH Agreement, unless earlier terminated by either party.

        The Company did not recognize any research and development expense associated with the MGH Agreement during the years ended December 31, 2015 and 2016.

    ALS Biopharma Agreement

        In August 2015, the Company entered into an agreement (the "ALS Biopharma Agreement") with ALS Biopharma and Fox Chase Chemical Diversity Center Inc. ("FCCDC"), pursuant to which ALS Biopharma and FCCDC assigned the Company their worldwide patent rights to a family of over 300 prodrugs of glutamate modulating agents, including trigriluzole, as well as other innovative technologies. Under the ALS Biopharma Agreement, the Company is obligated to use commercially reasonable efforts to commercialize and develop markets for the patent products. The Company paid ALS Biopharma $1,000 upon entering into the agreement as well as additional payments of $500 and $1,000 during the years ended December 31, 2015 and 2016, respectively, which amounts represented funding for research to be performed by ALS Biopharma in connection with a mutually agreed upon research plan. The Company is also obligated to pay $3,000 upon the achievement of specified regulatory milestones with respect to the first licensed product and $1,000 upon the achievement of specified regulatory milestones with respect to subsequently developed products, as well as royalty payments of a low single-digit percentage based on net sales of products licensed under the agreement, payable on a quarterly basis.

        In connection with the ALS Biopharma Agreement, the Company also issued to ALS Biopharma (i) 50,000 common shares; (ii) an immediately exercisable warrant to purchase 275,000 common shares at an exercise price of $5.60 per share; and (iii) a warrant to purchase 325,000 common shares at an exercise price of $5.60 per share, which warrant will become exercisable upon the Company's achievement of a specified regulatory milestone (see Note 9). The ALS Biopharma Agreement terminates on a country-by-country basis as the last patent rights expire in each such country. If the Company abandons its development, research, licensing or sale of all products covered by one or more claims of any patent or patent application assigned under the ALS Biopharma Agreement, or if the Company ceases operations, it has agreed to reassign the applicable patent rights back to ALS Biopharma.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

        The Company recorded research and development expenses of $2,836 and $3,127 for the years ended December 31, 2015 and 2016, respectively, as a result of the ALS Biopharma Agreement, which amounts consist of the fair value of the shares and warrants upon their issuance to ALS Biopharma, as well as the upfront payments made at the time of signing the ALS Biopharma Agreement.

    Rutgers Agreement

        In June 2016, the Company entered into an exclusive license agreement (the "Rutgers Agreement") with Rutgers, The State University of New Jersey ("Rutgers"), licensing several patents and patent applications related to the use of riluzole to treat various cancers. Under the Rutgers Agreement, the Company is required to pay Rutgers annual license maintenance fees in the aggregate of $75 for the first five years following execution of the agreement, then $25 per year thereafter until the first commercial sale of a licensed product, at which point the Company will pay Rutgers minimum annual royalties totaling in the low six-digits. The Company is also obligated to pay Rutgers up to $825 in the aggregate upon the achievement of specified clinical and regulatory milestones. The Company also agreed to pay Rutgers royalties of a low single-digit percentage of net sales of licensed products sold by the Company, its affiliates or its sublicensees, subject to a minimum amount of up to $100 per year. If the Company grants any sublicense rights under the Rutgers Agreement, the Company must pay Rutgers a low double-digit percentage of sublicense income it receives.

        Under the Rutgers Agreement, in the event that the Company experiences a change of control or sale of substantially all of its assets prior to the initiation of a Phase 3 clinical trial related to products licensed under the agreement, and such change of control or sale results in a full liquidation of the Company, the Company will be obligated to pay Rutgers a change-of-control fee equal to 0.3% of the total value of the transaction, but not less than $100. The Company determined that the change-of-control payment should be accounted for as a liability because it represents a contingent obligation to pay a variable amount of cash that may be based, in part, on the value of the Company's own shares. The fair value of the obligation upon execution of the Rutgers Agreement was $0 based on the Company's assessment that the probability of a change-in-control event occurring prior to the initiation of a Phase 3 clinical trial related to products licensed under the agreement was remote. The fair value of the liability remained at $0 through December 31, 2016.

        The Rutgers Agreement also requires the Company to meet certain due diligence requirements based upon specified milestones. The Company can elect to extend the deadline for its compliance with the due diligence requirements by a maximum of one year upon payments to Rutgers of up to $500 in the aggregate. Under the Rutgers Agreement, the Company is required to reimburse Rutgers for any fees that Rutgers incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the agreement. The Company also agreed to reimburse Rutgers for its past costs related to the licensed patent, which were estimated to be $72. The Rutgers Agreement expires upon expiration of the patent rights under the agreement or ten years from the date of first commercial sale of a licensed product, whichever is later, unless terminated by either party.

        The Company recorded research and development expense of $72 for the year ended December 31, 2016, which consisted of the reimbursed patent fees.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

    BMS Agreement

        In July 2016, the Company entered into an exclusive, worldwide license agreement (the "BMS Agreement") with BMS for the development and commercialization rights to rimegepant and BHV-3500, as well as other CGRP-related intellectual property. In exchange for these rights, the Company agreed to pay BMS initial payments, milestone payments and royalties on net sales of licensed products under the agreement.

        The Company made upfront payments to BMS totaling $9,000 during the year ended December 31, 2016 in connection with the BMS Agreement.

        The Company is obligated to make milestone payments to BMS upon the achievement of specified development and commercialization milestones. The development milestone payments due under the agreement depend on the licensed product being developed. With respect to rimegepant, the Company is obligated to pay up to $127,500 in the aggregate upon the achievement of the development milestones. For any product other than rimegepant, the Company is obligated to pay up to $74,500 in the aggregate upon the achievement of the development milestones. In addition, the Company is obligated to pay up to $150,000 for each licensed product upon the achievement of commercial milestones. If the Company receives revenue from sublicensing any of its rights under the agreement, it is also obligated to pay a portion of that revenue to BMS. The Company is also obligated to make tiered royalty payments to BMS based on annual worldwide net sales, with percentages in the low to mid teens.

        Under the BMS Agreement, the Company is obligated to use commercially reasonable efforts to develop licensed products and to commercialize at least one licensed product using the patent rights licensed from BMS and is solely responsible for all development, regulatory and commercial activities and costs. The Company is also required to reimburse BMS for any fees that BMS incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the BMS Agreement. Under the BMS Agreement, BMS transferred to the Company manufactured licensed products, including certain materials that will be used by the Company to conduct clinical trials.

        The BMS Agreement will terminate on a licensed product-by-licensed product and country-by-country basis upon the expiration of the royalty term with respect to each licensed product in each country. BMS has the right to terminate the agreement upon the Company's insolvency or bankruptcy, the Company's uncured material breach of the agreement, including the failure to meet its development and commercialization obligations, or if the Company challenges any of BMS's patent rights. The Company has the right to terminate the BMS Agreement if BMS materially breaches the agreement or if, after the Company provides notice, it chooses not to move forward with development and commercialization in a specific country.

        The BMS Agreement required the Company to complete a financing transaction with gross proceeds of at least $30,000, of which a minimum of $22,000 was to be from investment in equity prior to October 17, 2016, unless extended by mutual agreement of the Company and BMS. The BMS Agreement was amended, effective October 14, 2016, to extend the deadline for completing the financing transaction to October 31, 2016, on which date the Series A First Closing was completed (see Note 10).

        Under the BMS Agreement, the Company also agreed to issue BMS common shares in the amount of $12,500, which shares are contingently issuable upon the earliest to occur of (i) the initiation of a Phase 3 trial for the first licensed compound to reach such milestone, (ii) the Company's initial public offering or

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

(iii) an event resulting in the change of control of the Company. Under the terms of the BMS Agreement, if the qualifying financing transaction involves the issuance of preferred shares, BMS is entitled to receive preferred shares instead of common shares, at its option. BMS also had the right to purchase up to 8%, on a fully diluted basis, of shares issued in a qualifying financing transaction (as defined in the BMS Agreement) on the same terms and rights as all other investors involved in the financing. The number of shares issuable to BMS under the agreement will be determined by dividing $12,500 by a price per share equal to the lower of (i) the price per share paid by investors in the Series A First Closing, or $9.2911 (see Note 10), or (ii) the price per share paid by investors in any subsequent financing event that occurs prior to the events specified above.

        The obligation to contingently issue equity to BMS is classified as a liability on the consolidated balance sheet because it represents an obligation to issue a variable number of shares for a fixed dollar amount. Upon entering into the BMS Agreement, the issuance-date fair value of the contingent equity liability of $13,125 was recognized as research and development expense in the consolidated statement of operations and comprehensive loss. The Company remeasured the fair value of the contingent equity liability as of December 31, 2016 and recognized expense of $938 for the increase in the fair value of the liability to $14,063. Changes in the fair value of the contingent equity liability are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent equity liability will continue to be recognized until the occurrence of a triggering event.

        The Company recorded research and development expense of $22,125 related to the BMS Agreement for the year ended December 31, 2016, which consisted of $13,125 for the issuance-date fair value of the contingent equity liability and $9,000 for the upfront license payments made to BMS.

    AstraZeneca Agreement

        In October 2016, the Company entered into an exclusive license agreement (the "AstraZeneca Agreement") with AstraZeneca, pursuant to which AstraZeneca granted the Company a license to certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, including BHV-5000 and BHV-5500. In exchange for these rights, the Company agreed to pay AstraZeneca an upfront payment, milestone payments and royalties on net sales of licensed products under the agreement. The Company made an upfront payment of $5,000 during the year ended December 31, 2016. The regulatory milestones due under the agreement depend on the indication of the licensed product being developed as well as the territory where regulatory approval is obtained. Development milestones due under the agreement with respect to Rett syndrome total up to $30,000, and, for any indication other than Rett syndrome, total up to $60,000. Commercial milestones are based on net sales of all products licensed under the agreement and total up to $120,000. The Company has also agreed to pay tiered royalties based on net sales of all products licensed under the agreement of mid single-digit to low double-digit percentages. If the Company receives revenue from sublicensing any of its rights under the AstraZeneca Agreement, the Company is also obligated to pay a portion of that revenue to AstraZeneca. The Company is also required to reimburse AstraZeneca for any fees that AstraZeneca incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the AstraZeneca Agreement.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

        The AstraZeneca Agreement expires upon the expiration of the patent rights under the agreement, unless earlier terminated by either party, or on a country-by-country basis ten years after the first commercial sale.

        As part of the consideration under the AstraZeneca Agreement, the Company agreed to issue to AstraZeneca common shares in the amount of $10,000 if the Company completed a qualifying equity financing resulting in proceeds of at least $30,000 prior to December 29, 2016. Under the terms of the AstraZeneca Agreement, if the qualifying financing transaction involved the issuance of preferred shares, AstraZeneca would be entitled to receive preferred shares instead of common shares, at its option. The number of shares issued would be determined based on the price per share paid by investors in the qualifying financing transaction. Upon the occurrence of the qualifying financing transaction, 50% of the shares would be issuable upon the closing of the transaction (the "First Tranche") and the other 50% would become issuable upon the earlier of (i) the initiation of a Phase 2b or equivalent clinical trial of a product candidate based on the licensed patent rights or (ii) any liquidity event, including an initial public offering of the Company, any change of control of the Company or any assignment of the Company's rights and obligations under the AstraZeneca Agreement (the "Second Tranche"). The number of shares issuable to AstraZeneca in each of the First Tranche and the Second Tranche is determined by dividing $5,000 by the price per share paid by investors in the Company's Series A First Closing, or $9.2911 (see Note 10). In addition, AstraZeneca had the right to purchase up to 8%, on a fully diluted basis, of shares issued in such qualifying financing transaction, on the same terms and rights as all other investors involved in the financing.

        The obligations to contingently issue equity to AstraZeneca are classified as liabilities on the consolidated balance sheet because they represent obligations to issue a variable number of shares for a fixed dollar amount. Upon entering into the AstraZeneca Agreement, the issuance-date fair values of the First Tranche and Second Tranche contingent equity liabilities of $4,500 and $4,050, respectively, were recognized as research and development expense in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent equity liabilities are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent equity liabilities will continue to be recognized until the occurrence of a respective triggering event.

        In October 2016, upon completion of the Series A First Closing (see Note 10), the contingency associated with the First Tranche of contingently issuable equity related to the occurrence of a qualified financing was satisfied. As a result, the Company issued to AstraZeneca 538,150 Series A preferred shares with an aggregate fair value of $5,000, or $9.2911 per share. Immediately prior to the completion of the Series A First Closing, the Company remeasured the contingent equity liability associated with the First Tranche to fair value, resulting in recognition of other expense of $500. Upon issuance of the 538,150 Series A preferred shares to AstraZeneca, the Company reclassified the contingent equity liability associated with the First Tranche of $5,000 to the carrying value of Series A preferred shares.

        As of December 31, 2016, the Company determined that the fair value of the contingent equity liability associated with the Second Tranche was $4,875, which resulted in the recognition of other expense of $825 during the year ended December 31, 2016.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

13. License Agreements (Continued)

        The Company recorded research and development expense of $13,550 related to the AstraZeneca Agreement for the year ended December 31, 2016, which consisted of $8,550 for the issuance-date fair value of the contingent equity liability and $5,000 for the upfront license fee paid to AstraZeneca.

    Agreement with Catalent

        In March 2015, the Company entered into a development and license agreement with Catalent U.K. Swindon Zydis Limited ("Catalent") pursuant to which the Company obtained license rights to the Zydis technology in BHV-0223. BHV-0223 was developed under this agreement, and Catalent has manufactured BHV-0223 for clinical testing. The Company made an upfront payment of $275 to Catalent upon entering into the agreement and is obligated to pay Catalent up to $1,575 upon the achievement of specified regulatory and commercial milestones. The Company is also obligated to make royalty payments of a low single-digit percentage based on net sales of products licensed under the agreement.

        Under the agreement, the Company is responsible for conducting clinical trials and for preparing and filing regulatory submissions. The Company has the right to sublicense its rights under the Catalent agreement subject to Catalent's prior written consent. Catalent has the right to enforce the patents covering the Zydis Technology and to defend any allegation that a formulation using Zydis technology, such as BHV-0223, infringes a third party's patent.

        The development and license agreement terminates on a country-by-country basis upon the later of (i) 10 years after the launch of the most recently launched product in such country and (ii) the expiration of the last valid claim covering each product in such country, unless earlier voluntarily terminated by the Company. The agreement automatically extends for one-year terms unless either party gives advance notice of intent to terminate. In addition, Catalent may terminate the agreement either in its entirety or terminate the exclusive nature of the agreement on a country-by-country basis if the Company fails to meet specified development timelines, which it may extend in certain circumstances.

        The Company recorded research and development expense of $275 for the year ended December 31, 2015 under the agreement with Catalent, consisting of the upfront license fee. The Company did not record any research and development expense related to the agreement during the year ended December 31, 2016.

14. Income Taxes

        As a company incorporated in the British Virgin Islands ("BVI"), the Company is principally subject to taxation in the BVI. Under the current laws of the BVI, tax on a company's income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from its losses incurred in the BVI during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses.

        In addition, in each reporting period, the Company's tax provision includes the effects of consolidating the results of operations of BPI, either through December 30, 2016 as a variable interest entity or as of December 31, 2016 as the Company's wholly owned subsidiary. BPI is subject to taxation in the United States. Due to BPI's history of cumulative losses through September 30, 2016, the Company had recorded no tax benefits for the losses incurred by BPI through that date and had recorded a full valuation allowance against BPI's deferred tax assets, which consisted primarily of its U.S. net operating loss

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

14. Income Taxes (Continued)

carryforwards for all periods through September 30, 2016. BPI's U.S. net operating loss carryforwards are reflected as foreign net operating loss carryforwards in the following discussion.

        During the three months ended December 31, 2016, the Company fully utilized BPI's remaining U.S. net operating loss carryforwards due to BPI's profitability in that period and the Company recorded a full release of the valuation allowance of $9 due to management's reassessment of the amount of deferred tax assets that it believes are more likely than not to be realized. As a result, the Company recorded an income tax provision for the first time during the three months ended December 31, 2016.

        Income (loss) before provision for income taxes consisted of the following:

 
  Year Ended
December 31,
 
 
  2015   2016  

BVI

  $ (10,062 ) $ (63,677 )

Foreign (U.S.)

    (4 )   233  

Loss before provision for income taxes

  $ (10,066 ) $ (63,444 )

        The provision for income taxes consisted of the following:

 
  Year Ended
December 31,
 
 
  2015   2016  

Current income tax provision:

             

BVI

  $   $  

Foreign (U.S. federal and state)

        99  

Total current income tax provision

        99  

Deferred income tax provision (benefit):

             

BVI

         

Foreign (U.S. federal and state)

        (9 )

Total deferred income tax provision (benefit)

        (9 )

Total provision for income taxes

  $   $ 90  

        A reconciliation of the BVI statutory income tax rate of 0% to the Company's effective income tax rate is as follows:

 
  Year Ended
December 31,
 
 
  2015   2016  

BVI statutory income tax rate

    (0.0 )%   (0.0 )%

Foreign tax rate differential

    (0.0 )   0.1  

Change in valuation allowance

    0.0     (0.0 )

Effective income tax rate

    0.0 %   0.1 %

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

14. Income Taxes (Continued)

        Net deferred tax assets consisted of the following:

 
  December 31,  
 
  2015   2016  

Deferred tax assets:

             

Foreign net operating loss carryforwards

  $ 13   $  

Other

    3     9  

Total deferred tax assets

    16     9  

Valuation allowance

    (16 )    

Net deferred tax assets

  $   $ 9  

        As of December 31, 2016, the Company had no remaining foreign net operating loss carryforwards.

        Each reporting period, the Company evaluates the positive and negative evidence bearing on its ability to realize its deferred tax assets.

        As of December 31, 2015 and September 30, 2016 (unaudited), BPI's deferred tax assets consisted primarily of its U.S. net operating loss carryforwards. A full valuation allowance had been recorded against BPI's deferred tax assets through September 30, 2016. During the three months ended December 31, 2016, the Company fully utilized BPI's remaining U.S. net operating loss carryforwards and recorded a valuation allowance release of $9 due to management's reassessment of the amount of deferred tax assets that it believes are more likely than not to be realized.

        As of December 31, 2016, the Company released the deferred tax asset valuation allowance in full primarily as a result of BPI achieving three years of cumulative pre-tax income in the U.S. during the three months ended December 31, 2016. In addition, management had determined that sufficient positive evidence existed as of December 31, 2016 to conclude that it is more likely than not that BPI's deferred tax assets are realizable.

        Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2015 and 2016 were due primarily to the utilization of U.S. net operating loss carryforwards and were as follows:

 
  December 31,  
 
  2015   2016  

Valuation allowance as of beginning of year

  $ 21   $ 16  

Decreases recorded as benefit to income tax provision

    (5 )   (16 )

Increases recorded to income tax provision

         

Valuation allowance as of end of year

  $ 16   $  

        The Company has not recorded any amounts for unrecognized tax benefits as of December 31, 2015 or 2016. The Company's policy is to record interest and penalties related to income taxes as part of its income tax provision. As of December 31, 2015 and 2016, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company's statement of operations and comprehensive loss.

        BPI files income tax returns in the U.S. and certain state jurisdictions. BPI's U.S. federal and state income tax returns are subject to tax examinations for the tax years ended December 31, 2013 and subsequent years. There are currently no income tax examinations pending.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

15. Net Loss per Share and Unaudited Pro Forma Net Loss per Share

    Net Loss per Share Attributable to Common Shareholders of Biohaven Pharmaceutical Holding Company Ltd.

        Basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. was calculated as follows:

 
  Year Ended
December 31,
 
 
  2015   2016  

Numerator:

             

Net loss

  $ (10,066 ) $ (63,534 )

Less: Net income (loss) attributable to non-controlling interests

    (4 )   143  

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (10,062 ) $ (63,677 )

Denominator:

             

Weighted average common shares outstanding—basic and diluted

    11,009,277     12,608,366  

Net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted

  $ (0.91 ) $ (5.05 )

        The Company's potential dilutive securities, which include stock options and warrants to purchase common shares, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect:

 
  Year Ended
December 31,
 
 
  2015   2016  

Options to purchase common shares

    3,247,500     3,864,425  

Warrants to purchase common shares

    275,000     600,000  

    3,522,500     4,464,425  

        In addition to the potentially dilutive securities noted above, as of December 31, 2016, the Company agreed to issue warrants to purchase common shares to each of the Guarantor and Co-Guarantor of the Credit Agreement (see Note 8). As of December 31, 2016, the warrants had not yet been issued. Accordingly, the Company has excluded these warrants from the table above and the calculation of diluted net loss per share for the year ended December 31, 2016.

        The Company has also agreed under its agreements with AstraZeneca and BMS to issue common shares upon the achievement of specified milestones or upon the occurrence of specified events (see Note 13). Because the necessary conditions for issuance of the shares had not been met as of December 31, 2016, the Company excluded these shares from the table above and from the calculation of diluted net loss per share for the year ended December 31, 2016.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

15. Net Loss per Share and Unaudited Pro Forma Net Loss per Share (Continued)

    Unaudited Pro Forma Net Loss per Share Attributable to Common Shareholders of Biohaven Pharmaceutical Holding Company Ltd.

        The unaudited pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. for the year ended December 31, 2016 have been prepared to give effect to adjustments arising upon the closing of a qualified initial public offering.

        The unaudited pro forma basic and diluted weighted average common shares outstanding used in the calculation of unaudited pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. for the year ended December 31, 2016 have been prepared to give effect, upon a qualified initial public offering, to the automatic conversion of all outstanding convertible preferred shares into 4,948,369 common shares and the issuance of 1,883,523 common shares to AstraZeneca and BMS pursuant to the Company's license agreements with AstraZeneca and BMS (see Note 13) as if the proposed initial public offering had occurred on the latest of January 1, 2016, the issuance date of the convertible preferred shares or the date the Company entered into each respective license agreement.

        Unaudited pro forma basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. was calculated as follows:

 
  Year Ended
December 31,
2016
 
 
  (unaudited)
 

Numerator:

       

Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. 

  $ (63,677 )

Denominator:

       

Weighted average common shares outstanding—basic and diluted

    12,608,366  

Pro forma adjustment to reflect assumed automatic conversion of Series A preferred shares upon the closing of the proposed initial public offering

    824,729  

Pro forma adjustment to reflect issuance of shares to AstraZeneca and BMS upon the closing of the proposed initial public offering

    782,228  

Pro forma weighted average common shares outstanding—basic and diluted

    14,215,323  

Pro forma net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted

  $ (4.48 )

16. Commitments and Contingencies

    Lease Agreement

        In December 2016, the Company entered into an assignment agreement to assume an operating lease for its office space in New Haven, Connecticut. The lease agreement expires in October 2018, and the Company has the option to extend the term through October 2021. The agreement requires future minimum lease payments for the years ending December 31, 2017 and 2018 of $40 and $35, respectively, totaling $75.

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

16. Commitments and Contingencies (Continued)

    License Agreements

        The Company has entered into license agreements with various parties under which it is obligated to make contingent and non-contingent payments (see Note 13).

    Research Commitments

        The Company has entered into agreements with several CROs to provide services in connection with its preclinical studies and clinical trials. As of December 31, 2015 and 2016, the Company had committed to minimum payments under these arrangements totaling $630 and $6,973, respectively.

    Indemnification Agreements

        In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2015 or 2016.

    Legal Proceedings

        The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities.

17. Related Party Transactions

    License Agreement with Yale

        On September 30, 2013, the Company entered into the Yale Agreement with Yale (see Note 13). Yale is a related party because the Company's Chief Executive Officer is one of the inventors of the patents that the Company has licensed from Yale and, as such, is entitled to a specified share of the glutamate product-related royalty revenues that may be received by Yale under the Yale Agreement. As partial consideration for the license under the Yale Agreement, on September 30, 2013, the Company issued to Yale 250,000 common shares, representing 5.1% of the Company's then outstanding equity on a fully diluted basis. The fair value of the shares, totaling $152, was recognized as research and development expense at the time of issuance of the shares. During the years ended December 31, 2015 and 2016, the Company made payments to Yale under the Yale Agreement of $84 and $4, respectively. During the years ended December 31, 2015 and 2016, the Company recognized research and development expense under the Yale Agreement of $84 and $4, respectively. As of December 31, 2015 and 2016, the Company owed no amounts to Yale.

    Guarantor and Co-Guarantor Warrants

        The Guarantor and Co-Guarantor of the Credit Agreement with Wells Fargo are each shareholders and members of the board of directors of the Company. The Company agreed to issue warrants to

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

purchase $1,000 of common shares to each of the Guarantor and Co-Guarantor in exchange for their respective guaranties (see Notes 8 and 9). The warrants were issued on January 26, 2017, pursuant to which each director received a warrant to purchase 107,500 common shares at an exercise price of $9.2911 per share.

    Kleo Pharmaceuticals, Inc.

        On August 29, 2016, the Company executed a stock purchase agreement with Kleo to purchase 3,000,000 shares of Kleo common stock at a purchase price of $1.00 per share in an initial closing, which was completed on August 31, 2016, and committed to purchase an aggregate 5,500,000 additional shares of Kleo common stock at a purchase price of $1.00 per share (see Note 5). Kleo is a related party because the Company has determined that it exercises significant influence over the operating and financial policies of Kleo. In connection with its investment in Kleo, the Company received the right to designate two members of Kleo's board of directors, who are the Chairman of the Company's board of directors and another outside director of the Company. Also, the Chief Executive Officer and controlling stockholder of Kleo is a shareholder of the Company. In addition to the purchases under the stock purchase agreement described above, on August 29, 2016, the Company entered into an agreement with the Chief Executive Officer of Kleo to purchase 500,000 shares of Kleo common stock from him, which purchase was completed in March 2017 (see Note 20). As of December 31, 2016, the Company owned 18.6% of Kleo's outstanding capital stock. The Company has also entered into a clinical development master services agreement with Kleo to assist Kleo with clinical development. As of December 31, 2016, the Company had not performed any services or received any payments under this agreement.

    Biohaven Pharmaceuticals, Inc.

        BPI is a related party because its three founders, each of whom beneficially owned one-third of the equity of BPI prior to the Company's acquisition of BPI on December 31, 2016 (see Note 18), are shareholders of the Company and also serve as the Company's Chairman of the board of directors, Chief Executive Officer, and Chief Medical Officer, respectively. Since the Company's incorporation in September 2013, the Company is deemed to have had a variable interest in BPI, and BPI is deemed to have been a VIE, of which the Company is the primary beneficiary. Accordingly, the Company has consolidated the results of BPI since September 2013. All transactions between the Company and BPI have been eliminated in consolidation. On December 31, 2016, the Company acquired 100% of the capital stock of BPI for aggregate purchase consideration of $595 in the form of promissory notes to each of the former stockholders of BPI.

18. Acquisition of Biohaven Pharmaceuticals, Inc.

        On December 31, 2016, the Company entered into stock purchase agreements with each of the stockholders of BPI, acquiring 100% of the issued and outstanding shares of BPI for aggregate purchase consideration of $595. Prior to the acquisition, the Company was deemed to have had a variable interest in BPI, and BPI was deemed to be a VIE of which the Company was the primary beneficiary. As a result, the Company has consolidated the results of BPI since the Company's incorporation in September 2013, and, prior to the acquisition of BPI, recognized a non-controlling interest in its consolidated balance sheet representing 100% of the capital stock of BPI not owned by the Company. The three founders of BPI, each of whom beneficially owned one-third of the equity of BPI, also serve as the Company's Chairman of the board of directors, Chief Executive Officer, and Chief Medical Officer, respectively (see Note 17).

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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

18. Acquisition of Biohaven Pharmaceuticals, Inc. (Continued)

        The Company funded the acquisition through the issuance of promissory notes to each of the former stockholders of BPI. The notes are payable in five annual payments, the first four of which are interest only, with the final payment to include the principal balance outstanding plus any accrued and unpaid interest. The notes bear interest at a rate of 4.5% per annum and mature on December 31, 2021. The notes become immediately due and payable upon specified events, including immediately prior to the consummation of the initial public offering of the Company's common shares or upon the occurrence of a change of control of the Company. There are no affirmative, negative or financial covenants associated with the notes.

        Because the Company consolidated BPI as a VIE prior to the acquisition, the acquisition of all of the capital stock of BPI did not result in a change of control for accounting purposes and was accounted for as an equity transaction. Accordingly, as of the acquisition date, the $86 carrying value of the non-controlling interest on December 31, 2016 was derecognized and the difference between the carrying value of the non-controlling interest of $86 and the purchase price of $595 was recorded as a $509 reduction to additional paid-in capital.

19. 401(k) Savings Plan

        The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Company's board of directors. The Company made no contributions to the plan during the year ended December 31, 2015. During the year ended December 31, 2016, the Company made contributions totaling $25 to the plan.

20. Subsequent Events

        For its consolidated financial statements as of December 31, 2016 and for the year then ended, the Company evaluated subsequent events through April 3, 2017, the date on which those financial statements were issued.

    Sale of Series A Preferred Shares

        In February 2017, the Company closed the second and final tranche of its Series A preferred financing through the issuance and sale of an aggregate of 4,305,182 Series A preferred shares, at an issuance price of $9.2911 per share, for net cash proceeds of $38,635. The offering costs for the second tranche consisted of $1,365 payable in cash and 105,009 shares of the Company's Series A preferred shares.

    Purchases of Kleo Common Stock

        On March 30, 2017, the Company purchased 1,375,000 shares of Kleo common stock for cash consideration of $1,375 pursuant to its commitment under the Kleo SPA (see Note 5).

        On March 30, 2017, the Company purchased 500,000 shares of Kleo common stock from the Chief Executive Officer of Kleo pursuant to an agreement dated August 29, 2016. The consideration paid for these shares consisted of a cash payment of $250 and the Company's issuance of 32,500 common shares.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.     Other Expenses of Issuance and Distribution.

        The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with this offering. All amounts shown are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and the initial listing fee of the New York Stock Exchange.

 
  Amount to
be Paid
 

SEC registration fee

  $ 11,590  

FINRA filing fee

    15,500  

New York Stock Exchange initial listing fee

    *  

Printing and engraving expenses

    *  

Legal fees and expenses

    *  

Accounting fees and expenses

    *  

Transfer agent and registrar fees and expenses

    *  

Miscellaneous fees and expenses

    *
 

Total

  $
*
 

*
To be filed by amendment.

Item 14.     Indemnification of Directors and Officers.

        British Virgin Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Amended Memorandum and Articles of Association will provide for the indemnification of our directors against all losses or liabilities incurred or sustained by him or her as a director of our company in defending any proceedings, whether civil, criminal, administrative or investigative in which the director acted honestly and in good faith with a view to the best interest of the company and had no reasonable cause to believe that their conduct was unlawful.

        Further, prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained under British Virgin Islands law. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

        The limitation of liability and indemnification provisions that are expected to be included in our memorandum and articles of association and in indemnification agreements that we enter into with our directors and executive officers may discourage shareholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other shareholders. Further, a shareholder's investment may be harmed to the extent that we pay the costs of settlement and damage awards against directors and executive officers as required by these indemnification provisions. At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

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        We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law.

        The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of us and our officers and directors for certain liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, and otherwise.

Item 15.     Recent Sales of Unregistered Securities.

Issuances of Capital Stock

        The following list sets forth information regarding all unregistered securities sold by us since January 1, 2014 through the date of the prospectus that forms a part of this registration statement.

    1)
    In January 2014, we issued 5,752,000 common shares to one investor at a purchase price of $0.61 per share, for aggregate consideration of $3.5 million.

    2)
    In July 2015, we issued an aggregate of 867,000 common shares to three investors at a purchase price of $5.60 per share, for aggregate consideration of $4.9 million.

    3)
    In August 2015, we issued 50,000 common shares with a value of $0.3 million to a third party in partial settlement of amounts due under a license agreement.

    4)
    In August 2015, as part of our license agreement, we issued ALS Biopharma, LLC warrants to purchase an aggregate of 600,000 of our common shares with an exercise price of $5.60 per share.

    5)
    In February 2016, we issued an aggregate of 429,000 common shares to two investors at a purchase price of $7.00 per share, for aggregate consideration of $3.0 million.

    6)
    In May 2016 and June 2016, we issued an aggregate of 1,090,500 common shares to 10 investors at a purchase price of $7.70 per share, for aggregate consideration of $8.4 million.

    7)
    In October 2016, we issued an aggregate of 4,305,209 shares of our Series A preferred shares to 45 investors at a purchase price of $9.2911 per share, for aggregate consideration of $40.0 million, 538,150 shares of our Series A preferred shares with a value of $5.0 million to a third party in satisfaction of our obligations under a license agreement and 105,010 shares of our Series A preferred shares with a value of $1.0 million to two third parties in connection with their placement services with respect to the Series A preferred financing.

    8)
    In December 2016, we issued promissory notes in the aggregate principal amount of $0.6 million to the stockholders of Biohaven Pharmaceuticals, Inc. in connection with our purchase of all of the outstanding capital stock of BPI.

    9)
    In January 2017, we issued warrants to two of our directors, each to purchase 107,500 of our common shares with an exercise price of $9.2911 per share, in connection with the directors' guaranties related to our credit agreement with Wells Fargo.

    10)
    In February 2017, we issued an aggregate of 4,305,182 shares of our Series A preferred shares to 45 investors at a purchase price of $9.2911 per share, for aggregate consideration of $40.0 million and 105,009 shares of our Series A preferred shares with a value of $1.2 million to two third parties in connection with their placement services with respect to the Series A preferred financing.

    11)
    In March 2017, we issued 32,500 common shares plus $249,750 in cash to one shareholder in exchange for 500,000 shares of common stock of Kleo Pharmaceuticals, Inc.

        The offers, sales and issuances of the securities described in the paragraphs above were exempt from registration under Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act. Each of the purchasers represented to us that they acquired the securities for investment only and not

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with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. The purchasers also represented to us that they were accredited investors as defined in Rule 501 promulgated under the Securities Act.

Stock Option Grants

        From January 1, 2014 through the date of the prospectus that is a part of this registration statement, we have granted options under our 2014 Equity Incentive Plan to purchase an aggregate of 4,898,858 common shares to employees, consultants and directors, having exercise prices ranging from $0.61 to $10.82 per share. We have not issued any common shares upon the exercise of stock options.

        The offers, sales and issuances of the securities described in the foregoing paragraph were exempt from registration under Rule 701 promulgated under the Securities Act in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were our employees, directors or consultants and received the securities under our 2014 Equity Incentive Plan. Appropriate legends were affixed to the securities issued in these transactions.

Item 16.     Exhibits and Financial Statement Schedules.

    (a) Exhibits.

        The exhibits to the registration statement are listed in the Exhibit Index attached hereto and incorporated by reference herein.

    (b) Financial Statement Schedules.

        No financial statement schedules have been submitted because they are not required or are not applicable or because the information required is included in the consolidated financial statements or the notes thereto.

Item 17.     Undertakings.

        The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        The undersigned Registrant hereby undertakes that:

            (1)   For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

            (2)   For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

        Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New Haven, State of Connecticut, on the 7th day of April, 2017.

    BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

By:

 

/s/ VLAD CORIC

Vlad Coric
Chief Executive Officer

        KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Vlad Coric his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.

        Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ VLAD CORIC, M.D.

Vlad Coric, M.D.
  Chief Executive Officer and Director (Principal Executive Officer)   April 7, 2017

/s/ JAMES ENGELHART

James Engelhart

 

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

April 7, 2017

/s/ DECLAN DOOGAN, M.D.

Declan Doogan, M.D.

 

Chairman of the Board of Directors

 

April 7, 2017

/s/ GREGORY H. BAILEY, M.D.

Gregory H. Bailey, M.D.

 

Director

 

April 7, 2017

/s/ JOHN W. CHILDS

John W. Childs

 

Director

 

April 7, 2017

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Signature
 
Title
 
Date

 

 

 

 

 
/s/ ALBERT CHA, M.D., PH.D.

Albert Cha, M.D., Ph.D.
  Director   April 7, 2017

/s/ ERIC AGUIAR, M.D.

Eric Aguiar, M.D.

 

Director

 

April 7, 2017

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EXHIBIT INDEX

Exhibit
Number
  Description of Document
  1.1 Form of Underwriting Agreement.

 

3.1

 

Memorandum and Articles of Association, as currently in effect.

 

3.2


Amended and Restated Memorandum and Articles of Association, to be in effect upon the closing of this offering.

 

4.1


Specimen stock certificate evidencing common shares.

 

4.2

 

Investor Rights Agreement, dated as of October 31, 2016, by and among the Registrant and certain of its shareholders.

 

4.3

 

Term Note, dated August 30, 2016, issued to Wells Fargo Bank, National Association.

 

4.4

 

Warrant, dated January 26, 2017, issued to John Childs.

 

4.5

 

Warrant, dated January 26, 2017, issued to Gregory Bailey.

 

4.6

 

Warrants, dated August 15, 2015, issued to ALS Biopharma, LLC.

 

5.1


Opinion of Maples and Calder, British Virgin Islands counsel as to legality.

 

10.1

#

License Agreement, by and between the registrant and Bristol-Myers Squibb Company, dated as of July 8, 2016.

 

10.2

#

ALS Biopharma Agreement, by and among the registrant, ALS Biopharma, LLC and Fox Chase Chemical Diversity Center Inc., dated as of August 10, 2015, as amended to date.

 

10.3

#

License Agreement, by and between the registrant and AstraZeneca AB, dated as of October 5, 2016.

 

10.4

#

Agreement, by and between the registrant and Yale University, dated as of September 30, 2013, as amended to date.

 

10.5

#

Zydis® Development and License Agreement, by and between the registrant and Catalent U.K. Swindon Zydis Limited, dated as of March 9, 2015.

 

10.6

#

Exclusive Patent License Agreement, by and between the registrant and The General Hospital Corporation d/b/a Massachusetts General Hospital, dated as of September 13, 2014.

 

10.7

#

Exclusive License Agreement, by and between the registrant and Rutgers, the State University of New Jersey, dated as of June 15, 2016.

 

10.8

 

Credit Agreement, by and between the registrant and Wells Fargo Bank, National Association, dated as of August 30, 2016.

 

10.9

+

2014 Equity Incentive Plan.

 

10.10

+

Form of Share Option Agreement under 2014 Equity Incentive Plan.

 

10.11

†+

Form of 2017 Equity Incentive Plan.

 

10.12

†+

Form of Stock Option Grant Notice and Stock Option Agreement under 2017 Equity Incentive Plan.

 

10.13

†+

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under 2017 Equity Incentive Plan.

 

10.14

†+

Form of Indemnification Agreement with non-employee directors.

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Exhibit
Number
  Description of Document
  10.15 †+ Form of Employment Agreement with Vlad Coric to be in effect upon the closing of this offering.

 

10.16

†+

Form of Employment Agreement with Robert Berman to be in effect upon the closing of this offering.

 

10.17

†+

Form of Employment Agreement with James Engelhart to be in effect upon the closing of this offering.

 

10.18

†+

Non-Employee Director Compensation Policy to be in effect upon the closing of this offering.

 

21.1

 

Subsidiaries of the Registrant.

 

23.1

 

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

 

23.2


Consent of Maples and Calder, British Virgin Islands counsel (included in Exhibit 5.1).

 

24.1

 

Power of Attorney (included on signature page).

To be filed by amendment.

+
Indicates management contract or compensatory plan.

#
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and have been separately filed with the Securities and Exchange Commission.

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Exhibit 3.1

 

 

British Virgin Islands

 

The BVI Business Companies Act

 

(No. 16 of 2004)

 

Memorandum and Articles of Association

 

of

 

Biohaven Pharmaceutical Holding Company Ltd.
Incorporated this 25th day of September 2013
Amended and Restated this 20th day of January 2014
Amended and Restated this 28th day of June 2016
Amended and Restated this 28th day of October 2016

 

Maples Corporate Services (BVI) Limited
Kingston Chambers
PO Box 173
Road Town, Tortola
British Virgin Islands

 



 

TERRITORY OF THE BRITISH VIRGIN ISLANDS

 

THE BVI BUSINESS COMPANIES ACT, 2004

 

AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION

 

OF

 

Biohaven Pharmaceutical Holding Company Ltd.

 

1                                          Company Name

 

1.1                                The name of the Company is Biohaven Pharmaceutical Holding Company Ltd.

 

1.2                                The Directors or Members may from time to time change the Company’s name by Resolution of Directors or Resolution of Members. The Directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file an application for change of name with the Registrar, and any such change will take effect from the date of the certificate of change of name issued by the Registrar.

 

1.3                                A change of name of the Company shall constitute an amendment of this Memorandum and the Articles and, in the event of a resolution being passed to change the name of the Company, the provisions below in respect of amendments to this Memorandum and the Articles must be complied with.

 

2                                          Company Limited by Shares, Liability of Members

 

2.1                                The Company is a company limited by Shares.

 

2.2                                The liability of each Member is limited to:

 

(a)                                  the amount from time to time unpaid on that Member’s Shares;

 

(b)                                  any liability expressly provided for in this Memorandum or the Articles; and

 

(c)                                   any liability to repay a Distribution pursuant to section 58(1) of the Act.

 

3                                          Registered Office

 

3.1                                The first registered office of the Company will be situated at c/a Maples Corporate Services (BVI) Limited, Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.

 

3.2                                The Directors or Members may from time to time change the Company’s registered office by Resolution of Directors or Resolution of Members, provided that the Company’s registered office

 



 

shall at all times be the office of the registered agent. The Directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of change of registered office, and any such change of registered office will take effect from the date of the registration by the Registrar of such notice.

 

4                                          Registered Agent

 

4.1                                The first registered agent of the Company will be Maples Corporate Services (BVI) Limited of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.

 

4.2                                The Directors or Members may from time to time change the Company’s registered agent by Resolution of Directors or Resolution of Members. The Directors shall give notice of such resolution to the registered agent of the Company (meaning the existing registered agent), for the registered agent to file with the Registrar a notice of change of registered agent, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice.

 

4.3                                If the existing registered agent does not file such notice on instruction by the Directors, the Directors shall procure that a notice of change of registered agent is filed with the Registrar by a legal practitioner in the British Virgin Islands acting on behalf of the Company, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice.

 

4.4                                If at any time the Company does not have a registered agent, a registered agent may be appointed by a Resolution of Directors or Resolution of Members.

 

5                                          General Objects and Powers

 

5.1                                Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Act or any other law of the British Virgin Islands.

 

5.2                                Without limiting the foregoing, the powers of the Company include the power to do the following:

 

(a)                                  grant options over unissued Shares and treasury Shares;

 

(b)                                  issue securities that are convertible into Shares;

 

(c)                                   give financial assistance to any person in connection with the acquisition of the Company’s own Shares;

 

(d)                                  issue debt obligations of every kind and grant options, warrants and rights to acquire debt obligations;

 

(e)                                   guarantee a liability or obligation of any person and secure any obligations by mortgage, pledge or other charge, of any of its assets for that purpose; and

 

2



 

(f)                                    protect the assets of the Company for the benefit of the Company, its creditors and its Members and, at the discretion of the Directors, for any person having a direct or indirect interest in the Company.

 

6                                          Maximum Number of Authorised Shares

 

6.1                                The Company is authorised to issue a total of 49,242,172 Shares divided into two classes as follows:

 

(a)                                  38,000,000 common Shares of no par value each; (the “ Common Shares ”); and

 

(b)                                  11,242,172 series A convertible preferred Shares of no par value each (the “ Series A Preferred Shares ”) (such Series A Preferred Shares to be issued in such series as the Directors may determine from time to time),

 

each Share having the rights and being subject to the restrictions set out in this Memorandum and the Articles. For the purposes of Section 9 of the Act, any rights, privileges, restrictions and conditions attaching to any of the Shares as provided for in the Articles are deemed to be set out and stated in full in this Memorandum.

 

6.2                                Subject at all times to the provisions of clauses 10 and 11 of this Memorandum, the Directors or Members may from time to time by Resolution of Directors or Resolution of Members increase or decrease the maximum number of Shares the Company is authorised to issue, by amendment to this Memorandum in accordance with the provisions below.

 

7                                          Rights, Privileges, Restrictions and Conditions Attaching to Shares

 

Voting

 

7.1                                Each Common Share shall confer on the holder thereof the right to receive notice of, and to attend and vote at, any meetings of the Members and to one vote on any Resolution of Members. Except as provided by law or by the other provisions of this Memorandum or the Articles, holders of Common Shares shall vote together with the holders of Series A Preferred Shares as a single class.

 

7.2                                Each Series A Preferred Share confers on its holder the right to such number of votes on any Resolution of Members as would equal the number of Common Share(s) then issuable upon the conversion of such Series A Preferred Share into Common Share(s) in accordance with clause 7.10 of this Memorandum.

 

Dividends

 

7.3                                Each Share shall entitle the holder thereof to participate rateably in the payment of any dividends in accordance with the provisions of this clause 7.

 

3



7.4                                Save in respect of dividends on Common Shares payable in Common Shares subject to the provisions of clause 7.8(f), all Distributable Amounts, when, as and if declared by the Directors, be allocated in accordance with the order of priority set forth in this clause 7.4:

 

(a)                                  First , 100% of all Distributable Amounts to the holders of the Series A Preferred Shares on a pro rata, pari passu basis, until the holders of the Series A Preferred Shares have received a return calculated at the rate of eight percent (8%) per year of the Series A Preferred Share Original Issue Price on such Series A Preferred Shares (subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalisation with respect to the Series A Preferred Shares); then

 

(b)                                  Second , 100% of all remaining Distributable Amounts between the Common Shares and the Series A Preferred Shares, on a pro rata, pari passu basis, according to the number of Common Shares held by such holders, with the dividend per Series A Preferred Share being an amount as would equal the product of (1) the dividend payable on each Share of such class or series determined, if applicable, as if all Shares of such class or series had been converted into Common Shares and (2) the number of Common Shares issuable upon conversion of a Series A Preferred Share, in each case calculated on the record date for determination of holders entitled to receive such dividend.

 

7.5                                For the avoidance of doubt, dividends contemplated by clause 7.4(a) shall be non-cumulative year-on-year

 

Surplus Assets on a Winding up of the Company or Deemed Liquidation Event.

 

7.6                                Preferential Payments to holders of Series A Preferred Shares . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the holders of Series A Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its Members before any payment shall be made to the holders of Common Shares by reason of their ownership thereof, an amount per Share (the amount payable pursuant to this sentence is hereinafter referred to as the “ Series A Preferred Share Liquidation Amount ”) equal to the greater of:

 

(a)                                  the Series A Preferred Share Original Issue Price, plus any dividends declared but unpaid thereon; or

 

(b)                                  such amount per Share as would have been payable had all the Series A Preferred Shares been converted into Common Shares pursuant to clause 7.7 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event.

 

If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Company available for distribution to the Members shall be insufficient to pay the holders of Series A Preferred Shares the full amount to which they shall be entitled under this clause 7.6, the holders of Series A Preferred Shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise

 

4



 

be payable in respect of the Shares held by them upon such distribution if all amounts payable on or with respect to such Shares were paid in full.

 

7.7                                Payments to holders of Common Shares . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of Series A Preferred Shares, the remaining assets of the Company available for distribution to its Members shall be distributed among the holders of Common Shares, pro rata based on the number of Shares held by each such holder.

 

7.8                                Allocation of Escrow .  In the event of a Deemed Liquidation Event, if any portion of the consideration payable to the shareholders of the Company is placed into escrow and/or is payable to the shareholders of the Company subject to contingencies, the agreement or plan of merger or consolidation for such Deemed Liquidation Event shall provide that (i) the portion of such consideration that is not placed into escrow and not subject to any contingencies (the “ Initial Consideration ”) shall be allocated among the Members in accordance with clauses 7.6 and 7.7 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (ii) any additional consideration which becomes payable to Members upon release from escrow or satisfaction of contingencies shall be allocated among the Members in accordance with clauses 7.6 and 7.7 after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

7.9                                Amount Deemed Paid or Distributed . The amount deemed paid or distributed to the Members upon any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such Members by the Company or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Directors.

 

Optional Conversion Rights

 

7.10                         The holders of the Series A Preferred Shares shall have conversion rights as follows (the “ Conversion Rights ”):

 

(a)                                  Right to Convert

 

(i)                                      Conversion Ratio . Each Series A Preferred Share shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable Common Shares as is determined by dividing the Series A Preferred Share Original Issue Price by the Series A Preferred Share Conversion Price in effect at the time of conversion; provided , however , that the voluntary conversion of any Series A Preferred Shares pursuant to this clause 7.10(a)(i) shall only become effective upon Conversion Time referred to in clause 7,10(c)(i) unless (A) a Special Mandatory Conversion shall occur with respect to such Series A Preferred Shares prior to the Conversion Time, in which case such Series A Preferred Shares shall instead be converted pursuant to the provisions

 

5



 

of clauses 7.13 and 7.14, or (B) such voluntary conversion is exercised by any holder of Series A Preferred Shares in connection with, and effective upon or immediately prior to, a Deemed Liquidation Event or a firm-commitment underwritten public offering of Common Shares by the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended, in which case the voluntary conversion shall occur effectively upon or immediately prior to the closing of such Deemed Liquidation Event or the effectiveness of such registration statement.

 

(ii)                                   Termination of Conversion Rights . In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A Preferred Shares.

 

(b)                                  Fractional Shares

 

No fractional Common Shares shall be issued upon conversion of the Series A Preferred Shares. In lieu of any fractional Shares to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value of a Common Share as determined by a Resolution of Directors. Whether or not fractional Shares would be issuable upon such conversion shall be determined on the basis of the total number of Series A Preferred Shares the holder is at the time converting into Common Shares and the aggregate number of Common Shares issuable upon such conversion.

 

(c)                                   Mechanics of Conversion.

 

(i)                                      Notice of Conversion . In order for a holder of Series A Preferred Shares to voluntarily convert Series A Preferred Shares into Common Shares, such holder shall provide written notice to the Company that such holder elects to convert all or any number of such holder’s Series A Preferred Shares and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the Common Shares to be issued. If required by the Company, any Series A Preferred Shares surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder. The close of business on the 90 th  date after receipt by the Company of such notice shall be the time of conversion (the “ Conversion Time ”), and the Common Shares issuable upon conversion of the specified Shares shall be deemed to be outstanding of record as of such date. The Company shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Series A Preferred Shares, or to his, her or its nominees, a certificate or certificates for the number of full Common Shares issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the Series A Preferred Shares

 

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represented by the surrendered certificate that were not converted into Common Shares, (ii) pay in cash such amount as provided in clause 7.10(b) in lieu of any fraction of a Common Share otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the Series A Preferred Shares converted.

 

(ii)                                   Reservation of Shares . The Company shall at all times when the Series A Preferred Shares shall be outstanding, reserve and keep available, for the purpose of effecting the conversion of the Series A Preferred Shares, such number of its duly authorised Common Shares as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Shares; and if at any time the number of authorised but unissued Common Shares shall not be sufficient to effect the conversion of all then outstanding Shares of the Series A Preferred Shares, the Company shall take such corporate action as may be necessary to increase its authorised but unissued Common Shares to such number of Shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite Member approval of any necessary amendment to this Memorandum and the Articles.

 

(iii)                                Effect of Conversion . All Series A Preferred Shares which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such Shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive Common Shares in exchange therefor, to receive payment in lieu of any fraction of a Share otherwise issuable upon such conversion as provided in clause 7.10(b) and to receive payment of any dividends declared but unpaid thereon. Any Series A Preferred Shares so converted shall be retired and cancelled and may not be reissued as Shares of such series, and the Company may thereafter take such appropriate action (without the need for Member action) as may be necessary to reduce the authorised number of Series A Preferred Shares accordingly.

 

(iv)                               No Further Adjustment . Upon any such conversion, no adjustment to the Series A Preferred Share Conversion Price shall be made for any declared but unpaid dividends on the Series A Preferred Shares surrendered for conversion or on the Common Shares delivered upon conversion.

 

(v)                                  Taxes . The Company shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of Common Shares upon conversion of Series A Preferred Shares pursuant to this clause 7.10. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of Common Shares in a name other than that in which the Series A Preferred Shares so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Company the

 

7



 

amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

 

(d)                                  Adjustments to Series A Preferred Share Conversion Price for Diluting Issues.

 

(i)                                      No Adjustment of Series A Preferred Share Conversion Price . No adjustment in the Series A Preferred Share Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Common Shares if the Company receives written notice from the holders of at least a majority of the then outstanding Series A Preferred Shares agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Common Shares.

 

(ii)                                   Deemed Issue of Additional Common Shares .

 

(A)                                If the Company at any time or from time to time after the Series A Preferred Share Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of Common Shares (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Common Shares issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

(B)                                If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Series A Preferred Share Conversion Price pursuant to the terms of clause 7.10(d)(iii), are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of Common Shares issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Company upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Series A Preferred Share Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to

 

8



 

such Series A Preferred Share Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause 7.10(d)(ii)(B) shall have the effect of increasing the Series A Preferred Share Conversion Price to an amount which exceeds the lower of (i) the Series A Preferred Share Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Series A Preferred Share Conversion Price that would have resulted from any issuances of Additional Common Shares (other than deemed issuances of Additional Common Shares as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

 

(C)                                If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Series A Preferred Share Conversion Price pursuant to the terms of clause 7.10(d)(iii) (either because the consideration per Share (determined pursuant to clause 7.10(d)(iv)) of the Additional Common Shares subject thereto was equal to or greater than the Series A Preferred Share Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series A Preferred Share Original Issue Date), are revised after the Series A Preferred Share Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of Common Shares issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Company upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Common Shares subject thereto (determined in the manner provided in clause 7.10(d)(ii)(A) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

(D)                                Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Series A Preferred Share Conversion Price pursuant to the terms of clause 7.10(d)(iii), the Series A Preferred Share Conversion Price shall be readjusted to such Series A Preferred Share Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

 

9


 

(E)                                 If the number of Common Shares issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Company upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Series A Preferred Share Conversion Price provided for in this clause 7.10(d)(ii) shall be effected at the time of such issuance or amendment based on such number of Shares or amount of consideration without regard .to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this clause 7.10(d)(ii)). If the number of Common Shares issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Company upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Series A Preferred Share Conversion Price that would result under the terms of this clause 7.10(d)(ii) at the time of such issuance or amendment shall instead be effected at the time such number of Shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Series A Preferred Share Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

 

(iii)                                Adjustment of Series A Preferred Share Conversion Price Upon Issuance of Additional Common Shares . In the event the Company shall at any time after the Series A Preferred Share Original Issue Date issue Additional Common Shares (including Additional Common Shares deemed to be issued pursuant to clause 7.10(d)(ii)), without consideration or for a consideration per Share less than the Series A Preferred Share Conversion Price in effect immediately prior to such issue, then the Series A Preferred Share Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP2 = CP1* (A + B) + (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

“CP2” shall mean the Series A Preferred Share Conversion Price in effect immediately after such issue of Additional Common Shares

 

“CP1” shall mean the Series A Preferred Share Conversion Price in effect immediately prior to such issue of Additional Common Shares;

 

“A” shall mean the number of Common Shares outstanding immediately prior to such issue of Additional Common Shares (treating for this purpose as

 

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outstanding all Common Shares issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Series A Preferred Shares) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

 

“B” shall mean the number of Common Shares that would have been issued if such Additional Common Shares had been issued at a price per Share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and

 

“C” shall mean the number of such Additional Common Shares issued in such transaction.

 

(iv)                               Determination of Consideration . For purposes of this clause 7.10(d), the consideration received by the Company for the issue of any Additional Common Shares shall be computed as follows:

 

Cash and Property :  Such consideration shall:

 

(A)                                insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest;

 

(B)                                insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined by Resolution of Directors; and

 

(C)                                in the event Additional Common Shares are issued together with other Shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined by a Resolution of Directors.

 

Options and Convertible Securities . The consideration per Share received by the Company for Additional Common Shares deemed to have been issued pursuant to clause 7.10(d)(ii), relating to Options and Convertible Securities, shall be determined by dividing:

 

(D)                                The total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for

 

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Convertible Securities and the conversion or exchange of such Convertible Securities, by

 

(E)                                 the maximum number of Common Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

(v)                                  Multiple Closing Dates . In the event the Company shall issue on more than one date Additional Common Shares that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Series A Preferred Share Conversion Price pursuant to the terms of clause 7.10(d)(iii) then, upon the final such issuance, the Series A Preferred Share Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

 

(e)                                   Adjustment for Share Splits and Combinations.

 

If the Company shall at any time or from time to time after the Series A Preferred Share Original Issue Date effect a subdivision of the outstanding Common Shares, the Series A Preferred Share Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of Common Shares issuable on conversion of each Share of such series shall be increased in proportion to such increase in the aggregate number of Common Shares outstanding. If the Company shall at any time or from time to time after the Series A Preferred Share Original Issue Date combine the outstanding Common Shares, the Series A Preferred Share Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of Common Shares issuable on conversion of each Share of such series shall be decreased in proportion to such decrease in the aggregate number of Common Shares outstanding. Any adjustment under this clause shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(f)                                    Adjustment for Certain Dividends and Distributions.

 

In the event the Company at any time or from time to time after the Series A Preferred Share Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable on the Common Shares in additional Common Shares, then and in each such event the Series A Preferred Share Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series A Preferred Share Conversion Price then in effect by a fraction:

 

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(i)                                      the numerator of which shall be the total number of Common Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(ii)                                   the denominator of which shall be the total number of Common Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Common Shares issuable in payment of such dividend or distribution.

 

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series A Preferred Share Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series A Preferred Share Conversion Price shall be adjusted pursuant to this clause 7.10(f) as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series A Preferred Shares simultaneously receive a dividend or other distribution of Common Shares in a number equal to the number of Common Shares as they would have received if all outstanding Series A Preferred Shares had been converted into Common Shares on the date of such event.

 

(g)                                   Adjustments for Other Dividends and Distributions.

 

In the event the Company at any time or from time to time after the Series A Preferred Share Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of Common Shares in respect of outstanding Common Shares) or in other property and the provisions of clause 7.4 do not apply to such dividend or distribution, then and in each such event the holders of Series A Preferred Shares shall receive, simultaneously with the distribution to the holders of Common Shares, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Series A Preferred Shares had been converted into Common Shares on the date of such event.

 

(h)                                  Adjustment for Merger or Reorganisation, etc.

 

Subject to the provisions regarding Deemed Liquidation Events, if there shall occur any reorganisation, recapitalisation, reclassification, consolidation or merger involving the Company in which the Common Shares (but not the Series A Preferred Shares) is converted into or exchanged for securities, cash or other property (other than a transaction covered by clauses 7.10(d) to 7.10(d)(v), clause 7.10(f) or clause 7.10(g)), then, following any such reorganisation, recapitalisation, reclassification, consolidation or merger, each Series A Preferred Share shall thereafter be convertible in lieu of the Common Shares into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of Common Shares issuable upon conversion of one Series A Preferred Shares immediately prior to

 

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such reorganisation, recapitalisation, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined by Resolution of Directors) shall be made in the application of the provisions in this clause 7.10 with respect to the rights and interests thereafter of the holders of the Series A Preferred Shares, to the end that the provisions set forth in this clause 7.10 (including provisions with respect to changes in and other adjustments of the Series A Preferred Share Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Shares.

 

(i)                                      Certificate as to Adjustments.

 

Upon the occurrence of each adjustment or readjustment of the Series A Preferred Share Conversion Price pursuant to clause 7.10, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Shares a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series A Preferred Shares is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A Preferred Shares (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series A Preferred Share Conversion Price then in effect, and (ii) the number of Common Shares and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A Preferred Shares.

 

(j)                                     Notice of Record Date.

 

In the event:

 

(i)                                      the Company shall take a record of the holders of any class of Shares and/or securities for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any Shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                   of any capital reorganisation of the Company, any reclassification of the Common Shares, or any Deemed Liquidation Event; or

 

(iii)                                of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

 

then, and in each such case, the Company will send or cause to be sent to the holders of the Series A Preferred Shares a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend,

 

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distribution or right, or (ii) the effective date on which such reorganisation, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon the conversion of the Series A Preferred Shares) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganisation, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per Share and character of such exchange applicable to the Series A Preferred Shares and the Common Shares. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

(k)                                  Adjustment of Series A Preferred Share Conversion Price if Certain Conditions are Met.

 

Notwithstanding anything to the contrary provided in this clause 7, upon the earlier of (a) the date the Directors determine not to move forward with a Phase Ill clinical trial with the Company’s BHV-3000 candidate or (b) the Company failing to initiate a Phase Ill clinical trial with its BHV-3000 candidate on or before October 1, 2017, which date may be extended by the express written consent of holders of at least a majority of then-outstanding Series A Preferred Shares, voting together as a separate class (the “Preferred Majority”) (the date of such Directors’ determination or October 1, 2017, whichever is earlier, the “Adjustment Date”), the Series A Preferred Share Conversion Price per Share of the Series A Preferred Shares shall, automatically and without any action on the part of any holder of Series A Preferred Shares or the Company, be reduced to $7.0613 (subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalisation with respect to the Series A Preferred Shares), effective as of the Adjustment Date.

 

Notwithstanding anything to the contrary provided in this clause 7, contingent and effective upon the consummation of the transactions contemplated by the Restructuring Plan (as defined in the Purchase Agreement), pursuant to which Delaware Corp (as defined in the Purchase Agreement) will be merged with or into, consolidated with, acquired by (whether by share exchange, share purchase, asset purchase, acquisition, sale, license or other disposition) or otherwise become wholly owned by the Company or any of its Subsidiaries for consideration paid or deemed paid by the Company (or any of its Subsidiaries) to Delaware Corp in the form of securities (such total consideration, the “Consideration”), the Series A Preferred Conversion Price per Share of the Series A Preferred Shares shall, automatically and without any action on the part of any holder of Series A Preferred Shares, the Company or the Directors, be reduced to an amount obtained by dividing (a) the result of (x) $175,000,000 minus (y) the fair market value of the Consideration by (b) 18,835,167 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to Series A Preferred Shares plus any shares issued in connection with the Restructuring Plan. If the Consideration is in a form other than Securities of the Company, there will be no adjustment to the Series A

 

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Preferred Shares, but such Restructuring Plan must be approved by the Preferred Majority.

 

No amendment or modification to this Memorandum or any Resolution of Directors shall be required or necessary in connection with such adjustment pursuant to this clause 7.10(k).

 

Mandatory Conversion.

 

7.11                         Trigger Events .  Upon either (a) the closing of the sale of Common Shares to the public in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50,000,000 of proceeds, before deduction of the underwriting discount and commissions, to the Company or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the Preferred Majority (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “ Mandatory Conversion Time ”), then (i) all outstanding Series A Preferred Shares shall automatically and without any further action on the part of the holders thereof or the Company, be converted into Common Shares, at the then effective conversion rate as calculated pursuant to clause 7.10(a)(i) and (ii) such Shares may not be reissued by the Company.

 

7.12                         Procedural Requirements . All holders of record of Series A Preferred Shares shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such Series A Preferred Shares pursuant to clauses 7.11 and 7.12. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of Series A Preferred Shares in certificated form shall surrender his, her or its certificate or certificates for all such Shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company at the place designated in such notice. If so required by the Company, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by his, her or its attorney duly authorised in writing. All rights with respect to the Series A Preferred Shares converted pursuant to clause 7.11, including the rights, if any, to receive notices and vote (other than as a holder of Common Shares), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this clause 7.12. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Series A Preferred Shares, the Company shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full Common Shares issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in clause 7.10(b) in lieu of any fraction of

 

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a Common Share otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the Series A Preferred Shares converted. Such converted Series A Preferred Shares shall be retired and cancelled and may not be reissued as Shares of such series, and the Company may thereafter take such appropriate action (without the need for Member action) as may be necessary to reduce the authorised number of Series A Preferred Shares accordingly.

 

Special Mandatory Conversion

 

7.13                         Trigger Event.

 

(a)                                  In the event that any holder of Series A Preferred Shares, other than the Exempted Holders with respect to (and only with respect to) their respective Exempted Shares, does not purchase, at the Second Tranche Closing (if any), the full amount of its Second Tranche Share Allocation at the Second Tranche Closing, then the Applicable Portion of the Series A Preferred Shares held by such holder shall automatically, and without any further action on the part of such holder, be converted into Common Shares at a conversion ratio such that every 1,000 Series A Preferred Shares of the Applicable Portion held by such holder shall be converted into one Common Share, effective upon and concurrently with the consummation of the Second Tranche Closing. Any such conversion described in this clause 7.13(a) is referred to as a “ Special Mandatory Conversion.

 

(b)                                  Any Series A Preferred Shares converted pursuant to a Special Mandatory Conversion shall automatically, and without any further action on the part of the holder, upon the effectiveness of such Special Mandatory Conversion, lose, among other rights that are otherwise available to holders of Series A Preferred Shares, (a) registration rights and benefits set forth in Section 2 of the Investors’ Rights Agreement, provided, that the holder shall continue to be bound by Section 2.11 (Market Stand-off Agreement) with respect to such Shares, (b) information rights in Section 3.1 and inspection rights in Section 3.2, respectively, of the Investors’ Rights Agreement and (c) pre-emptive rights or rights of first offer with respect to issuances of securities by the Company and rights of first refusal and co-sale set forth in the Shareholders Agreement or such holder’s joinder thereto.

 

(c)                                   For the avoidance of doubt, if any Exempted Holder holds Series A Preferred Shares other than the Exempted Shares, such Exempted Holder shall be subject to the Special Mandatory Conversion with respect to the other Series A Preferred Shares held by such Exempted Holder.

 

(d)                                  For purposes of determining the number of Series A Preferred Shares owned by a holder, and for determining the number of Second Tranche Shares a holder of Series A Preferred Shares has purchased in the Second Tranche Closing, all Series A Preferred Shares held by Affiliates of such holder shall be aggregated with such holder’s Shares and Second Tranche Shares purchased by Affiliates of such holder shall be aggregated with the Second Tranche Shares purchased by such holder (provided that no Shares or

 

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securities shall be attributed to more than one entity or person within any such group of affiliated entities or persons).

 

7.14                         Procedural Requirements.

 

Upon a Special Mandatory Conversion, each holder of Series A Preferred Shares or Common Shares converted pursuant clause 7.13 shall be sent written notice of such Special Mandatory Conversion and the place designated for mandatory conversion of all such Series A Preferred Shares or Common Shares pursuant to clauses 7.13 and 7.14. Upon receipt of such notice, each holder of such Series A Preferred Shares or Common Shares in certificated form shall surrender his, her or its certificate or certificates for all such Shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company at the place designated in such notice. If so required by the Company, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by his, her or its attorney duly authorised in writing. All rights with respect to the Series A Preferred Shares converted pursuant to clause 7.13, including the rights, if any, to receive notices and vote (other than as a holder of Common Shares), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender any certificates for such Shares at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders therefor (or lost certificate affidavit and agreement), to receive the items provided for in the next sentence of this clause 7.14, As soon as practicable after the Special Mandatory Conversion and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Series A Preferred Shares or Common Shares so converted, the Company shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full Common Shares issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in clause 7.10(b) in lieu of any fraction of a Common Share otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the Series A Preferred Shares converted and (c) a new certificate for the number of Shares, if any, of Series A Preferred Shares represented by such surrendered certificate and not converted pursuant to clause 7.13. Such converted Series A Preferred Shares and/or Common Shares shall be retired and cancelled and may not be reissued as Shares of such series, and the Company may thereafter take such appropriate action (without the need for Shareholder action) as may be necessary to reduce the authorised number of Series A Preferred Shares or Common Shares accordingly.

 

8                                          Registered Shares Only

 

Shares may only be issued as registered Shares and the Company is not authorised to issue bearer shares. Registered Shares may not be exchanged for bearer shares or converted to bearer shares.

 

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9                                          Amendments to this Memorandum and the Articles

 

9.1                                Subject to the provisions of the Act and clauses 10 and 11 of this Memorandum, the Directors or Members may from time to time amend this Memorandum or the Articles by Resolution of Directors or Resolution of Members. The Directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of the amendment to this Memorandum or the Articles, or a restated memorandum and articles of association incorporating the amendment(s) made, and any such amendment(s) to this Memorandum or the Articles will take effect from the date of the registration by the Registrar of the notice of amendment or restated memorandum and articles of association incorporating the amendment(s) made.

 

9.2                                Notwithstanding any provision to the contrary in this Memorandum or the Articles, the Directors shall not have the power to amend this Memorandum or the Articles:

 

(a)                                  to restrict the rights or powers of the Members to amend this Memorandum or the Articles;

 

(b)                                  to change the percentage of Members required to pass a resolution to amend this Memorandum or the Articles;

 

(c)                                   in circumstances where this Memorandum or the Articles cannot be amended by the Members; or

 

(d)                                  to vary clause 10 or clause 11 of this Memorandum.

 

9.3                                A change of registered office or registered agent shall not constitute an amendment of this Memorandum or the Articles.

 

10                                   Reserved Matters

 

At any time when Series A Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without the written consent or affirmative vote of the Preferred Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class on an as-converted to Common Shares basis, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

(a)                                  amend or change the rights, preferences, privileges or powers of the Series A Preferred Shares;

 

(b)                                  increase or decrease the number of authorised Series A Preferred Shares or Common Shares;

 

(c)                                   create any new class or series of Shares having rights, preferences or privileges superior to or on parity with the Series A Preferred Shares;

 

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(d)                                  purchase or redeem any Common Shares other than pursuant to (i) equity incentive agreements with employees or service providers giving the Company the right to repurchase Shares upon termination of employment or the provision of services or (ii) that certain Put Agreement between the Company and Connecticut Innovations, Incorporated, dated July 18, 2016;

 

(e)                                   authorize or effect a Deemed Liquidation Event;

 

(f)                                    amend or waive any provisions of this Memorandum and/or the Articles;

 

(g)                                   increase or decrease the authorised maximum or minimum number of Directors as set out in Article 13.2 of the Articles;

 

(h)                                  pay or declare any dividend on Common Shares or Series A Preferred Shares; or

 

(i)                                      issue debt if the aggregate indebtedness of the Company and its Subsidiaries for borrowed money following such action would exceed US$10,000,000.

 

11                                   Further Reserved Matters

 

At any time when Series A Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without the written consent or affirmative vote of the Preferred Majority, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class on an as-converted to Common Shares basis, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

(a)                                  permit Delaware Corp or any Subsidiary to issue shares of interests in such entity; or

 

(b)                                  authorize or effect a sale, transfer or contribution of material assets of the Company to any third party other than a wholly-owned Subsidiary of the Company

 

12                                   Definitions and Interpretation

 

12.1                         In this memorandum of association and the articles of association of the Company:

 

Act

means the BVI Business Companies Act, 2004;

 

 

Additional Common Shares

means all Common Shares issued (or, pursuant to clause 7.10(d)(ii) of this Memorandum, deemed to be issued) by the Company after the Series A Preferred Share Original Issue Date, other than (1) the following Common Shares and (2) Common Shares deemed issued pursuant to the following Options and Convertible

 

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Securities (clauses (1) and (2), collectively, “ Exempted Securities ”):

 

 

 

 

(a)

Common Shares, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Shares;

 

 

 

 

(b)

Common Shares, Options or Convertible Securities issued by reason of a dividend, share split, split-up or other distribution on Common Shares that is covered by clauses 7.10(e) to 7.10(h) inclusive;

 

 

 

 

(c)

Common Shares or Options issued to employees or Directors of, or consultants or advisors to, the Company or any of its Subsidiaries pursuant to the Company’s equity incentive plan, as it may be amended or restated from time to time but only to the extent the number of Shares issued under such plan does not exceed 5% of the total number of Shares calculated on a fully-diluted basis as including in the denominator of such calculation all Series A Preferred Shares which the purchasers under the Series A Preferred Share Purchase Agreement have agreed to purchase (whether or not such Shares are purchased);

 

 

 

 

(d)

up to 32,500 Common Shares issued to Kleo Pharmaceuticals, Inc. pursuant to that certain Securities Purchase Agreement dated August 29, 2016, by and between the Company and Kleo Pharmaceuticals, Inc.; or

 

 

 

 

(e)

Common Shares or Convertible Securities actually issued upon the exercise of Options or Common Shares actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security.

 

 

 

Affiliate

means, with respect to any holder of Series A Preferred Shares, any person, entity or firm which, directly or indirectly, controls, is controlled by or is under common control with such holder, including, without limitation, any

 

21



 

 

entity of which the holder is a partner or member, any partner, officer,

 

director, member or employee of such holder and any venture capital fund now or hereafter existing of which the holder is a partner or member which is controlled by or under common control with one or more general partners of such holder or Shares the same management company with such holder;

 

 

Applicable Portion

means, with respect to any holder of Series A Preferred Shares, a number of Series A Preferred Shares calculated by multiplying the aggregate number of Series A Preferred Shares held by such holder immediately prior to the Second Tranche Closing by a fraction, the numerator of which is equal to the amount, if positive, by which such holder’s Second Tranche Share Allocation exceeds the number of Second Tranche Shares actually purchased by such holder at the Second Tranche Closing, and the denominator of which is equal to such holder’s Second Tranche Share Allocation;

 

 

Articles

means the Company’s articles of association, and “Article” shall be construed accordingly;

 

 

AZ

has the meaning given to it in the Purchase Agreement;

 

 

Blair

has the meaning given to it in the Purchase Agreement

 

 

BMS

has the meaning given to it in the Purchase Agreement;

 

 

Common Shares

has the meaning given to it in clause 6 of this Memorandum;

 

 

Company

means the above-named company;

 

 

Conversion Rights

has the meaning given to it in clause 7.8 of this Memorandum;

 

 

Convertible Securities

means any evidences of indebtedness, Shares or other securities directly or indirectly convertible into or exchangeable for Common Shares including warrants, but excluding Options;

 

 

Conversion Time

has the meaning given to it in clause 7.10(c)(i) of this Memorandum;

 

 

Cowen

has the meaning given to it in the Purchase Agreement

 

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Deemed Liquidation Event

means, unless the holders of at least a majority of the Series A Preferred Shares elect otherwise by written notice sent to the Company at least twenty (20) days prior to the effective date of any such event:

 

 

 

 

(a)

a merger or consolidation in which:

 

 

 

 

 

 

(i)

the Company is a constituent party; or

 

 

 

 

 

 

(ii)

a Subsidiary of the Company is a constituent party and the Company issues Shares pursuant to such merger or consolidation,

 

 

 

 

 

 

except any such merger or consolidation involving the Company or a Subsidiary in which the Shares outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the shares of (1) the surviving or resulting company; or (2) if the surviving or resulting company is a wholly owned Subsidiary of another company immediately following such merger or consolidation, the parent company of such surviving or resulting company; or

 

 

 

 

(b)

the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Subsidiary of the Company of all or substantially all the assets of the Company and its Subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more Subsidiaries of the Company if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Company;

 

 

 

Directors

means the directors for the time being of the Company;

 

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Distributable Amount

means any amount available as a Distribution;

 

 

Distribution

means any distribution (including an interim or final dividend);

 

 

Exempted Holders

means the holders of the Exempted Shares;

 

 

Exempted Shares

means (i) a total of 1,076,299 Series A Preferred Shares issued by the Company to AZ pursuant to that certain License Agreement dated as of September 30, 2016, by and between the Company and AZ, (ii) a total of 1,345,374 Series A Preferred Shares issued by the Company to BMS pursuant to that certain License Agreement dated as of July 8, 2016, by and between the Company and BMS, (iii) a total of up to 52,470 Series A Preferred Shares issued by the Company to Blair pursuant to that certain letter agreement dated as of April 6, 2016, by and between the Company and Blair, and (iv) a total of up to 157,549 Series A Preferred Shares issued by the Company to Cowen pursuant to that certain letter agreement dated as of March 30, 2016, by and between Cowen and the Company, in each case issued pursuant to the Purchase Agreement and subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalisation with respect to the Series A Preferred Shares;

 

 

Investors’ Rights Agreement

means that certain investors’ rights agreement entered into between the Company and certain of its Members on or around the date of these Memorandum and Articles (as may be amended, replaced or supplemented from time to time);

 

 

Mandatory Conversion Time

has the meaning given to in clause 7.11 of this Memorandum;

 

 

Members

means the members for the time being of the Company;

 

 

Memorandum

means this, the Company’s memorandum of association;

 

 

Option

means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Shares or Convertible Securities;

 

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Person

means any individual, corporation, partnership, trust, limited liability company, association or other entity;

 

 

Purchase Agreement

means that certain Series A Preferred Share Purchase Agreement entered into on or around the date of these Memorandum and Articles, by and among the Company and the other parties thereto;

 

 

Registrar

means the Registrar of Corporate Affairs appointed under the Act;

 

 

Resolution of Directors

means either:

 

 

 

 

(a)

a resolution approved at a duly constituted meeting of Directors by a majority of the votes cast by Directors who are present in person or by alternate at the meeting in accordance with the Articles; or

 

 

 

 

(b)

a resolution consented to in writing by or on behalf of a majority of the Directors in accordance with the Articles;

 

 

 

Resolution of Members

means either:

 

 

 

 

(a)

a resolution passed at a meeting of Members either on a show of hands or by a poll in accordance with the Articles; or

 

 

 

 

(b)

a resolution duly consented to in writing by Members representing a majority of the votes of Shares entitled to vote on the resolution in accordance with this Memorandum and the Articles;

 

 

 

Second Tranche Closing

has the meaning given to it in the Purchase Agreement;

 

 

Second Tranche Notice

has the meaning given to it in the Purchase Agreement;

 

 

Second Tranche Shares

means the Series A Preferred Shares sold at the Second Tranche Closing;

 

 

Second Tranche Share Allocation

means, with respect to any holder of Series A Preferred Shares, the number of Series A Preferred Shares set forth opposite such holder’s name under the column titled “ Second Tranche Shares ” in Exhibit A attached to the Purchase Agreement; and

 

25



 

“Series A Preferred Shares”

 

has the meaning given to it in clause 6 of this Memorandum;

 

 

 

 

“Series A Preferred Share Conversion Price”

 

shall initially be equal to $9.2911. Such initial Series A Preferred Share 
Conversion Price, and the rate at which Series A Preferred Shares may be 
converted into Common Shares, shall be subject to adjustment as provided for in this Memorandum;

 

 

 

“Series A Preferred Share Liquidation Amount”

 

has the meaning given to in clause 7.6 of this Memorandum;

 

 

 

“Series A Preferred Share Original Issue Date”

 

means the date on which the first Series A Preferred Shares were issued;

 

 

 

“Series A Preferred Share Original Issue Price”

 

means $9.2911 per Series A Preferred Share, subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalisation with respect to the Series A Preferred Shares;

 

 

 

“Series A Preferred Share Purchase Agreement”

 

means the Purchase Agreement;

 

 

 

“Share”

 

means a share in the Company and includes a fraction of a share in the Company;

 

 

 

“Shareholders Agreement”

 

means that certain Amended and Restated Shareholders’ Agreement entered into between the Company and the Members on or around the date of these Memorandum and Articles (as may be amended, replaced or supplemented from time to time);

 

 

 

“Special Mandatory Conversion”

 

has the meaning given to in clause 7.13 of this Memorandum;

 

 

 

“Subsidiary”

 

of any Person means another Person, (i) an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person or by another Subsidiary of such first Person, or (ii) which is required to be consolidated for financial reporting purposes with the first Person under GAAP. For the purpose of this

 

26



 

 

 

Memorandum, the defined term “Subsidiary” shall
include Biohaven Pharmaceuticals, Inc., a Delaware
corporation;

 

12.2                         In this Memorandum and the Articles:

 

(a)                                  words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and the neuter and references to persons shall include corporations and all entities capable of having a legal existence;

 

(b)                                  reference to a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;

 

(c)                                   the headings are for convenience only and shall not affect the construction of this Memorandum or the Articles;

 

(d)                                  reference to a thing being “ written ” or “ in writing ” includes all forms of writing, including all electronic records which, in the determination of the Directors, satisfy the requirements of the Electronic Transactions Act, 2001;

 

(e)                                   reference to a thing being “ signed ” or to a person’s “ signature ” shall include reference to an electronic signature which, in the determination of the Directors, satisfies the requirements of the Electronic Transactions Act, 2001, and reference to the Company’s “ seal ” shall include reference to an electronic seal which, in the determination of the Directors, satisfies the requirements of the Electronic Transactions Act, 2001.

 

27



 

We, Maples Corporate Services (BVI) Limited of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands in our capacity as registered agent for the Company hereby apply to the Registrar for the incorporation of the Company this 18th day of September 2013.

 

Incorporator

 


Sgd. Ruairi Bourke
Authorised Signatory
Maples Corporate Services (BVI) Limited]

 

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TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE BVI BUSINESS COMPANIES ACT, 2004

 

AMENDED AND RESTATED
ARTICLES OF ASSOCIATION

 

OF

 

Biohaven Pharmaceutical Holding Company Ltd.

 

1                                          Share Certificates

 

1.1                                Every person whose name is entered as a Member in the Company’s register of Members, being the holder of Shares, shall without payment (except where otherwise noted) be entitled to a Share certificate in the following circumstances:

 

(a)                                  on the issuance of such Shares to such Member;

 

(b)                                  on the transfer of such Shares to such Member;

 

(c)                                   on a re-designation, conversion or other restructuring of such Shares with the effect that the certificate in issue no longer properly describes such Shares; and

 

(d)                                  at the discretion of the Directors (who may levy a reasonable charge), on notice to the Company of a change of name of the Member.

 

1.2                                Such certificate shall be signed by a Director or under the common seal of the Company (which the registered agent of the Company is authorised to affix to such certificate) with or without the signature of any Director or officer of the Company specifying the Share or Shares held and the par value thereof (if any), provided that in respect of Shares held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate for a Share to one of several joint holders shall be sufficient delivery to all.

 

1.3                                If a certificate is worn out or lost it may, subject to the prior written consent of any mortgagee or chargee whose interest in the relevant certificated Shares has been noted on the Company’s register of Members, be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the Directors may reasonably require. Any Member receiving a Share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such a certificate.

 



 

2                                          Issue of Shares

 

2.1                                Subject to the provisions of the Memorandum, these Articles and the Shareholders Agreement, the unissued Shares shall be at the disposal of the Directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value (if any) of the Shares being disposed of, and upon such terms and conditions as the Directors may determine. Such consideration may take any form acceptable to the Directors, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property (including goodwill and know-how), services rendered or a contract for future services. Before issuing Shares for a consideration other than money, the Directors shall pass a Resolution of Directors stating:

 

(a)                                  the amount to be credited for the issue of the Shares;

 

(b)                                  their determination of the reasonable present cash value of the non-money consideration for the issue; and

 

(c)                                   that, in their opinion, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the Shares.

 

2.2                                Subject to the provisions of the Act in this regard, Shares may be issued on the terms that they are redeemable or, at the option of the Company, liable to be redeemed, on such terms and in such manner as the Directors before or at the time of the issue of such Shares may determine.

 

2.3                                The Directors may redeem any Share issued by the Company at a premium.

 

2.4                                Except as required by the Act, and notwithstanding that a Share certificate may, in the Company’s discretion, refer to a Member holding Shares “as trustee” or similar expression, no person shall be recognised by the Company as holding any Share upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or any interest in any fractional part of a Share or (except as provided by these Articles or by the Act) any other rights in respect of any Share except any absolute right to the entirety thereof by the registered holder.

 

3                                          Forfeiture of Shares

 

3.1                                The Company may, at any time after the due date for payment, serve on a Member who has not paid in full for Shares registered in the name of that Member, a written notice of call (“ Notice of Call ”) specifying a date for payment to be made. The Notice of Call shall name a further date not earlier than the expiration of 14 days from the date of service of the Notice of Call on or before which the payment required by the Notice of Call is to be made and shall contain a statement that in the event of non-payment at or before the time named in the Notice of Call the Shares, or any of them, in respect of which payment is not made will be liable to be forfeited.

 

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3.2                                Where a written Notice of Call has been issued under the foregoing Article and the requirements of the Notice of Call have not been complied with, the Directors may, at any time before tender of payment, forfeit and cancel the Shares to which the Notice of Call relates. The Company is under no obligation to refund any moneys to the Member whose Shares have been cancelled pursuant to this Article and that Member shall be discharged from any further obligation to the Company.

 

4                                          Transfer of Shares

 

4.1                                Shares shall be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee. The instrument of transfer shall also be signed by the transferee if registration as a holder of the Shares imposes a liability to the Company on the transferee. The instrument of transfer of a registered Share shall be sent to the Company for registration.

 

4.2                                Subject to the Memorandum, these Articles and to section 54(5) of the Act, the Company shall, on receipt of an instrument of transfer, enter the name of the transferee of the Share in the Company’s register of Members, provided that the transfer complies with the Shareholders Agreement.

 

4.3                                The transfer of a Share is effective when the name of the transferee is entered in the Company’s register of Members.

 

5                                          Mortgages of Shares and Charges over Shares

 

5.1                                Members may mortgage or create a charge or other form of security over their Shares.

 

5.2                                The Directors shall, at the written request of a Member who has mortgaged or created a charge over his Shares, enter in the Company’s register of Members:

 

(a)                                  a statement that such Shares are mortgaged or charged;

 

(b)                                  the name of the mortgagee or chargee (where such information has been stated by the Member); and

 

(c)                                   the date on which the statement and name are entered in the Company’s register of Members.

 

6                                          Transmission of Shares

 

6.1                                Subject to sections 52(2) and 53 of the Act, the executor or administrator of a deceased Member, the guardian of an incompetent Member or the trustee of a bankrupt Member shall be the only person recognised by the Company as having any title to such Member’s Share(s), save that and only in the event of death, incompetence or bankruptcy of any Member or Members as a consequence of which the Company no longer has any Directors or Members, then upon the production of any documentation which is reasonable evidence of the applicant being entitled to:

 

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(a)                                  a grant of probate of the deceased’s will, or grant of letters of administration of the deceased’s estate, or confirmation of the appointment as executor or administrator (as the case may be, or analogous position in the relevant jurisdiction), of a deceased Member’s estate;

 

(b)                                  the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent Member;

 

(c)                                   the appointment as trustee (or analogous position in the relevant jurisdiction) of a bankrupt Member; or

 

(d)                                  upon production of any other reasonable evidence of the applicant’s beneficial ownership of, or entitlement to the Shares,

 

to the Company’s registered agent in the British Virgin Islands together with (if so requested by the registered agent) a notarised copy of the Share certificate(s) of the deceased, incompetent or bankrupt Member, an indemnity in favour of the registered agent and/or appropriate legal advice in respect of any document issued by a foreign court, then the administrator, executor, guardian or trustee in bankruptcy (as the case may be) notwithstanding that their name has not been entered in the Company’s register of Members, may by written resolution of the applicant, endorsed with written approval by the registered agent, be appointed a Director and/or entered in the Company’s register of Members as the legal and/or beneficial owner of the Shares.

 

6.2                                Without limiting the foregoing, the production to the Company of any document which is reasonable evidence of:

 

(a)                                  a grant of probate of the will, or grant of letters of administration of the estate, or confirmation of the appointment as executor (or analogous position in the relevant jurisdiction), of a deceased Member;

 

(b)                                  the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent Member;

 

(c)                                   the trustee (or analogous position in the relevant jurisdiction) of a bankrupt Member; or

 

(d)                                  the applicant’s legal and/or beneficial ownership of the Shares,

 

shall be accepted by the Company even if the deceased, incompetent Member or bankrupt Member is resident and/or domiciled outside the British Virgin Islands if the document is issued by a foreign court which had competent jurisdiction in the matter. For the purposes of establishing whether or not a foreign court had competent jurisdiction in such a matter the Directors may obtain appropriate legal advice. The Directors may also require an indemnity to be given by the executor, administrator, guardian, trustee in bankruptcy or the applicant.

 

6.3                                Any person becoming entitled by operation of law or otherwise to a Share or Shares in consequence of the death, incompetence or bankruptcy of any Member may be registered as a Member upon such evidence being produced as may reasonably be required by the Directors. An

 

32



 

                                                application by any such person to be registered as a Member shall for all purposes be deemed to be a transfer of Shares of the deceased, incompetent or bankrupt Member and the Directors shall treat it as such (but without requiring an instrument of transfer).

 

6.4                                Any person who has become entitled to a Share or Shares in consequence of the death, incompetence or bankruptcy of any Member may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such Share or Shares and such request shall likewise be treated as if it were a transfer.

 

6.5                                What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case.

 

7                                          Acquisition of Own Shares

 

7.1                                The Company may, in the manner determined by the Directors by Resolution of Directors (and subject to the written consent of all the Members whose Shares are to be purchased, redeemed or otherwise acquired except as otherwise provided in an agreement between the Company and any such Member), purchase, redeem or otherwise acquire any of the Company’s own Shares for such consideration as the Directors consider fit, and either cancel or hold such Shares as treasury Shares. Shares may be purchased or otherwise acquired in exchange for newly issued Shares.

 

7.2                                The Directors shall not, unless permitted pursuant to the Act, purchase, redeem or otherwise acquire any of the Company’s own Shares unless immediately after such purchase, redemption or other acquisition:

 

(a)                                  the value of the Company’s assets exceeds it liabilities; and

 

(b)                                  the Company is able to pay its debts as they fall due.

 

7.3                                Sections 60 and 61 of the Act shall not apply to the Company.

 

8                                          Treasury Shares

 

8.1                                Shares may only be held as treasury Shares by the Company to the extent that the number of treasury Shares does not exceed 50% of the Shares of that class previously issued by the Company, excluding Shares that have been cancelled.

 

8.2                                The Directors may dispose of any treasury Shares on such terms and conditions as they may from time to time determine.

 

9                                          Notice of Meetings of Members

 

9.1                                The Directors may convene meetings of Members at such times and in such manner and places (within or outside the British Virgin Islands) as the Directors consider necessary or desirable, and they shall convene such a meeting upon the written request of Members entitled to exercise at

 

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                                                least ten (10) percent of the voting rights in respect of the matter for which the meeting is requested.

 

9.2                                Not less than seven (7) days’ notice specifying at least the place, the day and the hour of the meeting and general nature of the business to be conducted shall be given in the manner hereinafter mentioned to such persons whose names on the date the notice is given appear as Members in the Company’s register of Members and are entitled to vote at the meeting. The record date for determining those Members that are entitled to vote at the meeting may be specified in the notice (and such record date need not be the date notice is given).

 

9.3                                Notwithstanding the foregoing Article, a meeting of Members held in contravention of the requirement to give notice is valid if Members holding at least fifty (50) percent of:

 

(a)                                  the total voting rights on all the matters to be considered at the meeting; or

 

(b)                                  the votes of each class or series of Shares where Members are entitled to vote thereon as a class or series together with an absolute majority of the remaining votes,

 

have waived notice of the meeting and, for this purpose, the presence of a Member at the meeting shall be deemed to constitute waiver on his part (unless such Member objects in writing before the meeting proceeds to business).

 

9.4                                The inadvertent failure of the Directors to give notice of a meeting to a Member, or the fact that a Member has not received a notice that has been properly given, shall not invalidate the meeting.

 

10                                   Proceedings at Meetings of Members

 

10.1                         No business shall be transacted at any meeting of Members unless a quorum of Members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy entitled to exercise at least fifty (50) percent of the voting rights of the Shares of each class or series of Shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining Shares entitled to vote thereon.

 

10.2                         A Member shall be deemed to be present at a meeting of Members if:

 

(a)                                  he or his proxy participates by telephone or other electronic means; and

 

(b)                                  all Members and proxies participating in the meeting are able to hear each other.

 

10.3                         If, within half an hour from the time appointed for the meeting, a quorum is not present, the meeting shall be dissolved or, at the discretion of the Chairman, shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Chairman may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum.

 

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10.4                         A Member may attend a meeting of Members personally or be represented by a proxy who may speak and vote on behalf of the Member.

 

10.5                         The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the Member appointing the proxy, but must be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity (other than one or more individuals holding as joint owner) in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorised by such corporation or legal entity to execute the same.

 

10.6                         The Directors may, at any time prior to the time appointed for the meeting of Members to commence, appoint any person to act as chairman of the meeting of the Members (the “ Chairman ”) or, if the Directors do not make any such appointment, the Chairman of the Board shall preside as the Chairman. If there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be the Chairman.

 

10.7                         If no Director is willing to act as Chairman or if no Director is present within fifteen minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be Chairman.

 

10.8                         The Chairman may adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

10.9                         At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by the holders of a majority of in excess of fifty (50) percent of the votes of those Members (or their duly appointed proxies) entitled to vote and voting on the resolution, unless a poll is (before or on the declaration of the result of the show of hands) demanded:

 

(a)                                  by the Chairman; or

 

(b)                                  by any Member present in person or by proxy and holding not less than one tenth of the total voting Shares issued and having the right to vote on such resolution.

 

10.10                  Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

 

10.11                  If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn, at the discretion of the Chairman.

 

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10.12                  On a poll, every holder of a voting Share present in person or by proxy shall have one vote for every voting Share of which he is the holder which confers the right to a vote on the resolution. On a poll, a Resolution of Members is passed if it is approved by a majority of the votes validly cast by Members holding Shares entitled to vote on the poll.

 

10.13                  In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall not be entitled to a second or casting vote.

 

10.14                  Subject to the Memorandum or these Articles, an action that may be taken by Members at a meeting of Members may also be taken by a resolution consented to in writing, without the need for any notice. The consent may consist of several documents, including written communications, in like form each signed or assented to by one or more Members. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the earliest date from which Members holding a sufficient number of votes of Shares to pass the resolution have given their written consent.

 

10.15                  If a committee is appointed for any Member who is of unsound mind, that Member may vote by such committee.

 

11                                   Jointly Held Shares

 

Where Shares are registered in the names of joint owners:

 

(a)                                  each registered owner may be present in person or by proxy at a meeting of Members and may speak as a Member;

 

(b)                                  if only one of them is present in person or by proxy, he may vote on behalf of all of them; and

 

(c)                                   if two or more are present in person or by proxy, they must vote as one. If more than one joint owner votes in person or by proxy at any meeting of Members or consents in writing pursuant to Article 10.14, the vote or consent of the joint owner whose name appears first among such joint holders in the Company’s register of Members shall alone be counted.

 

12                                   Companies Acting by Representatives at Meetings

 

Any corporation or other form of corporate legal entity which is a Member may by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Members or any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member.

 

13                                   Appointment and Removal of Directors

 

13.1                         Subject to Article 13.2 and the Shareholders Agreement, the Directors shall be appointed and removed by Resolution of Directors or Resolution of Members. A Director shall be appointed for

 

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                                                such term as may be specified on his appointment or, failing any term specified, shall be deemed to be appointed indefinitely.  Sections 114(2) and 114(3) of the Act shall not apply to the Company.

 

13.2                         The maximum number of Directors shall be nine (9) and the minimum number of Directors shall be two (2). Subject to the provisions of the Shareholders’ Agreement, (a) subject to and effective as of the Second Tranche Closing, the Preferred Majority shall be exclusively entitled to designate, appoint, remove, replace and reappoint at any time or from time to time one Director subject to the provisions in the Shareholders Agreement relating to the appointment and election of such Director, and (b) the holders of a majority of the voting power of the outstanding Series A Preferred Shares and Common Shares, voting together as a single class on an as-converted to Common Shares basis, shall be exclusively entitled to designate, appoint, remove, replace and reappoint at any time or from time to time the remaining Directors.

 

13.3                         The Directors may, by Resolution of Directors, appoint a Director to fill a vacancy on the board of Directors. The term of the appointment of such Director shall not exceed the term that remained when the person who has ceased to be a Director ceased to hold office. A vacancy on the board of Directors occurs if a Director dies, or in the case of a Director that is not an individual, ceases to exist, or otherwise ceases to hold office or a Director prior to the expiration of his term of office.

 

13.4                         A person shall not be appointed as a Director unless he has consented in writing to be a Director.

 

13.5                         Each Director holds office until:

 

(a)                                  his disqualification to act as a Director under section 111 of the Act (on which his office as Director shall be automatically terminated if he has not resigned in accordance with section 115(2) of the Act);

 

(b)                                  his death or, in the case of a Director that is not an individual, its ceasing to exist;

 

(c)                                   his resignation;

 

(d)                                  the expiry of the term of office (if any) specified on his appointment or as the Directors or Members may have determined; or

 

(e)                                   the effective date of his removal by Resolution of Directors or Resolution of Members.

 

13.6                         The following are disqualified for appointment as a Director:

 

(a)                                  an individual who is under 18 years of age;

 

(b)                                  a person who is a disqualified person within the meaning of section 260(4) of the Insolvency Act, 2003;

 

(c)                                   a person who is a restricted person within the meaning of section 409 of the Insolvency Act, 2003; and

 

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(d)                                  an undischarged bankrupt.

 

13.7                         A Director shall not require a Share qualification, but nevertheless shall be entitled to attend and speak at any meeting of Directors and meeting of Members and at any separate meeting of the holders of any class of Shares.

 

13.8                         The remuneration of Directors (whether by way of salary, commission, participation in profits or otherwise) in respect of services rendered or to be rendered in any capacity to the Company (including to any company in which the Company may be interested) shall be fixed by Resolution of Directors or Resolution of Members. The Directors may also be paid such travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the Directors, or any committee of the Directors or meetings of the Members, or in connection with the business of the Company as shall be approved by Resolution of Directors or Resolution of Members.

 

14                                   Alternate Directors and Reserve Directors

 

14.1                         A Director, by written instrument deposited at the registered office, may from time to time appoint another Director or another person who is not disqualified for appointment as a Director under section 111 of the Act to be his alternate to:

 

(a)                                  exercise the appointing Director’s powers; and

 

(b)                                  carry out the appointing Director’s responsibilities, in relation to the taking of decisions by the Directors in the absence of the appointing Director.

 

14.2                         No person shall be appointed as an alternate Director unless he has consented in writing to be an alternate Director. The appointment of an alternate Director does not take effect until written notice of the appointment has been deposited at the registered office.

 

14.3                         The appointing Director may, at any time, terminate or vary the alternate’s appointment. The termination or variation of the appointment of an alternate Director does not take effect until written notice of the termination or variation has been deposited at the registered office, save that if a Director shall die or cease to hold the office of Director, the appointment of his alternate shall thereupon cease and terminate immediately without the need for notice.

 

14.4                         An alternate Director has no power to appoint an alternate, whether of the appointing Director or of the alternate Director.

 

14.5                         An alternate Director has the same rights as the appointing Director in relation to any meeting of Directors and any Resolution of Directors passed by way of a consent in writing. Unless stated otherwise in the notice of the appointment of the alternate, or a notice of variation of the appointment, if undue delay or difficulty would be occasioned by giving notice to a Director of a resolution of which his approval is sought in accordance with these Articles his alternate (if any) shall be entitled to waive notice on behalf of the appointing Director and vote on or consent to the resolution on behalf of that Director. Any exercise by the alternate Director of the appointing

 

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Director’s powers in relation to the taking of decisions by the Directors is as effective as if the powers were exercised by the appointing Director. An alternate Director does not act as an agent of or for the appointing Director and is liable for his own acts and omissions as an alternate Director.

 

14.6                         The remuneration of an alternate (if any) shall be payable out of the remuneration payable to the Director appointing him (if any), as agreed between such alternate and the Director appointing him.

 

14.7                         Where the Company has only one Member with voting rights who is an individual and that Member is also the sole Director (the “ sole member/director ”), that sole member/director may, by instrument in writing, nominate a person who is not disqualified from being a Director under section 111(1) of the Act as a reserve Director to act as director in the place of the director in the event of his death. A person shall not be nominated as a reserve Director unless he has consented in writing to be nominated as a reserve Director. The nomination of a person as a reserve Director ceases to have effect if:

 

(a)                                  before the death of the sole member/director who nominated him:

 

(i)                                      he resigns as reserve Director; or

 

(ii)                                   the sole member/Director revokes the nomination in writing; or

 

(b)                                  the sole member/director who nominated him ceases to be the sole member/director for any reason other than his death.

 

15                                   Duties of Directors and Conflicts of Interests

 

15.1                         A Director, in exercising his powers or performing his duties, shall act honestly and in good faith and in what the Director believes to be in the best interests of the Company.

 

15.2                         Notwithstanding the foregoing Article:

 

(a)                                  if the Company is a wholly-owned subsidiary, a Director may, when exercising powers or performing duties as a Director, act in a manner which he believes is in the best interests of the Company’s parent even though it may not be in the best interests of the Company;

 

(b)                                  if the Company is a subsidiary, but not a wholly-owned subsidiary, a Director may, when exercising powers or performing duties as a Director, with the prior agreement of all the Members, other than its parent, act in a manner which he believes is in the best interests of the Company’s parent even though it may not be in the best interests of the Company; and

 

(c)                                   if the Company is carrying out a joint venture between the Members, a Director may, when exercising powers or performing duties as a Director in connection with the carrying out of the joint venture, act in a manner which he believes is in the best interests of a Member or Members, even though it may not be in the best interests of the Company.

 

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15.3                         A Director shall exercise his powers as a Director for a proper purpose and shall not act, or agree to the Company acting, in a manner that contravenes the Act or the Memorandum or these Articles.

 

15.4                         A Director, when exercising powers or performing duties as a Director, shall exercise the care, diligence, and skill that a reasonable Director would exercise in the same circumstances taking into account, but without limitation:

 

(a)                                  the nature of the Company;

 

(b)                                  the nature of the decision; and

 

(c)                                   the position of the Director and the nature of the responsibilities undertaken by him.

 

15.5                         A Director, when exercising his powers or performing his duties as a Director, is entitled to rely upon the register of Members and upon books, records, financial statements and other information prepared or supplied, and on professional or expert advice given, by:

 

(a)                                  an employee of the Company whom the Director believes on reasonable grounds to be reliable and competent in relation to the matters concerned;

 

(b)                                  a professional adviser or expert in relation to matters which the Director believes on reasonable grounds to be within the person’s professional or expert competence; and

 

(c)                                   any other Director, or committee of Directors upon which the Director did not serve, in relation to matters within the Director’s or committee’s designated authority,

 

provided that the Director: (i) acts in good faith; (ii) makes proper inquiry where the need for the inquiry is indicated by the circumstances; and (iii) has no knowledge that his reliance on the register of Members or the books, records, financial statements and other information or expert advice is not warranted.

 

15.6                         A Director may hold any other office or position of profit under the Company (except that of auditor or liquidator) in conjunction with his office of Director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the Directors shall approve.

 

15.7                         A Director may be or become a Director or officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a Member or otherwise and no such Director shall be accountable for any remuneration or other benefits received by him as Director or officer or from his interest in such other company. The Directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or of their number, Directors or officers of such other company, or voting or providing for the payment of remuneration to the Directors or officers of such other company. A Director may vote in favour of the exercise of such voting rights in the manner aforesaid notwithstanding that he may be, or be about to become, a Director or

 

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officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in the manner aforesaid.

 

15.8                         No Director shall be disqualified by his office from contracting with the Company either as a buyer, seller or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested be voided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such Director holding that office or by reason of the fiduciary relationship thereby established, provided such Director shall, immediately after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose such interest to the board. For the purposes of this Article:

 

(a)                                  a Director is not required to make such a disclosure if:

 

(i)                                      the transaction or proposed transaction is between the Director and the Company; and

 

(ii)                                   the transaction or proposed transaction is or is to be entered into in the ordinary course of the Company’s business and on usual terms and conditions;

 

(b)                                  a disclosure to the board to the effect that a Director is a Member, Director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction. Such a disclosure is not made to the board unless it is made or brought to the attention of every Director on the board; and

 

(c)                                   subject to section 125(1) of the Act, the failure by a Director to comply with this Article does not affect the validity of a transaction entered into by the Director or the Company.

 

15.9                         A Director who is interested in a transaction entered into or to be entered into by the Company may:

 

(a)                                  vote on a matter relating to the transaction;

 

(b)                                  attend a meeting of Directors at which a matter relating to the transaction arises and be included among the Directors present at the meeting for the purposes of a quorum; and

 

(c)                                   sign a document on behalf of the Company, or do any other thing in his capacity as a Director, that relates to the transaction.

 

16                                   Powers of Directors

 

16.1                         The business of the Company shall be managed by the Directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company necessary for managing and for directing and supervising, the business and affairs of the Company as are not by the Act or by the

 

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Memorandum or these Articles required to be exercised by the Members, subject to any delegation of such powers as may be authorised by these Articles and permitted by the Act and to such requirements as may be prescribed by Resolution of the Members, but no requirement made by Resolution of the Members shall prevail if it be inconsistent with these Articles nor shall such requirement invalidate any prior act of the Directors which would have been valid if such requirement had not been made.

 

16.2                         Section 175 of the Act shall not apply to the Company.

 

16.3                         If the number of Directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the board there shall be only one continuing Director, he shall be authorised to act alone only for the purpose of appointing another Director.

 

17                                   Delegation by the Board to Directors, Committees, Officers, Attorneys and Agents

 

17.1                         The board may entrust to and confer upon any Director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. Subject to the provisions of section 110 of the Act, the Directors may delegate any of their powers to committees consisting of such Member or Members of their body as they think fit. Any committees so formed shall in the exercise of powers so delegated conform to any regulations that may be imposed on it by the Directors or the provisions of the Act.

 

17.2                         The Directors have no power to delegate the following powers to a committee of Directors:

 

(a)                                  to amend the Memorandum or these Articles;

 

(b)                                  to designate committees of Directors;

 

(c)                                   to delegate powers to a committee of Directors (provided that this and the preceding sub-Article do not prevent a committee of Directors, where authorised by the Directors, from appointing a sub-committee and delegating powers exercisable by the committee to the sub-committee);

 

(d)                                  to appoint or remove Directors;

 

(e)                                   to appoint or remove an agent;

 

(f)                                    to approve a plan or merger, consolidation or arrangement;

 

(g)                                   to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or approve a liquidation plan; or

 

(h)                                  to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed Distribution, satisfy the solvency test.

 

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17.3                         Where the Directors delegate their powers to a committee of Directors, they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds that at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on Directors by the Act.

 

17.4                         The Directors may, by Resolution of Directors, appoint officers of the Company at such times as shall be considered necessary or expedient. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modifications in such duties as may be prescribed by the Directors thereafter.

 

17.5                         Any person may hold more than one office and no officer need be a Director or Member. The officers shall remain in office until removed from office by the Directors, whether or not a successor is appointed.

 

17.6                         Any officer who is a body corporate may appoint any person as its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers.

 

17.7                         The Directors may from time to time by power of attorney appoint any company, firm or person or body of persons to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as the Directors think fit.

 

17.8                         The Directors may appoint any person, including a person who is a Director, to be an agent of the Company. An agent of the Company has such powers and authority of the Directors, including the power and authority to affix the common seal of the Company, as are set forth in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the following:

 

(a)                                  to amend the Memorandum or these Articles;

 

(b)                                  to change the registered office or registered agent;

 

(c)                                   to designate committees of Directors;

 

(d)                                  to delegate powers to a committee of Directors;

 

(e)                                   to appoint or remove Directors;

 

(f)                                    to appoint or remove an agent;

 

(g)                                   to fix emoluments of Directors;

 

(h)                                  to approve a plan of merger, consolidation or arrangement;

 

(i)                                      to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or to approve a liquidation plan;

 

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(j)                                     to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed Distribution, satisfy the solvency test as stipulated in section 56 of the Act; or

 

(k)                                  to authorise the Company to continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands.

 

17.9                         Where the Directors appoint any person to be an agent of the Company, they may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company.

 

17.10                  The Directors may at any time remove an agent and may revoke or vary a power conferred on him.

 

18                                   Proceedings of Directors

 

18.1                         The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit.  The meetings of the board and any committee thereof shall be held at such place or places (within or outside the British Virgin Islands) as the Directors shall decide.

 

18.2                         A Director may at any time summon a meeting of the Directors. A Director shall be given not less than three (3) business days’ (as defined in the Act) notice of a meeting of the Directors, save that a meeting of Directors held on less notice is valid if a majority of the Directors entitled to vote at the meeting have waived the notice of the meeting; and, for this purpose, the presence of a Director at the meeting shall be deemed to constitute waiver on his part (unless he objects in writing before the meeting proceeds to business).

 

18.3                         The inadvertent failure to give notice of a meeting to a Director, or the fact that a Director has not received the notice, shall not invalidate the meeting.

 

18.4                         Any Director who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at meetings of the Directors and of transacting any of the business of the Directors.

 

18.5                         A meeting of the Directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than four fifths of the total number of Directors with a minimum of four (4).

 

18.6                         If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

 

18.7                         A Director shall be deemed to be present at a meeting of the board if:

 

(a)                                  he or his alternate participates by telephone or other electronic means; and

 

(b)                                  all Directors and alternates participating in the meeting are able to hear each other.

 

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18.8                         The Directors may elect a chairman (the “ Chairman of the Board ”) of their meeting and determine the period for which he is to hold office. If no such Chairman of the Board is elected, or if at any meeting the Chairman of the Board is not present at the time appointed for holding the meeting, the Directors present may choose one of their number to be Chairman of the Board for the meeting. If the Directors are unable to choose a Chairman of the Board, for any reason, then the longest serving Director present at the meeting shall preside as the Chairman of the Board.

 

18.9                         Questions arising at any meeting of Directors shall be decided by a majority of the votes cast by Directors who are present in person or by alternate at the meeting and entitled to vote on the resolution. In the event of an equality in votes the Chairman of the Board shall have a second or casting vote.

 

18.10                  A resolution approved by a majority of the Directors or their alternates for the time being entitled to receive notice of a meeting of the Directors taking the form of a consent in writing shall be as valid and effectual as if it had been passed at a meeting of the Directors duly convened and held, without the need for any notice. The consent in writing may consist of several documents, including written communications, in like form each signed or assented to by one or more Directors. If the consent is in one or more counter parts, and the counterparts bear different dates, then the resolution shall take effect on the earliest date from which Directors having a sufficient number of votes to pass the resolution have given their written consent.

 

18.11                  If the Company shall have only one Director, the foregoing provisions for meetings of the Directors shall not apply but such sole Director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note of memorandum of all matters requiring a Resolution of Directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes.

 

19                                   Indemnification and Insurance

 

19.1                         Subject to the provisions of the Act, every Director and officer of the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company (each an “ Indemnified Person ”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect.

 

19.2                         The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute

 

45



 

an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.

 

19.3                         The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.

 

20                                   Company Seal and Entry into Contracts and Deeds

 

20.1                         The Directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument (save for a Share certificate in accordance with these Articles) shall be witnessed by a Director or officer of the Company or any other person so authorised from time to time by the Directors.

 

20.2                         A contract may be entered into by the Company as follows:

 

(a)                                  a contract that, if entered into by an individual, would be required by law to be in writing and under seal, may be entered into by or on behalf of the Company in writing under the common seal of the Company, or executed by or on behalf of the Company by a Director or an authorised agent of the Company, and may be varied or discharged in the same manner;

 

(b)                                  a contract that, if entered into by an individual, would be required by law to be in writing and signed, may be entered into by or on behalf of the Company in writing and signed by a person acting under the express or implied authority of the company, and may be varied or discharged in the same manner; and

 

(c)                                   a contract that, if entered into by an individual, would be valid although entered into orally, and not reduced to writing, may be entered into orally by or on behalf of the Company by a person acting under the express or implied authority of the Company, and may be varied or discharged in the same manner.

 

20.3                         Notwithstanding the foregoing Article, an instrument is validly executed by the Company as a deed, or an instrument under seal, if it is either:

 

(a)                                  sealed with the common seal of the Company and witnessed by a Director and/or such other person who is authorised by the Memorandum or these Articles to witness the application of the common seal of the Company; or

 

46



 

(b)                                  expressed to be, or is expressed to be executed as, or otherwise makes clear on its face that it is intended to be, a deed and it is signed by a Director and/or by a person acting under the express or implied authority of the Company.

 

21                                   Distributions

 

21.1                         Subject to the provisions of the Act and clause 11 of the Memorandum, the Directors may, by Resolution of Directors, authorise a Distribution by the Company at a time, and of an amount, and to any Members they think fit if they are satisfied, on reasonable grounds that, immediately after the Distribution, the value of the Company’s assets will exceed the Company’s liabilities and the Company will be able to pay its debts as they fall due. Distributions, including dividends, may be declared and paid in cash or in specie, in Shares or other assets and the Directors may for such purpose set such value as they deem fair upon any such assets.

 

21.2                         No Distribution shall be paid on those Shares which are held by the Company as treasury Shares at the date of declaration of the Distribution.

 

21.3                         The Directors may, before recommending any Distribution, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at their discretion, either be employed in the business of the Company or be invested in such investments as the Directors may from time to time think fit.

 

21.4                         If several persons are registered as joint holders of any Share, any of them may give effectual receipt for any Distribution or other monies payable on or in respect of the Share.

 

21.5                         Notice of any Distribution that may have been declared shall be given to each Member in manner hereinafter mentioned and all Distributions unclaimed for three years after having been declared may be forfeited by the Directors for the benefit of the Company.

 

21.6                         No Distribution shall bear interest against the Company.

 

22                                   Company Records

 

22.1                         The Company shall keep records that:

 

(a)                                  are sufficient to show and explain the Company’s transactions; and

 

(b)                                  will, at any time, enable the financial position of the Company to be determined with reasonable accuracy.

 

22.2                         The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the Directors may determine:

 

(a)                                  minutes of all meetings and all resolutions of Members and of classes of Members;

 

(b)                                  minutes of all meetings and all resolutions of Directors and committees of Directors; and

 

47



 

(c)                                   the records and underlying documentation of the Company (including, without limitation, its accounts (if any)).

 

22.3                         Where any such records are kept at a place other than at the office of the Company’s registered agent, the Company shall provide the registered agent with a written record of the physical address of the place or places at which the records are kept. Where the place at which any such records is changed, the Company shall provide the registered agent with the physical address of the new location of the records within fourteen (14) days of the change of location.

 

22.4                         The Company shall retain its records and underlying documentation for a period of at least five years from the date:

 

(a)                                  of completion of the transaction to which the records and underlying documentation relate; or

 

(b)                                  the Company terminates the business relationship to which the records and underlying documentation relate, and for these purposes “business relationship” means a continuing arrangement between the Company and one or more persons with whom the Company engages in business, whether on a one-off, regular, habitual or regular basis.

 

22.5                         The Company shall keep a register to be known as a register of Directors containing the names and addresses of the persons who are Directors, the date on which each person whose name is entered in the register was appointed as a Director, the date on which each person named as a Director ceased to be a Director, and such other information as may be prescribed from time to time by law.

 

22.6                         The Company shall maintain an accurate and complete register of Members showing the full names and addresses of all persons holding registered Shares, the number of each class and series of registered Shares held by such person, the date on which the name of each Member was entered in the register of Members and where applicable, the date such person ceased to hold any registered Shares.

 

22.7                         The Company shall maintain an accurate and complete register of charges in accordance with section 162(1) showing;

 

(a)                                  if the charge is a charge created by the company, the date of its creation or, if the charge is a charge existing on property acquired by the company, the date on which the property was acquired;

 

(b)                                  a short description of the liability secured by the charge;

 

(c)                                   a short description of the property charged;

 

(d)                                  the name and address of the trustee for the security or, if there is no such trustee, the name and address of the chargee;

 

48


 

(e)                                   unless the charge is a security to bearer, the name and address of the holder of the charge; and

 

(f)                                    details of any prohibition or restriction, if any, contained in the instrument creating the charge on the power of the Company to create any future charge ranking in priority to or equally with the charge.

 

22.8                         The Company shall keep the following at the office of its registered agent:

 

(a)                                  the Memorandum and these Articles;

 

(b)                                  the register of Members maintained in accordance with these Articles or a copy of the register of Members;

 

(c)                                   the register of Directors maintained in accordance with these Articles or a copy of the register of Directors;

 

(d)                                  copies of all notices and other documents filed by the Company in the previous ten years;

 

(e)                                   a copy of the register of charges kept by the Company pursuant to section 162(1) of the Act; and

 

(f)                                    an imprint of the common seal.

 

22.9                         Where the Company keeps a copy (but not the original) of the register of Members or the register of Directors at the office of its registered agent, it shall:

 

(a)                                  within fifteen (15) days of any change in the register, notify the registered agent, in writing, of the change; and

 

(b)                                  provide the registered agent with a written record of the physical address of the place or places at which the original register of Members or the original register of Directors is kept,

 

and where the place at which the original register of Members or the original register of Directors is changed, the Company shall provide the registered agent with the physical address of the new location of the records within fourteen (14) days of the change of location.

 

22.10                  The records, documents and registers required by these Articles shall be open to the inspection of the Directors at all times.

 

22.11                  The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions the records, documents and registers of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right to inspect any records, documents or registers of the Company except as conferred by the Act or authorised by a Resolution of Directors.

 

49



 

23                                   Audit

 

23.1                         The Directors may by a Resolution of Directors call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed.

 

23.2                         The auditor may be a Member but no Director or officer of the Company shall be eligible during his continuance in office.

 

23.3                         Every auditor of the Company shall have a right of access at all times to the books of account of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties.

 

23.4                         The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company’s audited profit and loss account and/or balance sheet is to be presented.

 

24                                   Notices

 

24.1                         Any notice, information or written statement required to be given to Members shall be served by mail, fax (or equivalent means of transmittance) or email addressed to each Member at the address shown in the Company’s register of Members (or where the notice is given by email or fax (or equivalent means of transmittance) by sending it to the email address or fax number (or equivalent) provided by such Member). Any mailed notice, if posted from one country to another, is to be sent by airmail.

 

24.2                         Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays in the British Virgin Islands) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the British Virgin Islands) following the day on which the notice was posted. Where a notice is sent by fax (or equivalent means of transmittance), service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by email service shall be deemed to be effected by transmitting the email to the email address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the email to be acknowledged by the recipient.

 

24.3                         A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under these Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the

 

50



 

persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

 

24.4                         All notices directed to be given to the Members shall, with respect to any registered Shares to which persons are jointly entitled, be given to whichever of such persons is named first in the Company’s register of Members, and notice so given shall be sufficient notice to all the holders of such Shares.

 

25                                   Continuation

 

The Company may, by a Resolution of Directors or by a Resolution of Members, continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.

 

51



 

26                                   Liquidation

 

26.1                         The Company may be voluntarily liquidated under Part XII of the Act if;

 

(a)                                  it has no liabilities; or

 

(b)                                  it is able to pay its debts as they fall due and the value of its assets equals or exceeds its liabilities.

 

26.2                         A voluntary liquidator may, subject to the terms of the Act, be appointed by a Resolution of Directors or by a Resolution of Members provided the Members have approved, by Resolution of Members, a liquidation plan approved by the Directors.

 

26.3                         If the Company shall be liquidated, the voluntary liquidator may divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any such property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the liquidator shall think fit, but so that no Member shall be compelled to accept any Shares or other securities whereon there is any liability.

 

52



 

We, Maples Corporate Services (BVI) Limited of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands in our capacity as registered agent for the Company hereby apply to the Registrar for the incorporation of the Company this 18th day of September 2013.

 

Incorporator

 

 

Sgd. Ruairi Bourke

Authorised Signatory

Maples Corporate Services (BVI) Limited

 

53




Exhibit 4.2

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

INVESTORS’ RIGHTS AGREEMENT

 

October 28, 2016

 



 

Table of Contents

 

 

 

 

Page

 

 

 

 

1.    DEFINITIONS

1

 

 

 

 

2.    REGISTRATION RIGHTS

5

 

 

 

 

 

2.1

Demand Registration

5

 

 

 

 

 

2.2

Company Registration

6

 

 

 

 

 

2.3

Underwriting Requirements

7

 

 

 

 

 

2.4

Obligations of the Company

8

 

 

 

 

 

2.5

Furnish Information

10

 

 

 

 

 

2.6

Expenses of Registration

10

 

 

 

 

 

2.7

Delay of Registration

10

 

 

 

 

 

2.8

Indemnification

10

 

 

 

 

 

2.9

Reports Under Exchange Act

12

 

 

 

 

 

2.10

Limitations on Subsequent Registration Rights

13

 

 

 

 

 

2.11

Market Stand-off’ Agreement

13

 

 

 

 

 

2.12

Restrictions on Transfer

14

 

 

 

 

 

2.13

Termination of Registration Rights

15

 

 

 

 

3.    INFORMATION AND OBSERVER RIGHTS

16

 

 

 

 

 

3.1

Delivery of Financial Statements

16

 

 

 

 

 

3.2

Inspection

16

 

 

 

 

 

3.3

Termination of Information

17

 

 

 

 

 

3.4

Confidentiality

17

 

 

 

 

4.    ADDITIONAL COVENANTS

17

 

 

 

 

 

4.1

Employee Agreements

17

 

 

 

 

 

4.2

Employee Stock

18

 

 

 

 

 

4.3

Board Matters

18

 

 

 

 

 

4.4

Successor Indemnification

18

 

 

 

 

 

4.5

Termination of Covenants

18

 

 

 

 

 

4.6

Passive Foreign Investment Company

18

 

 

 

 

 

4.7

Controlled Foreign Corporation

19

 

 

 

 

 

4.8

Taxes

19

 

 

 

 

 

4.9

Shareholder Approval

20

 

i



 

Table of Contents

(continued)

 

 

 

 

Page

 

 

 

 

 

4.10

Confidential Information Agreements

20

 

 

 

 

5.    MISCELLANEOUS

20

 

 

 

 

 

5.1

Successors and Assigns

20

 

 

 

 

 

5.2

Governing Law

20

 

 

 

 

 

5.3

Counterparts

20

 

 

 

 

 

5.4

Titles and Subtitles

21

 

 

 

 

 

5.5

Notices

21

 

 

 

 

 

5.6

Amendments and Waivers

21

 

 

 

 

 

5.7

Severability

22

 

 

 

 

 

5.8

Aggregation of Stock

22

 

 

 

 

 

5.9

Additional Investors

22

 

 

 

 

 

5.10

Entire Agreement

22

 

 

 

 

 

5.11

Dispute Resolution

22

 

 

 

 

 

5.12

Delays or Omissions

23

 

 

 

 

 

5.13

Acknowledgment

23

 

ii


 

INVESTORS’ RIGHTS AGREEMENT

 

THIS INVESTORS’ RIGHTS AGREEMENT (this “ Agreement ”), is made as of the 28th day of October, 2016, by and among Biohaven Pharmaceutical Holding Ltd., a company formed under the laws of the Territory of the British Virgin Islands (the “ Company ”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “ Investor, ” each of the shareholders listed on Schedule B hereto, each of whom is referred to herein as a “ Key Holder ” and any Additional Purchaser (as defined in the Purchase Agreement) that becomes a party to this Agreement in accordance with Section 5.9 hereof.

 

RECITALS

 

WHEREAS , the Company and the Investors are parties to the Series A Preferred Share Purchase Agreement of even date herewith (the “ Purchase Agreement ”); and

 

WHEREAS , in order to induce the Company to enter into the Purchase Agreement and to induce the Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register Common Shares issuable to the Investors, to receive certain information from the Company, and shall govern certain other matters as set forth in this Agreement;

 

NOW, THEREFORE , the parties hereby agree as follows:

 

1.                                       Definitions . For purposes of this Agreement:

 

1.1                                Affiliate ” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

1.2                                Common Shares ” means the Company’s common shares, no par value per share.

 

1.3                                Competitor ” means a Person engaged, directly or indirectly (including through any partnership, limited liability company, corporation, joint venture or similar arrangement (whether now arising or formed hereafter)), in the development or commercialization of drugs targeting similar systems or uses as the drugs developed, commercialized or under development or commercialization by the Company, but shall not include (i) any Investor, including any affiliated entity which act as investment advisors for such Investor or affiliates of such Investor, by virtue of another venture capital investment if such Investor regularly engages in venture capital investment or (ii) Bristol-Myers Squibb Company or AstraZeneca A.B. so long as such Investor (A) is a Major Investor, or (B) holds at least the number of Preferred Shares (or Common Stock issuable upon conversion thereof) as such Investor holds immediately following the initial issuance of Shares to such party.

 

1



 

1.4                                Damages ” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.5                                Derivative Securities ” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Shares, including options and warrants.

 

1.6                                Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.7                                Excluded Registration ” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Shares being registered is Common Shares issuable upon conversion of debt securities that are also being registered.

 

1.8                                Form S-1 ” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC; provided, that references to Form S-1 in this Agreement shall be read to include Form F-1, or any successor form adopted by the SEC, in the event the Company qualifies and files reports with the SEC as a “foreign issuer” as defined in Rule 3b-4 promulgated under the Exchange Act or otherwise qualifies for use of such form.

 

1.9                                Form S-3 ” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC; provided that references to Form S-3 in this Agreement shall be read to include Form F-3, or any successor form adopted by the SEC, in the event the Company qualifies and files reports with the SEC as a “foreign private issuer” as defined in Rule 3b-4 promulgated under the Exchange Act or otherwise qualifies for use of such form..

 

2



 

1.10                         GAAP ” means generally accepted accounting principles in the United States.

 

1.11                         Holder ” means any holder of Registrable Securities who is a party to this Agreement.

 

1.12                         IFRS ” means International Financial Reporting Standards.

 

1.13                         Immediate Family Member ” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.

 

1.14                         Initiating Holders ” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.15                         IPO ” means the Company’s first underwritten public offering of its Common Shares under the Securities Act.

 

1.16                         Key Holder Registrable Securities ” means (i) the 11,766,500 Common Shares held by the Key Holders, and (ii) any Common Shares issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of such shares.

 

1.17                         Major Investor ” means any Investor that, individually or together with such Investor’s Affiliates, holds at least 107,625 shares of Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof).

 

1.18                         Memorandum and Articles ” means the Company’s Restated and Amended Memorandum of Association and Amended and Restated Articles of Association, as amended and restated from time to time.

 

1.19                         New Securities ” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.20                         Person ” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.21                         Preferred Shares ” means, collectively, the Company’s Series A Preferred Shares.

 

1.22                         Registrable Securities ” means (i) the Common Shares issuable or issued upon conversion of the Preferred Shares, excluding any Common Shares issued upon conversion of the Preferred Shares pursuant to the “Special Mandatory Conversion”

 

3



 

provisions of the Company’s Memorandum and Articles, (ii) any Common Shares, or any Common Shares issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; the Key Holder Registrable Securities, provided, however , that such Key Holder Registrable Securities shall not he deemed Registrable Securities and the Key Holders shall not be deemed Holders for the purposes of Subsections 2.1, 2.10, 3.1, 3.2 and 4.3; and (iv) any Common Shares issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 5.1 , and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.13 . of this Agreement.

 

1.23                         Registrable Securities then outstanding ” means the number of shares determined by adding the number of shares of outstanding Common Shares that are Registrable Securities and the number of Common Shares issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

1.24                         Restricted Securities ” means the securities of the Company are subject to the restrictions on transfer set forth in Subsection 2.12 hereof.

 

1.25                         SEC ” means the Securities and Exchange Commission.

 

1.26                         SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.27                         SEC Rule 145 ” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.28                         Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.29                         Selling Expenses ” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.6 .

 

1.30                         Series A Director ” means any director of the Company that the holders of Series A Preferred Shares are entitled to elect pursuant to the Shareholders’ Agreement.

 

1.31                         Series A Preferred Shares ” means the Company’s Series A Preferred Share, no par value per share.

 

4



 

1.32                         Shareholders’ Agreement ” means the Amended and Restated Biohaven Shareholders’ Agreement dated as of the date hereof, among the Company and the other parties thereto.

 

2.                                       Registration Rights . The Company covenants and agrees as follows:

 

2.1                                Demand Registration .

 

(a)                                  Form S-1 Demand . If at any time after five (5) years after the date of this Agreement, the Company receives a request from Holders of fifty percent (50%) of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to at least forty percent (40%) of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of Selling Expenses, would exceed $10 million), then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “ Demand Notice ”) to all Holders other than the Initiating Holders; and (y) subject to the limitations set forth in this Section 2.1, within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c)  and 2.3 .

 

(b)                                  Form S-3 Demand . If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least ten percent (10%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $5 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) within forty-five (45) days after the date such request is given by the Initiating Holders, file a Font). S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c)  and 2.3 .

 

(c)                                   Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its shareholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such

 

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filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however , that the Company may not invoke this right more than once in any twelve (12) month period; and provided, further , that the Company shall not register any securities for its own account or that of any other shareholder during such ninety (90) day period other than pursuant to a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; a registration in which the only Common Shares being registered are Common Shares issuable upon conversion of debt securities that are also being registered; or a registration relating to an SEC Rule 145 transaction.

 

(d)                                  The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a) : (i) during the period that is one hundred eighty (180) days after the effective date of a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) if the Company delivers written notice to the holders of Registrable Securities within thirty (30) days of any request to file a Form S-1 registration statement pursuant to Subsection 2.1(a)  of its intent to file a registration statement for a registered public offering within ninety (90) days after such request; (iii) after the Company has effected two (2) registrations pursuant to Subsection 2.1(a) ; or (iv) if the Initiating Holders propose to dispose of shares of Registrable Securities that may he immediately registered on Fowl S-3 pursuant to a request made pursuant to Subsection 2.1(b) . The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(b)  (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected two registrations pursuant to Subsection 2.1(b)  within the twelve (12) month period immediately preceding the date of such request. A registration shall not he counted as “effected” for purposes of this Subsection 2.1(d)  until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Subsection 2.6 , in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Subsection 2.1(d) .

 

2.2                                Company Registration . If the Company proposes to register (including, for this purpose, a registration effected by the Company for shareholders other than the Holders) any of its Common Shares under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3 , cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under

 

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this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.6 .

 

2.3                                Underwriting Requirements .

 

(a)                                  If, pursuant to Subsection 2.1 , the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1 , and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.4(e) ) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.3 if the underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided , however , that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting.

 

(b)                                  In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2 , the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by shareholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable) to the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than

 

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securities to be sold by the Company) are first entirely excluded from the offering, (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other shareholder’s securities are included in such offering or (iii) notwithstanding (ii) above, any Registrable Securities which are not Key Holder Registrable Securities be excluded from such underwriting unless all Key Holder Registrable Securities are first excluded from such offering. For purposes of the provision in this Subsection  2.3(b)  concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, shareholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

(c)                                   For purposes of Subsection 2.1 , a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection  2.3(a) , fewer than forty percent (40%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.4                                Obligations of the Company . Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)                                  prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Shares (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, the Company shall keep the registration statement effective until all such Registrable Securities are sold, or, if earlier, the date on which all such Registrable Securities may be sold without limitation during a three-month period without registration under Rule 144 under the Securities Act;

 

(b)                                  prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

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(c)                                   furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)                                  use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)                                   in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f)                                    use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(g)                                   provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h)                                  promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(i)                                      notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

(j)                                     after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

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2.5                                Furnish Information . It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.6                                Expenses of Registration . All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $30,000, of one counsel for the selling Holders (“ Selling Holder Counsel ”), shall be borne and paid by the Company for the initial demand registration; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Subsections 2.1(a) or 2.1(b), as the case may be. All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7                                Delay of Registration . No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8                                Indemnification . If any Registrable Securities are included in a registration statement under this Section 2:

 

(a)                                  To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and shareholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided , however , that the indemnity agreement contained in this Subsection 2.8(a)  shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

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(b)                                  To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided , however , that the indemnity agreement contained in this Subsection 2.8(b)  shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b)  and 2.8(d)  exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c)                                   Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to he made against any indemnifying party under this Subsection 2.8 , give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided , however , that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8 , to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8 .

 

(d)                                  To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8   but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may

 

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be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8 , then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided , however , that, in any such case (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d) , when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b) , exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)                                   Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)                                    Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 . shall survive the completion of any offering of Registrable Securities in a registration under this Section 2 , and otherwise shall survive the termination of this Agreement.

 

2.9                                Reports Under Exchange Act . With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)                                  make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b)                                  use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

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(c)                                   furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10                         Limitations on Subsequent Registration Rights . From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that (i) would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included; or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Subsection 5.9 .

 

2.11                         “Market Stand-off’ Agreement . Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of its Common Shares or any other equity securities under the Securities Act on a registration statement on Form S-1 or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, or such other period, not to exceed seventeen (1 7) days after the expiration of the 180 day period, as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports, and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Shares held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 shall apply only to the IPO and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions

 

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set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all shareholders individually owning more than one percent (1%) of the Company’s outstanding Common Shares (after giving effect to conversion into Common Shares of all outstanding Preferred Shares). The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

2.12                         Restrictions on Transfer .

 

(a)                                  The Preferred Shares and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement and the Shareholders’ Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Series A Preferred Shares and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)                                  To the extent permissible, each Investor’s certificate, register of members, instrument, or book entry representing (i) the Preferred Shares, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Subsection 2.12(c) ) be notated with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

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(c)                                   The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.12 .

 

(d)                                  The holder of such Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2 . Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon, subject to compliance with the terms of the Shareholders Agreement (including, without limitation, obligations to comply with any transfer restrictions, rights of first and secondary refusal and tag-along rights therein), the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144; or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Subsection 2.12 . Each certificate or book entry representing the Restricted Securities transferred as above provided shall be notated with, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Subsection 2.12(b) , except that such certificate instrument, or book entry shall not be notated with such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13                         Termination of Registration Rights . The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsections 2.1 or 2.2 shall terminate upon the earliest to occur of:

 

(a)                                  the closing of a Deemed Liquidation Event, as such term is defined in the Company’s Memorandum and Articles;

 

(b)                                  such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and

 

(c)                                   the third (3rd) anniversary of the IPO.

 

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3.                                       Information and Observer Rights .

 

3.1                                Delivery of Financial Statements . The Company shall deliver to (x) each Investor as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company (i) an audited consolidated balance sheet as of the end of such year, (ii) audited consolidated statements of income and of cash flows for such year and (iii) an audited consolidated statement of shareholders’ equity as of the end of such year, and (y) each Major Investor the following, provided , in each case, that the Board of Directors has not reasonably determined that such Investor is a Competitor of the Company:

 

(a)                                  a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Subsection 3.1(b) ) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year.

 

(b)                                  as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited consolidated statements of income and cash flows for such fiscal quarter, and an unaudited consolidated balance sheet as of the end of such fiscal quarter, all prepared in accordance with GAAP or, if applicable, IFRS (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP or, if applicable, IFRS);

 

(c)                                   as soon as practicable, but in any event within thirty (30) days after the end of each month, unaudited consolidated statements of income and cash flows for such month, and an unaudited consolidated balance sheet as of the end of such month, all prepared in accordance with GAAP or, if applicable, IFRS (except that such financial statements may (i) be subject to normal year-end audit adjustments; and (ii) not contain all notes thereto that may be required in accordance with GAAP or, if applicable, IFRS); and

 

(d)                                  as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “ Budget ”), prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company.

 

Notwithstanding anything else in this Subsection 3.1 to the contrary, the Company may cease providing the information set forth in this Subsection 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Subsection 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

3.2                                Inspection . The Company shall permit each Major Investor ( provided that the Board of Directors has not reasonably determined that such Major Investor is a

 

16



 

competitor of the Company), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided , however , that the Company shall not be obligated pursuant to this Subsection 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3                                Termination of Information . The covenants set forth in Subsection 3.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, or (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Memorandum and Articles, whichever event occurs first.

 

3.4                                Confidentiality . Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Subsection 3.4 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Subsection 3.4; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

4.                                       Additional Covenants .

 

4.1                                Employee Agreements . The Company will cause each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without the consent of the Board of Directors.

 

17



 

4.2                                Employee Stock . Unless otherwise approved by the Board of Directors, including the Series A Director, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a three (3) year period, with the first twenty-five percent (25%) of such shares vesting upon grant and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Subsection 2.11 . In addition, all grants shall be made in compliance with Section 409A of the Internal Revenue Code, and, unless otherwise approved by the Board of Directors, including the Series A Director, the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at the lesser of cost or fair market value upon termination of employment of a holder of restricted stock.

 

4.3                                Board Matters . Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors.

 

4.4                                Successor Indemnification . If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Memorandum and Articles or their corporate governance documents, or elsewhere, as the case may be.

 

4.5                                Termination of Covenants . The covenants set forth in this Section 4, except for Subsection 4.5, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO or (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Memorandum and Articles, whichever event occurs first.

 

4.6                                Passive Foreign Investment Company . The Company will provide as soon as practicable (but in no event later than forty-five (45) days following the end of such taxable year) any United States based Investor with all information reasonably available to the Company or any of its subsidiaries to permit such United States based Investor (and its direct or indirect investors, as applicable) to (a) accurately prepare all tax returns and comply with any reporting requirements as a result of the Company’s status as a “passive foreign investment company” (“ PFIC ”) defined in Section 1297 of the Internal Revenue Code of 1986, as amended (the “ Code ”), (b) make any election (including, without limitation, a “qualified electing fund” election (“ QEF Election ”) under Section 1295 of the Code), with respect to the Company and/or any of its direct or indirect subsidiaries, and comply with any reporting or other requirements incident to such election, (c) file a “protective statement” pursuant to Section 1295 of the Code

 

18



 

with respect to the Company and/or any of its direct or indirect subsidiaries, and comply with any reporting or other requirements incident to such statement. Upon request from a United States based Investor, the Company shall, and shall cause its direct and indirect subsidiaries to, provide such United States based Investor (for the benefit of such United States based Investor’s direct or indirect investors, as applicable) with accurately completed “PFIC Annual Information Statements,” as required by Treasury Regulation Section 1.1295-1(g), and otherwise comply with applicable Treasury Regulation requirements, or “Annual Intermediary Statements”, as requested by the United States based Investor. The Company shall use its commercially reasonable efforts, to the extent of its available cash and to the extent allowable by law, to pay the shareholders of the Company a dividend sufficient to enable any United States based Investors (or their equity holders) who have made a QEF Election to defray their U.S. federal income tax liabilities arising from such QEF Election.

 

4.7                                Controlled Foreign Corporation . The Company will provide prompt written notice to the United States based Investors if at any time the Company becomes aware that it or any direct or indirect subsidiary has become a “controlled foreign corporation” (as defined in the Code) (“ CFC ”). Upon request of a United States based Investor from time to time, subject to obtaining the consent of its shareholders to release such information, the Company will promptly provide in writing such information in its possession concerning its shareholders and, to the Company’s actual knowledge, the direct and indirect interest holders in each shareholder reasonably sufficient for such United States based Investors to determine whether the Company or any direct or indirect subsidiary is a CFC. The Company shall provide United States based Investors with reasonable access to such other Company information as the Company may then have available to it as may reasonably be required by any United States based Investor (or its direct or indirect investors, as applicable) to determine the Company’s status as a CFC to determine whether such United States based Investor (or its direct or indirect investor) is required to report its pro rata portion of the Company’s Subpart F Income (as defined below) on its United States federal income tax return, or to allow such United States based Investor to otherwise comply with applicable United States federal income tax law. If it is determined, either by the Company, any United States based Investor or any taxing authority, that the Company or any subsidiary is or reasonably may be a CFC for any calendar year, the Company shall, as soon as practicable using commercially reasonable efforts after the end of such calendar year, determine, and make available to each United States based Investor a written report of the amount and character of any Subpart F Income, any Section 956 Amount (as defined below) and earnings and profits (as determined for U.S. federal income tax purposes) generated by such entity during such calendar year and the amount of each such Investor’s pro rata portion of such Subpart F Income and Section 956 Amount. For purposes of this Section 4.7, “Subpart F Income” means “subpart F income” as defined in Section 952 of the Code and the Treasury Regulations thereunder, and “Section 956 Amount” means any amount described in Sections 951(a)(1)(B) and 956 of the Code and the Treasury Regulations thereunder. Without limiting the Company’s obligations as set forth in this Section 1.9, for the avoidance of doubt, neither the Company nor other shareholders (including the Key Holders) are responsible for any tax filings of the United States based Investors or for any associated or related costs incurred in connection with such tax filings.

 

4.8                                Taxes . The Company shall file all necessary elections and take all necessary actions so as to be classified as a corporation for U.S. federal income tax purposes

 

19



 

4.9                                Shareholder Approval . On or prior to the Second Tranche Closing, the Company shall obtain shareholder approval of the last version of the Amended and Restated Memorandum and Articles of Association as filed with the British Virgin Islands on October 28, 2016.

 

4.10                         Confidential Information Agreements . By the seventh day anniversary of the Initial Closing, the Company and each of its employees, officers, and consultants will have entered into the form of Confidential Information Agreement approved by counsel to the Purchasers to its reasonable satisfaction.

 

5.                                       Miscellaneous.

 

5.1                                Successors and Assigns . The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a partner or retired partner of any holder which is a partnership; (iii) is a member or former member of any holder which is a limited liability company; (iv) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; (v) with respect to a transferee of Connecticut Innovations, Incorporated (“ CII ”), is a Permitted CII Transferee (as such term is defined in the Shareholders’ Agreement) or (vi) after such transfer, satisfies the criteria to be considered a Majority Investor (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided , however , that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11 . For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; or (4) with respect to a transferee of CII, that is a Permitted CII Transferee, provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

5.2                                Governing Law . This Agreement shall be governed by the internal law of the Territory of the British Virgin Islands.

 

5.3                                Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000,

 

20


 

e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

5.4                                Titles and Subtitles . The titles and subtitles used in this Agreement are for convenience only and arc not to be considered in construing or interpreting this Agreement.

 

5.5                                Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A or Schedule B (as applicable) hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Subsection 5.5. If notice is given to the Company, a copy shall also be sent to Douglas G. Gray, Locke Lord LLP, 2800 Financial Plaza, Providence, Rhode Island 02903.

 

5.6                                Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that the Company may in its sole discretion waive compliance with Subsection 2.12(d) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Subsection 2.12(d) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion. Further, this Agreement may not be amended, and no provision hereof may be waived, in each case, in any way which would adversely affect the rights of the Key Holders hereunder in a manner disproportionate to any adverse effect such amendment or waiver would have on the rights of the Investors hereunder, without also the written consent of the holders of at least a majority of the Registrable Securities held by the Key Holders. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 5.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

21



 

5.7                                Severability . In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

5.8                                Aggregation of Stock . All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

5.9                                Additional Investors . Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Preferred Shares after the date hereof pursuant to the Purchase Agreement, any purchaser of such Preferred Shares may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

 

5.10                         Entire Agreement . This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

5.11                         Dispute Resolution . Any unresolved controversy or claim arising out of or relating to this Agreement, except as (1) otherwise provided in this Agreement, or (ii) any such controversies or claims arising out of either party’s intellectual property rights for which a provisional remedy or equitable relief is sought, shall be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “ AAA ”), then by one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement and who is chosen by the AAA. The arbitration shall take place in New York, New York, in accordance with the AAA rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses and (c) such other depositions as may be allowed by the arbitrators upon a showing of good cause. Depositions shall be conducted in accordance with the New York Code of Civil Procedure, the arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings.

 

The prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. Each of the parties to this Agreement consents to personal jurisdiction for any equitable action sought

 

22



 

in the U.S. District Court for the Southern District of New York or any court of the State of New York having subject matter jurisdiction.

 

5.12                         Delays or Omissions . No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

5.13                         Acknowledgment . The Company acknowledges that the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

[Remainder of Page Intentionally Left Blank]

 

23



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

BIOHAVEN PHARMACEUTICAL
HOLDING COMPANY LTD.

 

 

 

 

 

 

 

By:

/s/ Vladimir Coric

 

Name:

Vladimir Coric

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

VENROCK HEALTHCARE CAPITAL
PARTNERS II, L.P.

 

By:

VHCP Management It, LLC

 

Its:

 General Partner

 

 

 

 

 

 

 

VHCP CO-INVESTMENT HOLDINGS II,

 

LLC By:

VHCP Management II, LLC

 

Its:

Manager

 

 

 

 

 

By:

/s/ David L. Stepp

 

 

Authorized Signatory

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Vivo Capital Fund VIII, L.P.

 

 

 

 

By:

Vivo Capital VII, LLC

 

Its:

General Partner

 

 

 

 

By:

 /s/ Albert Cha

 

 

Albert Cha

 

 

Managing Member

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Vivo Capital Surplus Fund VIII, L.P.

 

 

 

 

By:

Vivo Capital VII, LLC

 

Its:

General Partner

 

 

 

 

 

By:

/s/ Albert Cha

 

 

Albert Cha

 

 

Managing Member

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

RA CAPITAL HEALTHCARE FUND, L.P.

 

 

 

 

By:

RA Capital Management, LLC

 

Its:

General Partner

 

 

 

 

 

By:

/s/ Nicholas McGrath

 

 

 

 

Name:

Nicholas McGrath

 

 

 

 

Title:

Authorized Signatory

 

 

 

 

 

Notice Address

 

 

 

 

 

 

20 Park Plaza

 

 

Suite 1200

 

 

Boston, MA 02116

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

BLACKWELL PARTNERS LLC — SERIES A

 

 

 

 

 

 

 

By:

/s/ Mark E. Corigliano

 

 

 

 

Name:

Mark E. Corigliano

 

 

 

 

Title:

Investment Manager,

 

 

 DUMAC, Inc.

 

 

 Authorized Agent

 

 

 

 

 

By:

/s/ Jannine M. Lall

 

 

 

 

Name:

Jannine M. Lall

 

 

 

 

Title:

Controller,

 

 

 DUMAC, Inc.

 

 

 Authorized Agent

 

 

 

 

 

Notice Address

 

 

 

 

 

 

280 S. Mangum Street

 

 

Suite 210

 

 

Durham, NC 27701

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

GAKASA HOLDINGS

 

 

 

 

 

By:

/s/ Fred Knoll

 

Name:

Fred Knoll

 

Title:

Investment Manager

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Aisling Capital IV LP

 

 

 

 

 

By:

/s/ Lloyd Appel

 

Name:  Lloyd Appel

 

Title:  Chief Financial Officer

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

OSAGE UNIVERSITY PARTNERS II, L.P.

 

By:

Osage University GP II, LP, its general partner

 

By:

Osage Partners, LLC, its general partner

 

 

 

 

 

By:

/s/ William Harrington

 

Name:  William Harrington

 

Title:  Member

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

APERTURE VENTURE PARTNERS IV, L,P.

 

 

 

 

 

By:

 Aperture Ventures IV Management, LLC, its

 

General Partner

 

 

 

By:

/s/ Eric Sillman

 

 

 

Name:

Eric Sillman

 

 

 

 

Title:

Managing Member

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

ROTHCHILD TRUST (Schweiz) AG as Trustee
of the Debala Trust

 

 

 

 

 

By:

/s/ Gilbert Kellerhals & Mark Cooper

 

Name:  Gilbert Kellerhals & Mark Cooper

 

Title:  Authorized Signatories

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Rock Springs Capital Master Fund LP

 

 

 

By Rock Springs General Partner LLC
on behalf of the Master Fund

 

 

 

 

 

By:

/s/ Kris Jenner

 

Name:

Kris Jenner

 

Title:

Managing Member

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

 

 

JOHN W. CHILDS

 

 

 

 

 

/s/ Gregory Bailey

 

GREGORY H. BAILEY

 

 

 

 

 

MARI HADDOCK

 

 

 

 

 

DIANE GIANATASSIO

 

 

 

 

 

LISA GUERIN

 

 

 

 

 

PORTAGE BIOTECH, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

THE DECLAN DOOGAN 2014 TRUST

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

THE BERMAN FAMILY TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN MARITAL TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

 

 

JOHN W. CHILDS

 

 

 

 

 

GREGORY H. BAILEY

 

 

 

 

 

/s/ Mari Haddock

 

MARI HADDOCK

 

 

 

 

 

DIANE GIANATASSIO

 

 

 

 

 

LISA GUERIN

 

 

 

 

 

PORTAGE BIOTECH, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

THE DECLAN DOOGAN 2014 TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN FAMILY TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN MARITAL TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

 

 

JOHN W. CHILDS

 

 

 

 

 

GREGORY H. BAILEY

 

 

 

 

 

MARI HADDOCK

 

 

 

 

 

DIANE GIANATASSIO

 

 

 

 

 

/s/ Lisa Guerin

 

LISA GUERIN

 

 

 

 

 

PORTAGE BIOTECH, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE DECLAN DOOGAN 2014 TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN FAMILY TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN MARITAL TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

 

 

JOHN W. CHILDS

 

 

 

 

 

GREGORY H. BAILEY

 

 

 

 

 

MARI HADDOCK

 

 

 

 

 

DIANE GIANATASSIO

 

 

 

 

 

LISA GUERIN

 

 

 

 

 

PORTAGE BIOTECH, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE DECLAN DOOGAN 2014 TRUST

 

 

 

 

 

 

 

By:

/s/ Stephen Doogan

 

Name:

Stephen Doogan

 

Title:

Trustee

 

 

 

 

 

 

 

THE BERMAN FAMILY TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN MARITAL TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

/s/ John W. Childs

 

JOHN W. CHILDS

 

 

 

 

 

 

 

GREGORY H. BAILEY

 

 

 

 

 

 

 

MARI HADDOCK

 

 

 

 

 

 

 

DIANE GIANATASSIO

 

 

 

 

 

 

 

LISA GUERIN

 

 

 

 

 

PORTAGE BIOTECH, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE DECLAN DOOGAN 2014 TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN FAMILY TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

THE BERMAN MARITAL TRUST

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Portage Biotech, Inc.

 

 

 

By:

/s/ Kam Shah

 

Name:

Kam Shah

 

Title:

CFO

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

The Berman Family Trust - 2013

 

 

 

 

 

By:

/s/ Johnathan Krakoff

 

Name:

Johnathan Krakoff

 

Title:

Trustee

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

The Berman Family Trust - 2013

 

 

 

 

 

By:

/s/ Elizabeth Wilson

 

Name:

Elizabeth Wilson

 

Title:

Trustee

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

 

THE VLADIMIR CORIC FAMILY TRUST 2013

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

THE VLADIMIR CORIC MARITAL TRUST 2013

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

CHRISTOPHER S. EKLUND TRUST

 

 

 

By:

/s/ Christopher S. Eklund

 

Name:

Christopher S. Eklund

 

Title:

Trustee

 

 

 

RICHARD A. DANZIG PROFIT SHARING PLAN & TRUST

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

THE MAYER FAMILY TRUST — APRIL 22, 2005

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

BELLAH MAGUIRE LIVING TRUST

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

 

THE VLADIMIR CORIC FAMILY TRUST 2013

 

 

 

By:

/s/ Elizabeth Ann Coric

 

Name:

Elizabeth Ann Coric

 

Title:

Trustee

 

 

 

 

THE VLADIMIR CORIC MARITAL TRUST 2013

 

 

 

 

By:

/s/ Elizabeth Ann Coric

 

Name:

Elizabeth Ann Coric

 

Title:

Trustee

 

 

 

 

CHRISTOPHER S. EKLUND TRUST

 

 

 

 

By:

 

 

Name:

 

 

Title

 

 

 

 

 

RICHARD A. DANZIG PROFIT SHARING PLAN & TRUST

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

CONNECTICUT INNOVATIONS, INCORPORATED

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

RICHARD A. DANZIG PROFIT SHARING PLAN & TRUST

 

 

 

 

 

By:

/s/ Richard A. Danzig

 

Name:

Richard A. Danzig

 

Title:

Trustee

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

 

THE VLADIMIR CORIC FAMILY TRUST 2013

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

THE VLADIMIR CORIC MARITAL TRUST 2013

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

CHRISTOPHER S. EKLUND TRUST

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

RICHARD A. DANZIG PROFIT SHARING PLAN & TRUST

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

THE MAYER FAMILY TRUST — APRIL 22, 2005

 

 

 

 

By:

/s/ Kevin Mayer/Lisa Mayer

 

Name:

Kevin Mayer/Lisa Mayer

 

Title:

Trustee / Trustee

 

 

 

 

BELLAH MAGUIRE LIVING TRUST

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

BELLAH MAGUIRE LIVING TRUST

 

 

 

 

 

By:

/s/ Jennifer Bellah Maguire

 

 

Name:Jennifer Bellah Maguire, Trustee

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

 

CONNECTICUT INNOVATIONS, INCORPORATED

 

 

 

 

 

By:

/s/ David M. Wurzer

 

Name:

David M. Wurzer

 

Title:

CIO and EVP

 

 

 

 

 

JOHN W. CHILDS 2013 REVOCABLE TRUST

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

 

CONNECTICUT INNOVATIONS, INCORPORATED

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

JOHN W. CHILDS 2013 REVOCABLE TRUST

 

 

 

By:

/s/ John W. Childs

 

Name:

 John W. Childs

 

Title:

Trustee

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

[TO USE THE SIGNATURE BLOCK FOR EACH INVESTOR]

 

 

 

By:

/s/ James Mellon

 

Name:

James Mellon

 

Title:

Viking House, Nelson Street, Doug

 

 

IMO, IOM, IMI 2AH

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

ZEDAN LIMITED

 

 

 

By:

/s/ illegible

 

Name:

illegible

 

Title:

Corporate Director, Director One

 

 

Limited / Authorized Signatories

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Ali-Sevket Karaca

 

Name:

Ali-Sevket Karaca

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Ragip Ersin Akarlilar

 

Name:

Ragip Ersin Akarlilar

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

STARLING R. LAWRENCE AND

 

JENNY C. PRESTON

 

 

 

By:

/s/ Starling R. Lawrence

 

Name:

Starling R. Lawrence

 

Title:

 

 

 

 

By:

/s/ Jenny C. Preston

 

Name:

 Jenny C. Preston

 

Title:

 

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Charles C. King

 

 

Name: Charles C. King

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Kevin O’Brien

 

 

Name: Kevin O’Brien

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Corey L. Grossman

 

Name:

 Corey L. Grossman

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Alan Kerr

 

Name:

 Alan Kerr

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Ziya Selim Basak

 

Name:

 Ziya Selim Basak

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Maarten C. de Jong

 

Name:

 Maarten C. de Jong

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Gary B. Traystman

 

Name:

 Gary B. Traystman

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Drzislav Coric

 

Name:

 Drzislav Coric

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Jeffrey N. Green

 

Name:

 Jeffrey N. Green

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Matthew E. Auger

 

Name:

 Matthew E. Auger

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Joseph Piagentini

 

Name:

 Joseph Piagentini

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ John P. Turrentine

 

Name:

 John P. Turrentine

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

JET VENTURES LLC

 

 

 

By:

/s/ John Tilton

 

Name:

 John Tilton

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Frank A. Liberty

 

Name:

 Frank A. Liberty

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Kim Mathew

 

Name:

 Kim Mathew

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ John K. Powelzyk

 

Name:

 John K. Powelzyk

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ James Engelhart

 

Name:

 James Engelhart

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Annamarie Minuit

 

Name:

 Annamarie Minuit

 

 

 

By:

/s/ Mark Minuit

 

Name:

 Mark Minuit

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ George Kallivrousis

 

Name:

 George Kallivrousis

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

AstraZeneca AB (Publ)

 

 

 

 

By:

/s/ Marcus Schindler

 

Name:

Marcus Schindler

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

Cowen Investments LLC

 

 

 

 

By:

 /s/ Owen Litteman

 

Name:

 Owen Litteman

 

Title:

Authorized Signatory

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

By:

/s/ Thomas W. Pace

 

Name:

Thomas W. Pace

 

Title:

Principal

 

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

 



 

SCHEDULE A

 

Investors

 

Venrock Healthcare Capital Partners II, L.P.

c/o Venrock Healthcare Capital Partnes II, L.P.

3340 Hillview Avenue

Palo Alto, CA 94304

nshah@venrockcp.com

 

VHCP Co-Investment Holdings II, LLC

c/o Venrock Healthcare Capital Partnes II, L.P.

3340 Hillview Avenue

Palo Alto, CA 94304

nshahgvenrockcp.com

 

Vivo Capital Fund VIII, L.P. zzzz

575 High Street, Suite 201

Palo Alto, CA 94301

650-688-0818

acha@vivocapital.com

 

Vivo Capital Surplus Fund VIII, L.P.

575 High Street, Suite 201

Palo Alto, CA 94301

650-688-0818

acha@vivocapital.com

 

RA Capital Healthcare Fund, L.P.

20 Park Plaza, Suite 1200

Boston, MA 02116

nmcgrath@rcap.com

 

Blackwell Partners LLC - Series A

280 South Magnum Street, Suite 210

Durham, NC 27701

nmcgrath@rcap.com

 

John W. Childs 2013 Revocable Trust

165 Sago Palm Road

Vero Beach, FL 32963

 

1



 

Gregory H. Bailey

c/o Portage Biotech, Inc.

47 Avenue Road, Suite 200

Toronto, Ontario M5R 2G3

CANADA

 

Gakasa Holdings, LLC

c/o Knoll Capital Management

5 East 44th Street

Suite 12

New York, NY 10017

646-590-3960

fredknoll@konllcapital.com

 

Aisling Capital IV LP

888 7th Avenue

12th Floor

New York, NY 10106

lappel@aislingeapital.com and

rwenzel@aislingcapital.com

 

Osage University Partners II, L.P.

50 Monument Road

Suite 201

Bala Cynwyd, PA 19004

484-270-3241

bharrington@osagepartners.com

 

Aperture Venture Partners IV, L.P.

c/o Aperture Venture Partners

645 Madison Avenue

20th Floor

New York, NY 10022

212-758-7325 x2504

Tony@aperturevp.com

 

Rothschild Trust (Schweiz) AG

3 Rue de Commerce

1204 Geneva

SWITZERLAND

917-547-9733

janet.roos@rothschildtrust.com

 

2



 

Rock Springs Capital Master Fund LP

650 Exeter Street

Suite 1070

Baltimore, NILO 21202

ATTN: Mr. Dave Gardner

 

James Mellon

Viking House

Nelson Street

Douglas IM1 2AH

ISLE OF MAN

 

Connecticut Innovations, Inc.

865 Brook Street

Rocky Hill, CT 06067

 

The Mayer Family Trust — April 22, 2005

c/o Kevin Mayer, Trustee or Lisa Mayer, Trustee

14007 Aubrey Road

Beverly Hills, CA 90210

 

Zedan Limited

c/o Trust Corporation of the Channel Islands Limited

P.O. Box 665

Roseneath The Grange

St. Peter Port Guernsey GY1 3SJ

CHANNEL ISLANDS

 

Ali-Sevket Karaca

71 Studdridge Street

London SW6 3TD

UNITED KINGDOM

 

Christopher S. Eklund Trust U/A/D 8/31/2000

145 Lee Street

Brookline, MA 02445

 

Ersin Akarlilar

116 Premium Point

New Rochelle, NY 10801

 

3



 

Richard A. Danzig, Trustee

Richard A. Danzig Profit Sharing Plan & Trust

c/o Kurzman Eisenberg

1 North Broadway, 10 th  Floor

White Plains, NY 10601

 

Lisa Geurin

169 Washington Street, #14

Newton, MA 02458

lguerin@jwchilds.com

 

Mari Haddock

7 Summit Road

Medford, MA 02155

mhaddock@jwchilds.com

 

Jennifer Bellah Maguire, Trustee

Bellah Maguire Living Trust

1501 Bienveneda Avenue

Pacific Palisades, CA 90272

 

Starling R Lawrence and Jenny C Preston

45 East 62nd Street

New York, NY 10065

Slawrence@wwhorton.com

 

Charles C. King

4 Chatsworth Court

Lawrenceville, NJ 08648

CKing@1919ic.com

 

Kevin O’Brien

281 Old Sachems Head Road

Guilford, CT 06437

irishturtles@gmail.com

 

Corey Grossman

32 River Road Drive

Essex, CT 06426

 

Alan Kerr

45 Bury Walk

London SW3 6QE

UNITED KINGDOM

 

4



 

Selim Basak

Flat 16

Grove Court

Drayson Gardens

London SW10 9QY

UNITED KINGDOM

 

Maarten Christiaan de Jong

476 Broadway, 5F

New York, NY 10013

maarten.ch.dejong@gmail.com

 

Gary B. Traystman, Esq.

45 Channing Street

P.O. Box 60

New London, CT 06320

 

Drzislav Colic, Esq.

17 Old Quarry Road

Gales Ferry, CT 06335-1117

 

Jeffrey N. Green

59 Fowler Road

Lebanon, CT 06249

 

Matthew E. Auger, Esq.

1 Lewis Street

Groton, CT 06340

 

Joe Piagentini

463 Roast Meat Hill Road

Killingworth CT 06419

joepiagentini@gmail.com

 

John P. Turrentine

36 North Water Street

Stonington, CT 06378

 

JET Ventures LLC

44 Grove Avenue

Madison CT 06443

203-376-4870

john.tilton@biohavenpharma.com

 

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Frank A. Liberty, Esq.

105 Huntington Street

New London, CT 06320

 

Kim Matthew

68 Buttonwood Lane

Darien, CT 06820

 

John Powelsyck

8 Clark Lane

Mystic, CT 06355

 

James Engelhart

61 Governors Way

Madison, CT 06443

203-779-5278

jim.engelhart@biohvenpharma.com

 

Mark and Annamarie Minuit

748 Nut Plains Road

Guilford, CT 06437

203-410-9559

minutemanct@gmail.com

 

George Anthony Kallivrousis

4107 Connecticut Avenue NW

Apt. 207

Washington, DC 20008

georgekallivrousis@gmail.com

 

AstraZeneca AB

(Publ) SE-431 83 Mölndal, Sweden

 

With Copies to:

Business Development, Attn: Kumar Srinivasan, 35 Gatehouse drive, Waltham, MA 02451 Corporate Development, Attn: Tyrell Rivers, 1 MedImmune Way, Gaithersburg, MD 20841 Legal Department, Attn: Richard J. Kenny, 1800 Concord Pike Wilmington, DE 19850

 

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SCHEDULE B

 

Key Holders

 

The Berman Family Trust — 2013

77 Livingston Street

New Haven, CT 06511

 

The Berman Marital Trust — 2013

77 Livingston Street

New Haven, CT 06511

 

The Vladimir Coric Family Trust — 2013

7 Richborough Road

Madison, CT 06443

 

The Vladimir Coric Marital Trust — 2013

7 Richborough Road

Madison, CT 06443

 

Declan Doogan

15 Main Street

Stonington, CT 06378

 

Gregory H. Bailey

c/o Portage Biotech, Inc.

47 Avenue Road, Suite 200

Toronto, Ontario M5R 2G3

CANADA

 

John W. Childs

c/o J.W. Childs Associates, L.P.

1000 Winter Street, Suite 4300

Waltham, MA 02451

 

Christopher S. Eklund Trust

c/o J.W. Childs Associates, L.P.

1000 Winter Street, Suite 4300

Waltham, MA 02451

 

Portage Biotech, Inc.

47 Avenue Road, Suite 200

Toronto, Ontario M5R 2G3

CANADA

 

1




Exhibit 4.3

 

TERM NOTE

 

$5,000,000

August 30, 2016

 

FOR VALUE RECEIVED, the undersigned BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD. , a BVI business company incorporated under the laws of the British Virgin Islands (“ Borrower ”), promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION , a national banking association (“ Bank ”), at its office at 101 Federal Street, Suite 2020, Boston, Massachusetts, 02110, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Five Million Dollars ($5,000,000), or so much thereof as may be advanced and be outstanding pursuant to the terms of the Credit Agreement, as defined herein, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein.

 

DEFINITIONS:

 

As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined:

 

(a)                                  LIBOR ” means the rate of interest per annum determined by Bank based on the rate for United States dollar deposits for delivery on the first day of each LIBOR Period for a period approximately equal to such LIBOR Period published by the ICE Benchmark Administration Limited, a United Kingdom company, at approximately 11:00 a.m., London time, two London Business Days prior to the first day of such LIBOR Period (or if not so published, then as determined by Bank from another recognized source or interbank quotation); provided, however, that if LIBOR determined as provided above would be less than zero percent (0.0%), then LIBOR shall be deemed to be zero percent (0.0%).

 

(b)                                  LIBOR Period ” means a period commencing on a New York Business Day and continuing for one month during which the entire outstanding principal balance of this Note bears interest determined in relation to LIBOR, with the understanding, that (i) the initial LIBOR Period shall commence on the date this Note is disbursed, (ii) there shall be successive LIBOR Periods thereafter, each commencing automatically, and without notice to or consent from Borrower, immediately after the preceding LIBOR Period ends, (iii) if any LIBOR Period is scheduled to commence on a day that is not a New York Business Day, then such LIBOR Period shall commence on the next succeeding New York Business Day (and the preceding LIBOR Period shall continue up to, but shall not include, the first day of such LIBOR Period), unless the result of such extension would be to cause such LIBOR Period to begin in another calendar month, in which event such new LIBOR Period shall commence on the immediately preceding New York Business Day (and the preceding LIBOR Period shall continue up to, but shall not include, the first day of such new LIBOR Period), and (iv) if, on the first day of the last LIBOR Period applicable hereto the remaining term of this Note is less than one (1) month, said LIBOR Period shall be in effect only until the Maturity Date (as defined below).

 

(c)                                   London Business Day ” means any day that is a day for trading by and between banks in dollar deposits in the London interbank market.

 

(d)                                  New York Business Day ” means any day except a Saturday, Sunday or any other day on which commercial banks in New York are authorized or required by law to close.

 



 

(e)                                   Prime Rate ” means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. If the rate of interest announced by Bank as its Prime Rate at any time is less than zero percent (0.0%), then for purposes of this Note the Prime Rate shall be deemed to be zero percent (0.0%).

 

(f)                                    State Business Day ” means any day except a Saturday, Sunday or any other day on which commercial banks in the jurisdiction described in “Governing Law’ herein are authorized or required by law to close.

 

INTEREST:

 

(a)                                  Interest . The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a fixed rate per annum determined by Bank to be one and one-half of one percent (1.50%) above LIBOR in effect on the first day of each LIBOR Period. With respect to each LIBOR Period hereunder, Bank is hereby authorized to note the date and interest rate applicable thereto and any payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or on any schedule attached to this Note, which notations shall be prima facie evidence of the accuracy of the information noted. Borrower shall reimburse Bank immediately upon demand for any loss or expense (including any loss or expense incurred by reason of the liquidation or redeployment of funds obtained to fund or maintain a LIBOR borrowing) incurred by Bank as a result of the failure of Borrower to accept or complete a LIBOR borrowing hereunder after making a request therefor. Any reasonable determination of such amounts by Bank shall be conclusive and binding upon Borrower.

 

(b)                                  Taxes and Regulatory Costs . Borrower shall pay to Bank immediately upon demand, in addition to any other amounts due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii) costs, expenses and liabilities arising from or in connection with reserve percentages prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to Borrower hereunder, any reasonable allocation made by Bank among its operations shall be conclusive and binding upon Borrower.

 

(c)                                   Default Interest . From and after the Maturity Date, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, or upon the occurrence and during the continuance of an Event of Default, then at the option of Bank, in its sole and absolute discretion, the outstanding principal balance of this Note shall bear interest at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note.

 

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REPAYMENT:

 

(a)                                  Repayment of Principal . The outstanding principal balance of this Note shall be due and payable in full on August 30, 2017 (the “ Maturity Date ”).

 

(b)                                  Payment of Interest . Interest accrued on this Note shall be payable on the 30th day of each month, commencing September 30, 2016.

 

(c)                                   Application of Payments . Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.

 

PREPAYMENT:

 

(a)                                  Prepayment . Borrower may prepay principal on this Note at any time and in the minimum amount of One Hundred Thousand Dollars ($100,000); provided however, that if the outstanding principal balance of this Note is less than said amount, the minimum prepayment amount shall be the entire outstanding principal balance hereof. In consideration of Bank providing this prepayment option to Borrower, or if this Note shall become due and payable at any time prior to the last day of any LIBOR Period by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the sum of the discounted monthly differences for each month from the month of prepayment through the month in which such LIBOR Period matures, calculated as follows for each such month:

 

(i)                                      Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the LIBOR Period applicable thereto.

 

(ii)                                   Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such LIBOR Period at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid.

 

(iii)                                If the result obtained in (ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above.

 

Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses and/or liabilities. Borrower, therefore, agrees to pay the above-described prepayment fee and agrees that said amount represents a reasonable estimate of the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until paid at a rate per annum two percent (2.00%) above the Prime Rate in effect from time to time (computed on the basis of a 360-day year, actual days elapsed).

 

(b)                                  Application of Prepayments . If principal under this Note is payable in more than one installment, then any prepayments of principal shall be applied to the most remote principal installment or installments then unpaid.

 

3



 

EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of the date hereof, as amended from time to time (the “ Credit Agreement ”). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an “Event of Default” under this Note.

 

MISCELLANEOUS:

 

(a)                                  Remedies . Upon the occurrence of any Event of Default, the holder of this Note, at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder’s rights and/or the collection of any amounts which become due to the holder under this Note whether or not suit is brought, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.

 

(b)                                  Obligations Joint and Several . Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several.

 

(c)                                   Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of New York, but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.

 

(d)                                  Savings Clause . If at any time the interest rate set forth in this Note exceeds the maximum interest rate allowable under applicable law, the interest rate shall be deemed to be such maximum interest rate allowable under applicable law.

 

(e)                                   Right Of Setoff; Deposit Accounts . Upon and after the occurrence of an Event of Default, (i) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared this Note to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower’s obligations and liabilities under this Note (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (ii) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect. Borrower hereby grants to

 

4



 

Bank a security interest in all deposits and accounts maintained with Bank to secure the payment of all obligations and liabilities of Borrower to Bank under this Note.

 

[Intentionally Left Blank - Signature Page Follows]

 

5



 

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[Signature Page to Term Note – Biohaven]

 




Exhibit 4.4

 

WARRANT No. 3

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF OCTOBER 31, 2016, BY AND AMONG BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. (THE “ COMPANY ”) AND CERTAIN SHAREHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “ SHAREHOLDERS’ AGREEMENT ”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH SHAREHOLDERS’ AGREEMENT. A COPY OF THE SHAREHOLDERS’ AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

Warrant Certificate No. 3

 

Original Issue Date: January 26, 2017

 

FOR VALUE RECEIVED, BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. , a British Virgin Island company (the “ Company ”), hereby certifies that JOHN W. CHILDS , an individual, or his registered assigns (the “ Holder ”) is entitled to purchase from the Company up to 107,500 of the Company’s common shares duly authorized, validly issued, fully paid and nonassessable Common Shares at an exercise price equal to $9.2911 per Common Share (subject to adjustment as provided herein, the “ Exercise Price ”), all subject to the terms, conditions and adjustments set

 



 

forth below in this Warrant. Certain capitalized terms used herein are defined in SECTION 1 hereof.

 

This Warrant has been issued in consideration for facilitating that certain Continuing Guaranty issued by John W. Childs to Wells Fargo Bank, a national association (“ Wells Fargo ”), on behalf of the Company with respect to that certain loan made to the Company by Wells Fargo in the amount of $5,000,000 (the “ Loan ”).

 

SECTION 1.         Definitions . As used in this Warrant, the following terms have the respective meanings set forth below:

 

Aggregate Exercise Price ” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to SECTION 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

 

Board ” means the board of directors of the Company.

 

Business Day ” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the British Virgin Islands are authorized or obligated by law or executive order to close.

 

Common Shares ” means the common shares, no par value, of the Company, and any capital stock into which such Common Shares shall have been converted, exchanged or reclassified following the date hereof.

 

Company ” has the meaning set forth in the preamble.

 

Exercise Date ” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in SECTION 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

Exercise Notice ” has the meaning set forth in Section 3(a)(i) .

 

Exercise Period ” has the meaning set forth in SECTION 2 .

 

Exercise Price ” has the meaning set forth in the preamble.

 

Fair Market Value ” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Shares for such day on all United States securities exchanges on which the Common Shares may at the time be listed; (b) if there have been no sales of the Common Shares on any such exchange on any such day,

 

2



 

the average of the highest bid and lowest asked prices for the Common Shares on all such exchanges at the end of such day; (c) if on any such day the Common Shares are not listed on a United States securities exchange, the closing sales price of the Common Shares on the principal stock exchange on which the Common Shares may at the time be listed; (d) if on any such day the Common Shares are not listed on a United States securities exchange and there is no other principal stock exchange on which the Common Shares are listed, the closing sales price of the Common Shares as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Shares on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Shares quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided , that if the Common Shares are listed on any securities exchange under clause (a), (b) or (c) above, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Shares are not listed on any United States securities exchange or any other principal stock exchange and are not quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Shares shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Shares within a reasonable period of time (not to exceed ten (10) Business Days) from the Company’s receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne equally by the Company and the Holder.

 

Holder ” has the meaning set forth in the preamble.

 

“Loan” has the meaning set forth in the preamble.

 

Original Issue Date ” means January 26, 2017.

 

OTC Bulletin Board ” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

Person ” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

Pink OTC Markets ” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

3



 

Shareholders’ Agreement ” has the meaning set forth in the legend endorsed hereon.

 

Warrant ” means this Warrant No. 3 and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

Warrant Shares ” means the Common Shares or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

SECTION 2.         Term of Warrant . Subject to the terms and conditions hereof, at any time or from time to time after the Original Issue Date hereof and prior to 5:00 p.m., New York time, on the earlier of the fifth (5th) anniversary of the Original Issue Date or the second (2nd) anniversary of the Company’s initial public offering or, if such day is not a Business Day, on the closest preceding Business Day (the “ Exercise Period ”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

SECTION 3.         Exercise of Warrant .

 

(a)           Exercise Procedure . This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

 

(i)            surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “ Exercise Notice ”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)           payment to the Company of the Aggregate Exercise Price in accordance with SECTION 3(b) .

 

(b)           Payment of the Aggregate Exercise Price . Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)            by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price; or

 

(ii)           by instructing the Company to issue Warrant Shares then issuable upon all or any part of this Warrant on a net basis such that, without payment of any cash

 

4



 

consideration or other immediately available funds, the Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:

 

 

X = Y(A-B) ÷ A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder;

 

 

Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 3(a) ;

 

A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date; and

 

B = the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

In the event of any withholding of Warrant Shares to effect a net settlement pursuant to clause (ii) above where the number of shares issuable thereunder is not a whole number, the number of shares issued by the Company on a net basis under clause (ii) shall be rounded down to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld multiplied by (y) the Fair Market Value per Warrant Share as of the Exercise Date.

 

(c)           Delivery of Stock Certificates . Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with SECTION 3(a)  hereof), the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a copy of the share certificate or certificates representing the Warrant Shares issuable upon such exercise, with any appropriate transfer restrictions thereon, together with cash in lieu of any fraction of a share, as provided in SECTION 3(d)  hereof. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with SECTION 6 below, such other Person’s name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any

 

5



 

other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

(d)           Fractional Shares . The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)           Delivery of New Warrant . Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with SECTION 3(c)  hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)            Valid Issuance of Warrant and Warrant Shares; Payment of Taxes . With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)            This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)           All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any shareholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)          The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)          The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares are listed at the time of such exercise.

 

6



 

(v)           The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(g)           Conditional Exercise . Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)           Reservation of Shares . During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Shares or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.

 

SECTION 4.         Adjustment to Exercise Price and Number of Warrant Shares . The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this SECTION 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section SECTION 4 ).

 

(a)           Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Shares . If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Shares or any other capital stock of the Company that is payable in Common Shares, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this SECTION 4(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

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(b)           Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger . In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by SECTION 4(a) ), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Shares, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this SECTION 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this SECTION 4(b)  shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the

 

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contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this SECTION 4(b) , the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in SECTION 2 instead of giving effect to the provisions contained in this SECTION 4(b)  with respect to this Warrant.

 

(c)           Adjustment to the Exercise Price and Warrant Shares Upon the Sale of Common Shares below the Exercise Price with One Year.    Subject to Section 4(a) hereof, if the Company shall within one (1) year of the Original Issue Date, sell shares of its Common Shares in a financing transaction that raises more than $25,000,000 in gross proceeds to the Company at a per price below the Exercise Price, the Exercise Price shall be lowered to such lower price and the defined term “Exercised Price” as used in this Warrant shall be adjusted fully to such lower price and the number of Warrant Shares issuable shall be equitably adjusted.  Any adjustment under this SECTION 4(a)  shall become effective at the close of business on the date the sale of such lower priced Common Shares occurs.

 

(d)           Certificate as to Adjustment .

 

(i)            As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)           As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(e)           Notices . In the event:

 

(i)            that the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)           of any capital reorganization of the Company, any reclassification of the Common Shares of the Company, any consolidation or merger of the Company

 

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with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

 

(iii)          of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

 

SECTION 5.         Shareholders’ Agreement . All Warrant shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Shareholders’ Agreement, and the Holder shall be required, for so long as the Holder holds any Warrant Shares, to become and remain a party to the Shareholders’ Agreement.

 

SECTION 6.         Transfer of Warrant . Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B , together with funds sufficient to pay any transfer taxes described in Section 3(f)(v)  in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

SECTION 7.         Holder Not Deemed a Shareholder; Limitations on Liability . Except as otherwise specifically provided herein and for common shares held directly by Holder not subject to this Warrant, prior to the issuance to the Holder of the Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder

 

10


 

shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

SECTION 8.                          Replacement on Loss; Division and Combination .

 

(a)                                  Replacement of Warrant on Loss . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided , that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                  Division and Combination of Warrant . Subject to compliance with the applicable provisions of this Warrant and the Shareholders’ Agreement as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant and the Shareholders’ Agreement as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

SECTION 9.                          No Impairment . The Company shall not, by amendment of its Articles of Association or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or

 

11



 

seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

 

SECTION 10.                   Compliance with the Securities Act .

 

(a)                                  Agreement to Comply with the Securities Act; Legend . The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this SECTION 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “ Securities Act ”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

(b)                                  Representations of the Holder . In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                                      The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

 

12



 

(ii)                                   The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                                The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

SECTION 11.                   Warrant Register . The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

SECTION 12.                   Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this SECTION 12 ).

 

If to the Company:

Biohaven Pharmaceutical Holding Company Ltd.

 

234 Church Street, Suite 301

 

New Haven, CT 06520

 

E-mail: vlad.coric@biohavenpharma.com

 

Attention: Chief Executive Officer

 

 

 

13



 

with a copy to:

Locke Lord LLP

 

2800 Financial Plaza

 

Providence, Rhode Island 02903

 

Email: douglas.gray@lockelord.com

 

Attention: Douglas G. Gray

 

 

If to the Holder:

John W. Childs

 

165 Sago Palm Road

 

Vero Beach, Florida 32963

 

E-mail: jchilds@jwchilds.com

 

SECTION 13.                   Cumulative Remedies . Except to the extent expressly provided in SECTION 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

SECTION 14.                   Equitable Relief . Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

SECTION 15.                   Entire Agreement . This Warrant, together with the Shareholders’ Agreement, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant, the Shareholders’ Agreement, the statements in the body of this Warrant shall control.

 

SECTION 16.                   Successor and Assigns . This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

SECTION 17.                   No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the

 

14



 

Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

SECTION 18.                   Headings . The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

SECTION 19.                   Amendment and Modification; Waiver . Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

SECTION 20.                   Severability . If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

SECTION 21.                   Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the Territory of the British Virgin Islands without giving effect to any choice or conflict of law provision or rule (whether of the Territory of the British Virgin Islands or any other jurisdiction) that would cause the application of the domestic substantive laws of any other jurisdiction.

 

SECTION 22.                   Submission to Jurisdiction . Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the courts located in Road Town, Tortola, British Virgin Islands, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

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SECTION 23.                   Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

SECTION 24.                   Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

SECTION 25.                   No Strict Construction . This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

16



 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

 

 

 

By:

/s/ Vladimir Coric

 

Name:

Vladimir Coric

 

Title:

Chief Executive Officer and Director

 

 

 

Accepted and agreed,

 

 

 

 

 

 

 

 

By:

/s/ John W. Childs

 

 

 

Name: 

John W. Childs

 

 

 

 

17



 

EXHIBIT A

 

Form of Exercise Notice

 

(To be executed by the Holder to purchase Common Shares
under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)                                  The undersigned is the Holder of Warrant No. 3 (the “Warrant”) issued by Biohaven Pharmaceutical Holding Company Ltd., a British Virgin Islands corporation (the “Company”).  Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

 

(2)                                  The undersigned hereby exercises its right to purchase            Warrant Shares pursuant to the Warrant.

 

(3)                                  The Holder intends that payment of the Exercise Price shall be made as (check one):

 

o                                     Cash Exercise

 

o                                     “Cashless Exercise” under Section 10

 

(4)                                  If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $             in immediately available funds to the Company in accordance with the terms of the Warrant.

 

(5)                                  Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.

 

Dated:                                    , 20

 

Name of Holder:

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

 



 

Exhibit B

 

Biohaven Pharmaceutical Holding Company Ltd.

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                           (the “Transferee”) the right represented by the within Warrant to purchase                shares of Common Stock of Biohaven Pharmaceutical Holding Company Ltd. (the “Company”) to which the within Warrant relates and appoints                       attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

Dated:                                      , 20

 

 

 

 

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

 

 

 

 

Address of Transferee

 

 

In the presence of:

 

 

 

 

 

 




Exhibit 4.5

 

WARRANT No. 4

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A SHAREHOLDERS’ AGREEMENT DATED AS OF OCTOBER 31, 2016, BY AND AMONG BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. (THE “ COMPANY ”) AND CERTAIN SHAREHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “ SHAREHOLDERS’ AGREEMENT ”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH SHAREHOLDERS’ AGREEMENT. A COPY OF THE SHAREHOLDERS’ AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

Warrant Certificate No.  4

 

Original Issue Date : January 26, 2017

 

FOR VALUE RECEIVED, BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD ., a British Virgin Island company (the “ Company ”), hereby certifies that GREGORY H. BAILEY, M.D. , an individual, or his registered assigns (the “ Holder ”) is entitled to purchase from the Company up to 107,500 of the Company’s common shares duly authorized, validly issued, fully paid and nonassessable Common Shares at an exercise price equal to $9.2911 per Common Share (subject to adjustment as provided herein, the “ Exercise Price ”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in SECTION 1 hereof.

 



 

This Warrant has been issued in consideration for facilitating that certain Continuing Guaranty issued by John W. Childs to Wells Fargo Bank, a national association (“ Wells Fargo ”), on behalf of the Company with respect to that certain loan made to the Company by Wells Fargo in the amount of $5,000,000 (the “ Loan ”).

 

SECTION 1.                          Definitions . As used in this Warrant, the following terms have the respective meanings set forth below:

 

Aggregate Exercise Price ” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to SECTION 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

 

Board ” means the board of directors of the Company.

 

Business Day ” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the British Virgin Islands are authorized or obligated by law or executive order to close.

 

Common Shares ” means the common shares, no par value, of the Company, and any capital stock into which such Common Shares shall have been converted, exchanged or reclassified following the date hereof.

 

Company ” has the meaning set forth in the preamble.

 

Exercise Date ” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in SECTION 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

Exercise Notice ” has the meaning set forth in SECTION 3(a)(i) .

 

Exercise Period ” has the meaning set forth in SECTION 2 .

 

Exercise Price ” has the meaning set forth in the preamble.

 

Fair Market Value ” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Shares for such day on all United States securities exchanges on which the Common Shares may at the time be listed; (b) if there have been no sales of the Common Shares on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Shares on all such exchanges at the end of such day; (c) if on any such day the Common Shares are not listed on a United States securities exchange, the closing sales price of the Common Shares on the principal stock exchange on which the Common Shares may at the time be listed; (d) if on any such day the Common Shares

 

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are not listed on a United States securities exchange and there is no other principal stock exchange on which the Common Shares are listed, the closing sales price of the Common Shares as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Shares on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Shares quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided , that if the Common Shares are listed on any securities exchange under clause (a), (b) or (c) above, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Shares are not listed on any United States securities exchange or any other principal stock exchange and are not quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Shares shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Shares within a reasonable period of time (not to exceed ten (10) Business Days) from the Company’s receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne equally by the Company and the Holder.

 

Holder ” has the meaning set forth in the preamble.

 

Loan ” has the meaning set forth in the preamble.

 

Original Issue Date ” means January 26, 2017.

 

OTC Bulletin Board ” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

Person ” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

Pink OTC Markets ” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

Shareholders’ Agreement ” has the meaning set forth in the legend endorsed hereon.

 

Warrant ” means this Warrant No. 4 and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

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Warrant Shares ” means the Common Shares or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

SECTION 2.                          Term of Warrant . Subject to the terms and conditions hereof, at any time or from time to time after the Original Issue Date hereof and prior to 5:00 p.m., New York time, on the earlier of the fifth (5th) anniversary of the Original Issue Date or the second (2nd) anniversary of the Company’s initial public offering or, if such day is not a Business Day, on the closest preceding Business Day (the “ Exercise Period ”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

SECTION 3.                          Exercise of Warrant .

 

(a)                                  Exercise Procedure . This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

 

(i)                                      surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “ Exercise Notice ”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)                                   payment to the Company of the Aggregate Exercise Price in accordance with SECTION 3(b) .

 

(b)                                  Payment of the Aggregate Exercise Price . Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)                                      by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price; or

 

(ii)                                   by instructing the Company to issue Warrant Shares then issuable upon all or any part of this Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:

 

X = Y(A-B) ÷ A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder;

 

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Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to SECTION 3(a) ;

 

A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date; and

 

B = the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

In the event of any withholding of Warrant Shares to effect a net settlement pursuant to clause (ii) above where the number of shares issuable thereunder is not a whole number, the number of shares issued by the Company on a net basis under clause (ii) shall be rounded down to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld multiplied by (y) the Fair Market Value per Warrant Share as of the Exercise Date.

 

(c)                                   Delivery of Stock Certificates . Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with SECTION 3(a)  hereof), the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a copy of the share certificate or certificates representing the Warrant Shares issuable upon such exercise, with any appropriate transfer restrictions thereon, together with cash in lieu of any fraction of a share, as provided in SECTION 3(d)  hereof. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with SECTION 6 below, such other Person’s name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

(d)                                  Fractional Shares . The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                   Delivery of New Warrant . Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with SECTION 3(c)  hereof, deliver to the Holder a new Warrant evidencing the

 

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rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)                                    Valid Issuance of Warrant and Warrant Shares; Payment of Taxes . With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)                                      This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                   All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any shareholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)                                The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)                               The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares are listed at the time of such exercise.

 

(v)                                  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(g)                                   Conditional Exercise . Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                  Reservation of Shares . During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Shares or other

 

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securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.

 

SECTION 4.                          Adjustment to Exercise Price and Number of Warrant Shares . The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this SECTION 4 (in each case, after taking into consideration any prior adjustments pursuant to this SECTION 4 ).

 

(a)                                  Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Shares . If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Shares or any other capital stock of the Company that is payable in Common Shares, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased.  If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased.  Any adjustment under this SECTION 4(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

(b)                                  Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger . In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by SECTION 4(a) , in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Shares, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the

 

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exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this SECTION 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this SECTION 4(b)  shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this SECTION 4(b) , the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in SECTION 2 instead of giving effect to the provisions contained in this SECTION 4(b)  with respect to this Warrant.

 

(c)                                   Adjustment to the Exercise Price and Warrant Shares Upon the Sale of Common Shares below the Exercise Price with One Year.    Subject to SECTION 4(a)  hereof, if the Company shall within one (1) year of the Original Issue Date, sell shares of its Common Shares in a financing transaction that raises more than $25,000,000 in gross proceeds to the Company at a per price below the Exercise Price, the Exercise Price shall be lowered to such lower price and the defined term “Exercised Price” as used in this Warrant shall be adjusted fully to such lower price and the number of Warrant Shares issuable shall be equitably adjusted.  Any adjustment under this SECTION 4(b)  shall become effective at the close of business on the date the sale of such lower priced Common Shares occurs.

 

(d)                                  Certificate as to Adjustment .

 

(i)                                      As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

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(ii)                                   As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(e)                                   Notices . In the event:

 

(i)                                      that the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                   of any capital reorganization of the Company, any reclassification of the Common Shares of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

 

(iii)                                of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

 

SECTION 5.                          Shareholders’ Agreement . All Warrant shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Shareholders’ Agreement, and the Holder shall be required, for so long as the Holder holds any Warrant Shares, to become and remain a party to the Shareholders’ Agreement.

 

SECTION 6.                          Transfer of Warrant . Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by

 

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the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B , together with funds sufficient to pay any transfer taxes described in SECTION 3(f)(v)  in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

SECTION 7.                          Holder Not Deemed a Shareholder; Limitations on Liability . Except as otherwise specifically provided herein and for common shares held directly by Holder not subject to this Warrant, prior to the issuance to the Holder of the Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

SECTION 8.                          Replacement on Loss; Division and Combination .

 

(a)                                  Replacement of Warrant on Loss . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided , that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                  Division and Combination of Warrant . Subject to compliance with the applicable provisions of this Warrant and the Shareholders’ Agreement as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new

 

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Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant and the Shareholders’ Agreement as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

SECTION 9.                          No Impairment . The Company shall not, by amendment of its Articles of Association or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

 

SECTION 10.                   Compliance with the Securities Act .

 

(a)                                  Agreement to Comply with the Securities Act; Legend . The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this SECTION 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “ Securities Act ”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

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(b)                                  Representations of the Holder . In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                                      The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

 

(ii)                                   The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                                The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

SECTION 11.                   Warrant Register . The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

SECTION 12.                   Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as

 

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shall be specified in a notice given in accordance with this SECTION 12 ).

 

If to the Company:

Biohaven Pharmaceutical Holding Company Ltd.

 

234 Church Street, Suite 301

 

New Haven, CT 06520

 

E-mail: vlad.coric@biohavenpharma.com

 

Attention: Chief Executive Officer

 

 

with a copy to:

Locke Lord LLP

 

2800 Financial Plaza

 

Providence, Rhode Island 02903

 

Email: douglas.gray@lockelord.com

 

Attention: Douglas G. Gray

 

 

If to the Holder:

Gregory H. Bailey, M.D.

 

29 Yeomans Row

 

London UK SW3 2AL

 

E-mail: gregorymd@gmail.com

 

SECTION 13.                   Cumulative Remedies . Except to the extent expressly provided in SECTION 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

SECTION 14.                   Equitable Relief . Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

SECTION 15.                   Entire Agreement . This Warrant, together with the Shareholders’ Agreement, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant, the Shareholders’ Agreement, the statements in the body of this Warrant shall control.

 

SECTION 16.                   Successor and Assigns . This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

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SECTION 17.                   No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

SECTION 18.                   Headings . The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

SECTION 19.                   Amendment and Modification; Waiver . Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

SECTION 20.                   Severability . If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

SECTION 21.                   Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the Territory of the British Virgin Islands without giving effect to any choice or conflict of law provision or rule (whether of the Territory of the British Virgin Islands or any other jurisdiction) that would cause the application of the domestic substantive laws of any other jurisdiction.

 

SECTION 22.                   Submission to Jurisdiction . Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the courts located in Road Town, Tortola, British Virgin Islands, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

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SECTION 23.                   Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

SECTION 24.                   Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

SECTION 25.                   No Strict Construction . This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF , the Company has duly executed this Warrant on the Original Issue Date.

 

 

BIOHAVEN PHARMACEUTICAL
HOLDING COMPANY LTD.

 

 

 

By:

/s/ Vladimir Coric

 

Name: Vladimir Coric

 

Title: Chief Executive Officer and Director

 

 

Accepted and agreed,

 

 

 

/s/ Gregory H. Bailey

 

GREGORY H. BAILEY, M.D.

 

 



 

EXHIBIT A

 

Form of Exercise Notice

 

(To be executed by the Holder to purchase Common Shares under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)                                  The undersigned is the Holder of Warrant No. 4 (the “ Warrant ”) issued by Biohaven Pharmaceutical Holding Company Ltd., a British Virgin Islands corporation (the “ Company ”).  Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

 

(2)                                  The undersigned hereby exercises its right to purchase            Warrant Shares pursuant to the Warrant.

 

(3)                                  The Holder intends that payment of the Exercise Price shall be made as (check one):

 

o

Cash Exercise

 

 

o

“Cashless Exercise” under Section 10

 

(4)                                  If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $             in immediately available funds to the Company in accordance with the terms of the Warrant.

 

(5)                                  Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.

 

Dated:                      , 20       

 

 

 

Name of Holder:

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

 



 

Exhibit B

 

Biohaven Pharmaceutical Holding Company Ltd.

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                           (the “ Transferee ”) the right represented by the within Warrant to purchase                shares of Common Stock of Biohaven Pharmaceutical Holding Company Ltd. (the “ Company ”) to which the within Warrant relates and appoints                       attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

 

Dated:                     , 20

 

 

 

 

 

 

 

 

 

 

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

 

 

 

 

 

 

 

Address of Transferee

 

 

 

In the presence of:

 

 

 

 

 

 

 

 

 




Exhibit 4.6

 

WARRANT No. 1

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 6, 2014, BY AND AMONG BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. (THE “ COMPANY ”), CERTAIN STOCKHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “ STOCKHOLDERS AGREEMENT ”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

Warrant Certificate No.: 1

 

Original Issue Date: August 15, 2015

 

FOR VALUE RECEIVED, BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD., a British Virgin Island company (the “ Company ”), hereby certifies that ALS BIOPHARMA, LLC, a Delaware limited liability company, or its registered assigns (the “ Holder ”) is entitled to purchase from the Company Five Hundred Fifty (550) duly authorized, validly issued, fully paid and nonassessable Common Shares at a purchase price per share of U.S.$2,800.00 (subject to adjustment as provided herein, the “ Exercise Price ”), all subject to the terms, conditions and adjustments set forth below in this Warrant.  Certain capitalized terms used herein are defined in Section 1 hereof.

 

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This Warrant has been issued pursuant to the terms of the ALS Biopharma Agreement, dated as of August 10, 2015 (the “ ALS Agreement ”), among the Company, Fox Chase Chemical Diversity Center Inc., a Delaware corporation, and the Holder.

 

1.                                       Definitions .  As used in this Warrant, the following terms have the respective meanings set forth below:

 

Aggregate Exercise Price ” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

 

ALS Agreement ” has the meaning set forth in the preamble.

 

Board ” means the board of directors of the Company.

 

Business Day ” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the British Virgin Islands are authorized or obligated by law or executive order to close.

 

Common Shares ” means the common shares, no par value, of the Company, and any capital stock into which such Common Shares shall have been converted, exchanged or reclassified following the date hereof.

 

Company ” has the meaning set forth in the preamble.

 

Exercise Date ” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

Exercise Notice ” has the meaning set forth in Section 3(a)(i) .

 

Exercise Period ” has the meaning set forth in Section 2 .

 

Exercise Price ” has the meaning set forth in the preamble.

 

Fair Market Value ” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Shares for such day on all United States securities exchanges on which the Common Shares may at the time be listed; (b) if there have been no sales of the Common Shares on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Shares on all such exchanges at the end of such day; (c) if on any such day the Common Shares are not listed on a United States securities exchange, the closing sales price of the Common

 

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Shares on the principal stock exchange on which the Common Shares may at the time be listed; (d) if on any such day the Common Shares are not listed on a United States securities exchange and there is no other principal stock exchange on which the Common Shares are listed, the closing sales price of the Common Shares as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Shares on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Shares quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided , that if the Common Shares are listed on any securities exchange under clause (a), (b) or (c) above, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading.  If at any time the Common Shares are not listed on any United States securities exchange or any other principal stock exchange and are not quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Shares shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Shares within a reasonable period of time (not to exceed ten (10) Business Days) from the Company’s receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder.  The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne equally by the Company and the Holder.

 

Holder ” has the meaning set forth in the preamble.

 

Original Issue Date ” means August 15, 2015.

 

OTC Bulletin Board ” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

Person ” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

Pink OTC Markets ” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

Stockholders Agreement ” has the meaning set forth in the legend endorsed hereon.

 

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Warrant ” means this Warrant No. 1 and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

Warrant Shares ” means the Common Shares or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

2.                                       Term of Warrant .  Subject to the terms and conditions hereof, at any time or from time to time after the date hereof and prior to 5:00 p.m., New York time, on the tenth (10th) anniversary of the date hereof or, if such day is not a Business Day, on the closest preceding Business Day (the “ Exercise Period ”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

3.                                       Exercise of Warrant .

 

(a)                                  Exercise Procedure .  This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

 

(i)                                      surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “ Exercise Notice ”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)                                   payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b) .

 

(b)                                  Payment of the Aggregate Exercise Price .  Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)                                      by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price; or

 

(ii)                                   by instructing the Company to issue Warrant Shares then issuable upon all or any part of this Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:

 

4



 

X = Y(A-B) ÷ A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder;

 

Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 3(a) ;

 

A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date; and

 

B = the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

In the event of any withholding of Warrant Shares to effect a net settlement pursuant to clause (ii) above where the number of shares issuable thereunder is not a whole number, the number of shares issued by the Company on a net basis under clause (ii) shall be rounded down to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld multiplied by (y) the Fair Market Value per Warrant Share as of the Exercise Date.

 

(c)                                   Delivery of Stock Certificates .  Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)  hereof), the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, with any appropriate transfer restrictions thereon, together with cash in lieu of any fraction of a share, as provided in Section 3(d)  hereof.  The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with Section 6 below, such other Person’s name as shall be designated in the Exercise Notice.  This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

(d)                                  Fractional Shares .  The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant.  As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the

 

5



 

Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                   Delivery of New Warrant .  Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c)  hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant.  Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)                                    Valid Issuance of Warrant and Warrant Shares; Payment of Taxes .  With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)                                      This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                   All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any shareholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)                                The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)                               The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares are listed at the time of such exercise.

 

(v)                                  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless

 

6



 

and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(g)                                   Conditional Exercise .  Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                  Reservation of Shares .  During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Shares or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.

 

4.                                       Adjustment to Exercise Price and Number of Warrant Shares .  The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section 4 ).

 

(a)                                  Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Shares .  If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Shares or any other capital stock of the Company that is payable in Common Shares, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall he proportionately increased.  If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased.  Any adjustment under this Section 4(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

(b)                                  Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger .  In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or

 

7



 

(v) other similar transaction (other than any such transaction covered by Section 4(a) ), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Shares, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction).  The provisions of this Section 4(b)  shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions.  The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant.  Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b) , the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(b)  with respect to this Warrant.

 

8



 

(c)                                   Certificate as to Adjustment .

 

(i)                                      As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)                                   As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(d)                                  Notices .  In the event:

 

(i)                                      that the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                   of any capital reorganization of the Company, any reclassification of the Common Shares of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

 

(iii)                                of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale,

 

9



 

dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

 

5.                                       Stockholders Agreement .  All Warrant shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Stockholders Agreement, and the Holder shall be required, for so long as the Holder holds any Warrant Shares, to become and remain a party to the Stockholders Agreement.

 

6.                                       Transfer of Warrant .  Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B , together with funds sufficient to pay any transfer taxes described in Section 3(f)(v)  in connection with the making of such transfer.  Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

7.                                       Holder Not Deemed a Stockholder; Limitations on Liability .  Except as otherwise specifically provided herein and for common shares held directly by Holder not subject to this Warrant, prior to the issuance to the Holder of the Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

8.                                       Replacement on Loss; Division and Combination .

 

(a)                                  Replacement of Warrant on Loss .  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided , that, in

 

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the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                  Division and Combination of Warrant .  Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys.  Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice.  Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

9.                                       No Impairment .  The Company shall not, by amendment of its Articles of Association or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

 

10.                                Compliance with the Securities Act .

 

(a)                                  Agreement to Comply with the Securities Act; Legend .  The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “ Securities Act ”).  This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR

 

11



 

OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

(b)                                  Representations of the Holder .  In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                                      The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.  The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act,

 

(ii)                                   The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                                The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares.  The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

11.                                Warrant Register .  The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof.  The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

12



 

12.                                Notices .  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12 ).

 

If to the Company:

Biohaven Pharmaceutical Holding Company Ltd.

 

234 Church Street, Suite 301

 

New Haven, CT 06520

 

E-mail: robert.berman@biohavenpharma.com

 

Attention:

Vice President

 

 

 

If to the Holder:

ALS Biopharma LLC

 

3805 Old Easton Road

 

Doyletown, PA 18902

 

E-mail: AReitz@alsbiopharma.com

 

Attention:

Allen B. Reitz, Ph.D.

 

 

13.                                Cumulative Remedies .  Except to the extent expressly provided in Section 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

14.                                Equitable Relief .  Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

15.                                Entire Agreement .  This Warrant, together with the Stockholders Agreement and the ALS Agreement, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.  In the event of any inconsistency between the statements in the body

 

13



 

of this Warrant, the Stockholders Agreement and the ALS Agreement, the statements in the body of this Warrant shall control.

 

16.                                Successor and Assigns .  This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder.  Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

17.                                No Third-Party Beneficiaries .  This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

18.                                Headings .  The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

19.                                Amendment and Modification; Waiver .  Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.  No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.  No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver.  No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

20.                                Severability .  If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

21.                                Governing Law .  This Warrant shall be governed by and construed in accordance with the internal laws of the Territory of the British Virgin Islands without giving effect to any choice or conflict of law provision or rule (whether of the Territory of the British Virgin Islands or any other jurisdiction) that would cause the application of the domestic substantive laws of any other jurisdiction.

 

22.                                Submission to Jurisdiction .  Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the courts located in Road Town, Tortola, British Virgin Islands, as well as to the jurisdiction

 

14



 

of all courts to which an appeal may be taken from such courts, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.  Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

23.                                Waiver of Jury Trial .  Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

24.                                Counterparts .  This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.  A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

25.                                No Strict Construction .  This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

15



 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

By:

/s/ Declan Doogan

 

Name:

Declan Doogan

 

Title:

Chairman

 

 

 

Accepted and agreed,

 

 

 

ALS Biopharma LLC

 

 

 

 

By:

/s/ Allen B. Reitz

 

Name:

Allen B. Reitz, Ph.D.

 

Title:

CEO

 

 

16


 

WARRANT No. 2

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 6, 2014, BY AND AMONG BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. (THE “ COMPANY ”), CERTAIN STOCKHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “ STOCKHOLDERS AGREEMENT ”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

Warrant Certificate No.: 2

 

Original Issue Date: August 15, 2015

 

FOR VALUE RECEIVED, BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD., a British Virgin Island company (the “ Company ”), hereby certifies that ALS BIOPHARMA, LLC, a Delaware limited liability company, or its registered assigns (the “ Holder ”) is entitled to purchase from the Company Six Hundred Fifty (650) duly authorized, validly issued, fully paid and nonassessable Common Shares at a purchase price per share of U.S.$2,800.00 (subject to adjustment as provided herein, the “ Exercise Price ”), all subject to the terms, conditions and adjustments set forth below in

 

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this Warrant (including the Vesting Condition set forth in Section 2 hereof).  Certain capitalized terms used herein are defined in Section 1 hereof.

 

This Warrant has been issued pursuant to the terms of the ALS Biopharma Agreement, dated as of August 10, 2015 (the “ ALS Agreement ”), among the Company, Fox Chase Chemical Diversity Center Inc., a Delaware corporation, and the Holder.

 

1.                                       Definitions .  As used in this Warrant, the following terms have the respective meanings set forth below:

 

Aggregate Exercise Price ” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

 

ALS Agreement ” has the meaning set forth in the preamble.

 

Board ” means the board of directors of the Company.

 

Business Day ” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the British Virgin Islands are authorized or obligated by law or executive order to close.

 

Common Shares ” means the common shares, no par value, of the Company, and any capital stock into which such Common Shares shall have been converted, exchanged or reclassified following the date hereof.

 

Company ” has the meaning set forth in the preamble.

 

Exercise Date ” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

Exercise Notice ” has the meaning set forth in Section 3(a)(i) .

 

Exercise Period ” has the meaning set forth in Section 2 .

 

Exercise Price ” has the meaning set forth in the preamble.

 

Fair Market Value ” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Shares for such day on all United States securities exchanges on which the Common Shares may at the time be listed; (b) if there have been no sales of the Common Shares on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Shares on all such

 

2



 

exchanges at the end of such day; (c) if on any such day the Common Shares are not listed on a United States securities exchange, the closing sales price of the Common Shares on the principal stock exchange on which the Common Shares may at the time be listed; (d) if on any such day the Common Shares are not listed on a United States securities exchange and there is no other principal stock exchange on which the Common Shares are listed, the closing sales price of the Common Shares as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Shares on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Shares quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided , that if the Common Shares are listed on any securities exchange under clause (a), (b) or (c) above, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading.  If at any time the Common Shares are not listed on any United States securities exchange or any other principal stock exchange and are not quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Shares shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Shares within a reasonable period of time (not to exceed ten (10) Business Days) from the Company’s receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder.  The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne equally by the Company and the Holder.

 

Holder ” has the meaning set forth in the preamble.

 

Original Issue Date ” means August 15, 2015.

 

OTC Bulletin Board ” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

Person ” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

Pink OTC Markets ” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

Stockholders Agreement ” has the meaning set forth in the legend endorsed hereon.

 

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Vesting Condition ” means the filing by the Company of the first IND (as defined in the APS Agreement) for a Patent Product (as defined in the APS Agreement).

 

Warrant ” means this Warrant No. 2 and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

Warrant Shares ” means the Common Shares or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

2.                                       Term of Warrant .  Subject to the terms and conditions hereof and the satisfaction of the Vesting Condition, at any time or from time to time thereafter and prior to 5:00 p.m., New York time, on the tenth (10th) anniversary of the date hereof or, if such day is not a Business Day, on the closest preceding Business Day (the “ Exercise Period ”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

3.                                       Exercise of Warrant .

 

(a)                                  Exercise Procedure .  This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares into which it is then exercisable, upon:

 

(i)                                      surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “ Exercise Notice ”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)                                   payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b) .

 

(b)                                  Payment of the Aggregate Exercise Price .  Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)                                      by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price; or

 

(ii)                                   by instructing the Company to issue Warrant Shares then issuable upon all or any part of this Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender this

 

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Warrant in exchange for the number of Warrant Shares as is computed using the following formula:

 

X = Y(A-B) ÷ A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder;

 

Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 3(a) ;

 

A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date; and

 

B = the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

In the event of any withholding of Warrant Shares to effect a net settlement pursuant to clause (ii) above where the number of shares issuable thereunder is not a whole number, the number of shares issued by the Company on a net basis under clause (ii) shall be rounded down to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld multiplied by (y) the Fair Market Value per Warrant Share as of the Exercise Date.

 

(c)                                   Delivery of Stock Certificates .  Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)  hereof), the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, with any appropriate transfer restrictions thereon, together with cash in lieu of any fraction of a share, as provided in Section 3(d)  hereof.  The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with Section 6 below, such other Person’s name as shall be designated in the Exercise Notice.  This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

5



 

(d)                                  Fractional Shares .  The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant.  As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                   Delivery of New Warrant .  Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c)  hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant.  Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)                                    Valid Issuance of Warrant and Warrant Shares; Payment of Taxes .  With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)                                      This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                   All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any shareholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)                                The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)                               The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares are listed at the time of such exercise.

 

(v)                                  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided , that the Company

 

6



 

shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(g)                                   Conditional Exercise .  Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                  Reservation of Shares .  During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Shares or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.

 

4.                                       Adjustment to Exercise Price and Number of Warrant Shares .  The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section 4 ).

 

(a)                                  Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Shares .  If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Shares or any other capital stock of the Company that is payable in Common Shares, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall he proportionately increased.  If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased.  Any adjustment under this Section 4(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

(b)                                  Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger .  In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no

 

7



 

par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(a) ), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Shares, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction).  The provisions of this Section 4(b)  shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions.  The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant.  Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b) , the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(b)  with respect to this Warrant.

 

8


 

(c)                                   Certificate as to Adjustment .

 

(i)                                      As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)                                   As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(d)                                  Notices .  In the event:

 

(i)                                      that the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                   of any capital reorganization of the Company, any reclassification of the Common Shares of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

 

(iii)                                of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale,

 

9



 

dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

 

5.                                       Stockholders Agreement .  All Warrant shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Stockholders Agreement, and the Holder shall be required, for so long as the Holder holds any Warrant Shares, to become and remain a party to the Stockholders Agreement.

 

6.                                       Transfer of Warrant .  Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B , together with funds sufficient to pay any transfer taxes described in Section 3(f)(v)  in connection with the making of such transfer.  Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

7.                                       Holder Not Deemed a Stockholder; Limitations on Liability .  Except as otherwise specifically provided herein and for common shares held directly by Holder not subject to this Warrant, prior to the issuance to the Holder of the Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

8.                                       Replacement on Loss; Division and Combination .

 

(a)                                  Replacement of Warrant on Loss .  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided , that, in

 

10



 

the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                  Division and Combination of Warrant .  Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys.  Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice.  Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

9.                                       No Impairment .  The Company shall not, by amendment of its Articles of Association or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

 

10.                                Compliance with the Securities Act .

 

(a)                                  Agreement to Comply with the Securities Act; Legend .  The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “ Securities Act ”).  This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR

 

11



 

OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

(b)                                  Representations of the Holder .  In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                                      The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.  The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act,

 

(ii)                                   The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                                The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares.  The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

11.                                Warrant Register .  The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof.  The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

12



 

12.                                Notices .  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12 ).

 

If to the Company:

 

Biohaven Pharmaceutical Holding Company Ltd.

 

 

234 Church Street, Suite 301

 

 

New Haven, CT 06520

 

 

E-mail: robert.berman@biohavenpharma.com

 

 

Attention:

Vice President

 

 

 

If to the Holder:

 

ALS Biopharma LLC

 

 

3805 Old Easton Road

 

 

Doyletown, PA 18902

 

 

E-mail: AReitz@alsbiopharma.com

 

 

Attention:

Allen B. Reitz, Ph.D.

 

13.                                Cumulative Remedies .  Except to the extent expressly provided in Section 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

14.                                Equitable Relief .  Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

15.                                Entire Agreement .  This Warrant, together with the Stockholders Agreement and the ALS Agreement, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.  In the event of any inconsistency between the statements in the body

 

13



 

of this Warrant, the Stockholders Agreement and the ALS Agreement, the statements in the body of this Warrant shall control.

 

16.                                Successor and Assigns .  This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder.  Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

17.                                No Third-Party Beneficiaries .  This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

18.                                Headings .  The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

19.                                Amendment and Modification; Waiver .  Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.  No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.  No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver.  No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

20.                                Severability .  If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

21.                                Governing Law .  This Warrant shall be governed by and construed in accordance with the internal laws of the Territory of the British Virgin Islands without giving effect to any choice or conflict of law provision or rule (whether of the Territory of the British Virgin Islands or any other jurisdiction) that would cause the application of the domestic substantive laws of any other jurisdiction.

 

22.                                Submission to Jurisdiction .  Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the courts located in Road Town, Tortola, British Virgin Islands, as well as to the jurisdiction

 

14



 

of all courts to which an appeal may be taken from such courts, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.  Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

23.                                Waiver of Jury Trial .  Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

24.                                Counterparts .  This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.  A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

25.                                No Strict Construction .  This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

15



 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

 

 

BIOHAVEN PHARMACEUTICAL
HOLDING COMPANY LTD.

 

 

 

By:

/s/ Declan Doogan

 

Name:

Declan Doogan

 

Title:

Chairman

 

 

Accepted and agreed,

 

 

 

ALS Biopharma LLC

 

 

 

By:

/s/ Allen B. Reitz

 

Name:

Allen B. Reitz, Ph.D.

 

Title:

CEO

 

 

16




Exhibit 10.1

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

 

 

LICENSE AGREEMENT

 

between

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

and

 

BRISTOL-MYERS SQUIBB COMPANY

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 


 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

EXECUTION COPY

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (this “ Agreement ”) is made and entered into as of the date last signed by a party below (the “ Effective Date ”), by and between Bristol-Myers Squibb Company , a Delaware corporation, headquartered at 345 Park Avenue, New York, New York 10154 (“ BMS ”), and Biohaven Pharmaceutical Holding Company Ltd. , a British Virgin Islands business company, with its registered office address of P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands (“ Company ”). BMS and Company are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties.

 

RECITALS

 

WHEREAS, BMS and its Affiliates Control (as defined below) certain intellectual property rights with respect to the Licensed Compounds (as defined below); and

 

WHEREAS, Company desires to obtain from BMS the licenses set forth herein, and BMS desires to grant such licenses to Company, all on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE in consideration of the foregoing and the mutual agreements set forth below, the Parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

The terms in this Agreement with initial letters capitalized, whether used in the singular or the plural, shall have the meaning set forth below or, if not listed below, the meaning designated in places throughout this Agreement.

 

1.1                                Act ” means the United States Food, Drug and Cosmetic Act, as amended.

 

1.2                                Affiliate ” of a Person means any other Person which (directly or indirectly) is controlled by, controls or is under common control with such Person. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a Person, shall mean the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and “control” shall be presumed to exist if either of the following conditions is met: (i) in the case of a corporate entity, direct or indirect ownership of voting securities entitled to cast at least fifty percent (50%) of the votes in the election of directors or (ii) in the case of a non-corporate entity, direct or indirect ownership of at least fifty percent (50%) of the equity interests with the power to direct the management and policies of such entity.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.3                                Approval ” means, with respect to any Licensed Product in any regulatory jurisdiction, approval from the applicable Regulatory Authority sufficient for the manufacture, distribution, use, marketing, and sale of the Licensed Product in such jurisdiction in accordance with applicable Laws; provided, however that for purposes of the U.S., Approval means NDA Approval, for purposes of the EU, Approval means MAA Approval and for purposes of Japan, Approval means PMDA Approval.

 

1.4                                BMS Know-How ” means Know-How that, as of the Effective Date, is Controlled by BMS and directly relates to and is reasonably necessary and/or useful for, Company’s Development and Commercialization of the Licensed Compounds and/or Licensed Products in the Field.

 

1.5                                BMS Patent Rights ” means (a) the Patent Rights listed in Appendix 1a and Appendix 1b , (b) all divisionals, continuations, continuations-in-part thereof (excluding claims in continuations-in-part that necessarily rely on new matter invented by BMS after the Effective Date) or any other patent application claiming priority directly or indirectly to (i) any of the patents or patent applications in subsection (a), or (ii) any patent or patent application from which the patents or patent applications in (a) claim direct or indirect priority, (c) all patents issuing on any of the foregoing in (a) and (b), (d) all foreign counterparts of any of the foregoing in (a) through (c), including any patent applications filed under the Patent Cooperation Treaty (“ PCT Applications ”), and (e) all registrations, reissues, re-examinations, supplemental protection certificates, or extensions of any of the foregoing in (a) through (d). BMS Patent Rights shall also include any claims in any patents or patent applications existing as of the Effective Date that are Controlled by BMS and cover the composition of matter of any intermediate or starting material reasonably necessary in or reasonably useful for the manufacture of any Licensed Compound as manufactured by BMS as of the Effective Date.

 

1.6                                Business Day ” or “business day” means a day other than Saturday, Sunday or any day on which commercial banks located in New York, New York are authorized or obligated by Law to close.

 

1.7                                Calendar Quarter ” means the respective periods of three consecutive calendar months ending on March 31, June 30, September 30 and December 31.

 

1.8                                Calendar Year ” means each one-year period commencing on January 1 and ending on December 31.

 

1.9                                cGMP ” means as to the United States and the European Union, applicable good manufacturing practices as in effect in the United States and the European Union, respectively, during the term of this Agreement and, with respect to any other jurisdiction, manufacturing practices equivalent to good manufacturing practices as then in effect in the United States or the European Union.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.10                         CGRP ” means any and all isoforms of the signaling peptide Calcitonin Gene-Related Peptide.

 

1.11                         CGRP Receptor ” means the heteromeric transmembrane receptor comprised of (a) a 7 transmembrane calcitonin receptor-like receptor (“ CRLR ”), (b) a single transmembrane receptor activity modifying protein type 1 (“ RAMP1 ”), and (c) an intracellular receptor component protein (“ RCP ”), in which CRLR and RAMP1 components are required for ligand binding to the CGRP Receptor, and RCP is required for subsequent signal transduction, including any and all isoforms of (a) through (c), and any combination of any of the foregoing.

 

1.12                         Clinical Trial ” means any human clinical study of a pharmaceutical product.

 

1.13                         Combination Product ” means a Licensed Product that includes at least one additional active ingredient other than the Licensed Compound. Drug delivery vehicles, adjuvants, and excipients shall not be deemed to be “active ingredients”, except in the case where such delivery vehicle, adjuvant, or excipient is recognized by the FDA as an active ingredient in accordance with 21 CFR 210.3(b)(7).

 

1.14                         Commercialization ” or “ Commercialize ” means activities directed to commercially manufacturing, obtaining pricing and reimbursement approvals and regulatory activities pertaining to same, marketing, promoting, distributing, importing or selling a Licensed Product.

 

1.15                         Commercially Reasonable Efforts ” means, with respect to the efforts to be expended by a Party or its Affiliate with respect to any objective, activity or decision to be undertaken under this Agreement, those efforts that a company within the bio-pharmaceutical industry would reasonably use to accomplish such objective, activity or decision, and specifically means the carrying out of Development and Commercialization activities using efforts that a company within the bio-pharmaceutical industry would reasonably devote to a product at a similar stage in its development or product life and of similar market potential, profit potential, based on conditions then prevailing and taking into account efficacy, safety, approved labeling, the competitiveness of alternative products sold by Third Parties in the marketplace, the patent and other proprietary position of the product, and the likelihood of regulatory approval given the regulatory structure involved. Commercially Reasonable Efforts shall be determined on a country-by-country and indication-by-indication basis for the Licensed Product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Licensed Product and the market(s) or country(ies) involved. Without limiting the foregoing, Commercially Reasonable Efforts require that Company: (i) promptly assign responsibility for such Development and Commercialization activities to specific employees who are held accountable for progress and monitor such progress on an on-going basis, (ii) set and consistently seek to achieve specific and meaningful objectives and timelines for carrying out such Development and Commercialization activities, and (iii) consistently make and implement decisions and allocate resources designed to advance progress with respect to such objectives and timelines.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3



 

***Text Omitted and Filed Separately

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1.16                         Company Change of Control ” means any transaction in which the Company: (a) sells, conveys or otherwise disposes of all or substantially all of its property or business; or (b)(i) merges, consolidates with, or is acquired by any other corporation, firm, partnership or other legal entity (each a “ Person ”) (other than an Affiliate of such Party solely in the case that such Person was an Affiliate of such Party prior to the Effective Date); or (ii) effects any other transaction or series of related transactions; in each case of subsection (i) or (ii), such that the shareholders of the Company immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving Person following the closing of such merger, consolidation, other transaction or series of related transactions. Notwithstanding the foregoing, a Company Change of Control cannot occur until after the Financing (as defined in Section 13.2.5 below) has occurred.

 

1.17                         Competitive Compound ” means any molecule that is not a Licensed Compound and that is designed to, and in fact specifically [* * *].

 

1.18                         Confidential Information ” means all trade secrets, processes, formulae, data, Know-How, improvements, inventions, chemical or biological materials, techniques, marketing plans, strategies, customer lists, or other information (including all information and materials of a Party’s customers and any other Third Party and their consultants) that has been disclosed by a Party to the other Party, regardless of whether any of the foregoing are marked “confidential” or “proprietary” or communicated to the other by the disclosing Party in oral, written, graphic, or electronic form. “ Confidential Information ” of BMS shall include the BMS Know-How.

 

1.19                         Controlled ” or “ Controls ”, when used in reference to intellectual property, shall mean the legal authority or right of a Party (or any of its Affiliates) to grant a license or sublicense of intellectual property rights to the other Party or any Third Party, or to otherwise disclose proprietary or trade secret information to such other Party or to any Third Party, without breaching the terms of any agreement with any Third Party.

 

1.20                         Development ” means non-clinical and clinical drug development activities reasonably related to the development and submission of information to a Regulatory Authority, including toxicology, pharmacology and other discovery and pre-clinical efforts, test method development and stability testing, process development, formulation development, development manufacturing, delivery system development, quality assurance and quality control development, clinical studies (including pre- and post-Approval studies but specifically excluding regulatory activities directed to obtaining pricing and reimbursement approvals), statistical analysis, and post-marketing commitments/requirements. When used as a verb, “ Develop ” means to engage in Development.

 

1.21                         Development Plan ” means, with respect to a Licensed Product, a plan prepared by Company for the then current calendar year and the two (2) following years setting forth a summary of the key Development activities to be conducted for such Licensed Product in the Territory, including the indications expected to be targeted, a good faith estimate of reasonable

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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timelines for completing key Development activities and filing of key regulatory submissions (including estimated timelines for commencement of each stage of clinical Development), and including, where known, the primary endpoints and any comparator or any agents used in combination with a Licensed Compound or Licensed Product for any such studies and any go-no-go decision criteria for any such studies. The initial Development Plan as of the Effective Date is attached hereto as Appendix 2 . A copy of the study protocol for a given study will be provided to BMS if available and if requested by BMS.

 

1.22                         Distributor ” means, with respect to a country, any Third Party that is used by pharmaceutical manufacturers generally in such country on a non-exclusive basis, and without any intellectual property right or license grant from the Company or its Sublicensees, to distribute (but not to market or promote) finished, packaged pharmaceutical products to pharmacies, managed care organizations, governmental agencies ( e.g. , federal, state and local), and other group purchasing organizations ( e.g. , pharmaceutical benefits managers) and the like in such country. For clarity, a Distributor of a Licensed Product in a country shall not include any person or entity that has been granted a right, whether by license or otherwise and whether express or implied (including by subcontract or agency), by a Party or its Affiliates to research, Develop or manufacture any such Licensed Product or that otherwise assumes any regulatory or other responsibilities with respect to obtaining or maintaining regulatory approvals for such Licensed Product in such country.

 

1.23                         Dollar ” or “ $ ” means the lawful currency of the United States.

 

1.24                         EMA ” means the European Medicines Agency, or any successor agency thereto.

 

1.25                         Equity Interest ” (i) any capital stock or share of a corporation, company, partnership interest, limited liability company interest or other equity interest; (ii) any security or right convertible into, exchangeable for, or evidencing the right to subscribe for any such stock, share, equity interest or security referred in (i); (iii) any stock appreciation rights, contingent value right or similar security or right that is derivative of any such stock, equity interest or security referred to in clause (i) and (ii); and (iv) any contract to grant issue, award, convey or sell any of the foregoing.

 

1.26                         EU ” means the European Union, as its membership may be altered from time to time, and any successor thereto.

 

1.27                         FDA ” means the U.S. Food and Drug Administration, or any successor agency thereto.

 

1.28                         Field ” means the prevention, treatment or control of any disease, disorder or condition in humans.

 

1.29                         First Commercial Sale ” means, with respect to any Licensed Product in a country in the Territory, the first sale for use or consumption by the general public of such

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Licensed Product in such country after Approval of such Licensed Product has been granted, or such marketing and sale is otherwise permitted, by the Regulatory Authority of such country.

 

1.30                         GAAP ” means the U.S. generally accepted accounting principles, consistently applied.

 

1.31                         Governmental Authority ” means any multi-national, national, federal, state, local, municipal, provincial, county, or other political subdivision, agency or other body, domestic or foreign or other government authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, court, tribunal or other entity).

 

1.32                         Indebtedness ” shall mean all liabilities for borrowed money, whether current or funded, secured or unsecured, all obligations evidenced by bonds, debentures, notes or similar instruments, and all liabilities in respect of mandatorily redeemable or purchasable capital stock or shares, or securities convertible into capital stock or shares.

 

1.33                         IND ” means an Investigational New Drug Application, as defined in the Act, filed with the FDA or its foreign counterparts, including as applicable clinical trial applications (CTAs), clinical trial exemptions (CTXs), and investigational medicinal product dossiers.

 

1.34                         Initiation ” means, when used with respect to a Clinical Trial, the dosing of the first patient with the first dose in such Clinical Trial.

 

1.35                         Know-How ” means tangible and intangible information, techniques, technology, practices, inventions (whether patentable or not), methods, knowledge, know-how, trade secrets, data and results (including all biological, chemical, pharmacological, toxicological, clinical, analytical and quality control data and methods (including any applicable reference standards), manufacturing assay and related data, data and results relating to drug substance, drug product, starting materials, and radiolabeled compounds, know-how and trade secrets).

 

1.36                         Knowledge ” means, with respect to a Party or its Affiliates, the actual knowledge of its in-house counsel based on such individuals’ good faith understanding of the facts and information in their possession or control without any duty to conduct any additional investigations with respect to such facts and information.

 

1.37                         Laws ” means all applicable laws, statutes, rules, regulations and other pronouncements having the effect of law of any Governmental Authority that may be in effect from time to time, including for clarity any applicable rules, regulations and other requirements of any Regulatory Authority that may be in effect from time to time.

 

1.38                         Licensed Compound ” means (a) the compounds identified as BMS-927711 (also known as rimegepant ) or [* * *], as specifically described in Appendix 3 (each, a “ Lead Compound ”) and any [* * *] or [* * *] thereof, and any [* * *] or [* * *] of any of the foregoing (collectively

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Derivative Compounds ”) and (b) any compound that is within the scope of the BMS Patent Rights.

 

1.39                         Licensed Product ” means any pharmaceutical product containing a Licensed Compound (alone or with other active ingredients controlled by the Company), in all forms, presentations, formulations and dosage forms. For clarity, “other active ingredients” does not include any other active ingredients or molecules that are proprietary to, or controlled by, BMS and its Affiliates.

 

1.40                         MAA ” means a marketing authorization application filed for Approval in the EU of the applicable Licensed Product.

 

1.41                         MAA Approval ” means Approval by the EMA of a MAA filed with the EMA for the applicable Licensed Product under the centralized European procedure. If the centralized EMA filing procedure is not used, MAA Approval shall be achieved upon the first Approval for the applicable Licensed Product in any of the following countries: [* * *]; provided , that MAA Approval shall in any event be deemed achieved upon First Commercial Sale in any country in the European Union.

 

1.42                         MAA Filing ” means the validation by the EMA of the filing of an MAA for the applicable Licensed Product. If the centralized EMA filing procedure is not used, MAA Filing shall be achieved upon the first acceptance of an MAA for the applicable Licensed Product for any of the following countries: [* * *].

 

1.43                         Major Market Countries ” means the following countries:  [* * *]. “ Major Market Country ” means any one of these countries.

 

1.44                         NDA ” means a new drug application filed with the FDA required for marketing approval for the applicable Licensed Product in the U.S., or, if the Licensed Compound is a biologic, a biologics license application (BLA) filed with the FDA required for marketing approval for the applicable Licensed Product in the U.S.

 

1.45                         NDA Approval ” means the final approval of an NDA for a given indication by the FDA for the applicable Licensed Product in the U.S.; provided, that, for milestone payment purposes, NDA Approval shall in any event be deemed achieved upon First Commercial Sale in the U.S. for such indication.

 

1.46                         NDA Filing ” means the acceptance by the FDA of the filing of an NDA for the applicable Licensed Product.

 

1.47                         Net Sales ” means, with respect to any Licensed Product, billed in arm’s-length transactions by a Party, an Affiliate of such Party, or any permitted Sublicensee (or such Sublicensee’s Affiliates) (all of the foregoing persons and entities, for purposes of this definition and Sections 8.4, 8.6, and 8.7), shall be considered a “ Related Party ”) for sales of such Licensed

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Product to a Third Party, less the sum of the following (to the extent not reimbursed by any Third Party):

 

(a)                                  discounts (including [* * *] discounts and [* * *] discounts), [* * *];

 

(b)                                  credits or allowances [* * *];

 

(c)                                   taxes or duties levied on, absorbed or otherwise imposed [* * *];

 

(d)                                  any [* * *] bad debt expense recorded in accordance with GAAP from customers related to sales of a Licensed Product, such bad debt not to exceed [* * *].

 

No deduction shall be made for any item of cost incurred by any Related Party in Developing or Commercializing Licensed Products except as permitted pursuant to clauses (a) to (e) of the foregoing sentence; provided that, [* * *].

 

Such amounts shall be determined consistent with a Related Party’s customary practices and in accordance with GAAP.

 

It is understood that any accruals for individual items reflected in Net Sales are periodically (at least quarterly) trued up and adjusted by each Related Party consistent with its customary practices and in accordance with GAAP.

 

Sale or transfer of Licensed Products between any of the Related Parties shall not result in any Net Sales, with Net Sales to be based only on any subsequent sales or dispositions to a non-Related Party. To the extent that any Related Party receives consideration other than or in addition to cash upon the sale or disposition of a Licensed Product to a non-Related Party, Net Sales shall be calculated based on [* * *]. For clarity, (i) Net Sales shall not include amounts or other consideration received by a Related Party from a non-Related Party in consideration of the grant of a (sub)license or co-promotion or distribution right to such non-Related Party, provided that such consideration is not in lieu of all or a portion of the transfer price of the Licensed Product, (ii) sales to a Third Party Distributor, wholesaler, group purchasing organization, pharmacy benefit manager, or retail chain customer shall be considered sales to a non-Related Party and not to a Sublicensee, (iii) Net Sales by a Related Party to a non-Related Party consignee are not recognized as Net Sales by such Related Party until the non-Related Party consignee sells the Licensed Product and (iv) if a Related Party receives in-kind consideration for the sale of the Licensed Product, then Net Sales shall be calculated as [* * *].

 

In the case of any Combination Product sold in the Territory, Net Sales for such Combination Product shall be calculated [* * *]. If, on a country-by-country basis, the other active ingredient or ingredients in the Combination Product are not sold separately in said country, Net Sales for the purpose of determining royalties of the Combination Product shall be calculated [* * *]. If neither the Licensed Product nor the other active ingredient(s) are sold separately in a given country, the Parties shall determine Net Sales in accordance with the formulas provided above in

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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this paragraph based on [* * *], or, [* * *], the Parties shall negotiate in good faith a reasonable adjustment to Net Sales in such country that takes into account the medical contribution to the Combination Product of and all other factors reasonably relevant to the relative value of, the Compound(s), on the one hand and all of the other active ingredient(s) collectively, on the other hand, and shall take into account in good faith, if reasonably applicable, any allocations and calculations that may have been made for the same period in other countries [* * *]. Notwithstanding the foregoing, for purposes of [* * *], the portion of Net Sales of the Combination Product [* * *] shall [* * *] in the Combination Product.

 

Should Company, its Affiliates or Sublicensees enter into a Third Party agreement for the purchase of a Licensed Product that provides [* * *] on such Licensed Product that are conditioned on pricing terms or conditions for purchase of another product or products owned or Controlled by Company, its Affiliates or Sublicensees, as the case may be, then the [* * *] on such Licensed Product under such agreement shall be determined, for purposes of determining Net Sales under this Agreement for a given accounting period, based on [* * *] under such agreement.

 

1.48                         Patent Rights ” means (a) patents and patent applications, (b) all divisionals, continuations, continuations-in-part thereof or any other patent application claiming priority directly or indirectly to (i) any of the patents or patent applications in subsection (a), or (ii) any patent or patent application from which the patents or patent applications in (a) claim direct or indirect priority, (c) all patents issuing on any of the foregoing in (a)-(b), (d) all foreign counterparts of any of the foregoing in (a)-(c), including PCT Applications, and (e) all registrations, reissues, re-examinations, supplemental protection certificates, or extensions of any of the foregoing in (a)-(d).

 

1.49                         Person ” means any individual, firm, corporation, partnership, limited liability company, trust, business trust, joint venture, governmental authority, association or other entity.

 

1.50                         Phase I Trial ” means a Clinical Trial of a Licensed Product on a sufficient number of subjects that is designed to provide a preliminary determination of safety, pharmacokinetics, and pharmacodynamic parameters in healthy individuals or patients, as described in 21 C.F.R. 312.21(a), or a similar clinical study prescribed by a Regulatory Authority outside the U.S.

 

1.51                         Phase II Trial ” means a Clinical Trial of a Licensed Product on a sufficient number of subjects that is designed to explore a variety of doses, dose response, and duration of effect, and to generate initial evidence of clinical safety and activity in a target patient population, as described in 21 C.F.R. 312.21(b), or a similar clinical study prescribed by a Regulatory Authority outside the U.S.

 

1.52                         Phase III Trial ” means a Clinical Trial of a Licensed Product on a sufficient number of subjects that is designed to establish that a pharmaceutical product is safe and efficacious for its intended use, and to determine warnings, precautions, and adverse reactions

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

that are associated with such pharmaceutical product in the dosage range and dose duration to be prescribed, which trial is intended to support Approval of a Licensed Product, as described in 21 C.F.R. 312.21(c), or a similar clinical study prescribed by a Regulatory Authority outside the U.S.

 

1.53                         PMDA ” means the Japanese Pharmaceutical and Medical Device Agency or its successor, or the Japanese Ministry of Health, Labour and Welfare.

 

1.54                         PMDA Approval ” means Approval by the PMDA of a MAA filed with the PMDA for the applicable Licensed Product in Japan.

 

1.55                         PMDA Filing ” means the acceptance by the PMDA of the filing of an MAA for the applicable Licensed Product in Japan.

 

1.56                         Regulatory Authority ” means any Governmental Authority, including the FDA, PMDA or EMA, that has responsibility in countries in the Territory over the Development and/or Commercialization of the Licensed Compounds and/or Licensed Products.

 

1.57                         Sublicense Revenues ” means all consideration Company receives from a Sublicensee pursuant to any Sublicense, including any upfront payment, milestone payments and royalty payments (excluding that portion of any milestone or royalty payment made by a Sublicensee that is intended to reimburse Company for its milestone and royalty obligations to BMS under Article 8 hereof), collaboration fee, and premiums on equity investments in Company (with the premium to be reasonably allocated to the value of this Agreement as compared the Company’s other assets); provided, that if such equity investment is coupled with a change of control of the Company (as defined under the Securities Exchange Act of 1934, as amended, or equivalent legislation outside of the U.S., if applicable), then any such equity premium will be included only to the extent that such premium is more than [* * *] above the volume weighted average price of the common stock of Company for the [* * *] trading days on the Nasdaq Stock Market ending on the date that is [* * *] trading days on the Nasdaq Stock Market prior to the first public announcement of the proposed equity investment, but excluding, for clarity, any amounts received by Company: (a) as bona fide, fair market value, actual reimbursement for research, Development or Commercialization activities performed or paid for by Company after the grant of a Sublicense, and only to the extent they are documented and are reasonably detailed in a written report provided to BMS; (b) for reimbursement of Company’s fully-burdened cost to manufacture and supply Licensed Products or Licensed Compounds; or (c) in the form of bona fide loans made by Sublicensee to Company. For clarity Sublicense Revenues include the difference between (x) the Sublicense Revenue payment or royalty received by Company from a Sublicensee on Net Sales or for a given milestone event and (y) the payment Company pays to BMS for a particular payment under the Agreement for the same Net Sales or event (e.g., (i) the difference between the milestone payment Company receives from a Sublicensee and the milestone payment Company pays to BMS for the same milestone event or (ii) the difference between the royalty rates for a given tier).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.58                         Sublicense ” means a grant of rights by Company to a Sublicensee under any of the rights licensed to Company by BMS under Section 2.1 with respect to the Development, manufacture, or Commercialization of any Licensed Product or Licensed Compound, and includes any reverse co-promotion agreements. For clarity, a Distributor is not considered a Sublicensee.

 

1.59                         Sublicense Agreement ” means a written, definitive agreement for a Sublicense.

 

1.60                         Sublicensee ” means any Third Party to whom rights are granted under any of the rights licensed to Company by BMS under Section 2.1 with respect to any Licensed Product or Licensed Compound, including through any license, sublicense, co-development, co-discovery, co-promotion, distribution, joint venture, Development and Commercialization collaboration or similar transaction between Company (or an Affiliate of Company) and a Third Party.

 

1.61                         Territory ” means worldwide.

 

1.62                         Third Party ” means any Person other than Company, BMS, and their Sublicensees, and any Affiliates of Company, BMS and their Sublicensees.

 

1.63                         United States ” or “ U.S. ” means the United States of America including Puerto Rico and any U.S. territories and possessions.

 

1.64                         Valid Claim ” means a claim of (i) an issued and unexpired patent or a supplementary protection certificate, which claim has not been held invalid or unenforceable by a court or other government agency of competent jurisdiction from which no appeal can be or has been taken and has not been held or admitted to be invalid or unenforceable through re-examination or disclaimer, opposition procedure, nullity suit or otherwise, or (ii) a pending patent application that has not been finally abandoned, finally rejected or expired; provided, however , that if a claim of a pending patent application shall not have issued within [* * *] years after the earliest filing date from which such claim takes priority, such claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until a patent issues with such claim.

 

Additional Definitions . In addition to those terms defined above, definitions for each of the following terms are found in the body of this Agreement as indicated below:

 

Defined Term

 

Section

 

BMS

 

Preamble

 

BMS Reversion Products

 

13.4.1

 

Business Combination

 

13.2.4

 

BVI Subsidiary

 

2.2

 

Company

 

Preamble

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Effective Date

 

Preamble

 

Financing and Financing Period

 

13.2.5

 

Force Majeure

 

15.3

 

Indemnification Claim

 

12.3

 

Indemnitee

 

12.3

 

Indemnitor

 

12.3

 

Indication

 

8.2.1(iv)

 

Inventory Disposal Period

 

13.4.6

 

Joint Invention

 

10.1

 

Joint Patent Rights

 

10.1

 

Know-How Transfer Period

 

3.1

 

Liability Cap

 

9.5

 

Losses and Claims

 

12.1

 

Party or Parties

 

Preamble

 

PCT Application

 

1.5

 

Pharmacovigilance Agreement

 

3.5

 

Related Party

 

1.44

 

Royalty Term

 

8.4.2

 

Surviving Sublicensee

 

2.2.1(g)

 

TA Period

 

3.2

 

Third Party Compensation

 

8.4.4

 

Title 11

 

13.10

 

Transferred Materials

 

4.1

 

Triggering Event

 

5.6.2

 

 

ARTICLE 2

 

LICENSE GRANT

 

2.1                                BMS Patent Rights and BMS Know-How . Subject to all the terms and conditions set forth in this Agreement, BMS hereby grants to Company a non-transferable (except in accordance with Section 15.5), exclusive license, with the right to grant Sublicenses in accordance with Section 2.2, under the BMS Patent Rights and BMS Know-How solely to the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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extent necessary to research, discover, Develop, make, have made, use, sell, offer to sell, export and import Licensed Compounds and/or Licensed Products in the Field in the Territory.

 

For clarification, nothing in this Section 2.1 or this Agreement shall be interpreted as a grant of rights to make, have made, sell, use, co-formulate or use in combination a Licensed Compound with any compound of BMS or any of its Affiliates (i) that is not a Licensed Compound or (ii) that is, or the manufacture or use of which is, covered by a Patent Right owned or Controlled by, or licensed to, BMS or any of its Affiliates, or (iii) that is or could be subject to a governmental grant providing marketing exclusivity with respect to such compound or such product (such as data exclusivity under the FDA’s Orange Book or under national implementations of Article 10.1 of Directive 2001/EC/83), including but not limited to, in each case (i), (ii) and (iii), any such compound or such product that is being developed or sold (as of the Effective Date or in the future) by BMS or its Affiliates or by contractors or collaborators with or on behalf of BMS or its Affiliates.

 

2.2                                Sublicenses . Company shall have the right to grant Sublicenses with respect to the rights licensed to Company under Section 2.1: (x) to an Affiliate, including to its wholly owned subsidiary, Biohaven Pharmaceutical Product No.2000 Ltd., a British Virgin Island corporation (“ BVI Subsidiary ”), without the prior written consent of BMS, (y) to a third party manufacturer to make Licensed Compounds or Licensed Product for the benefit of Company without the prior written consent of BMS provided that such Sublicense relates only to the manufacturing of Licensed Compounds or Licensed Products and (z) to a Third Party (other than to any Third Party referred to in (y) above) subject to BMS’ prior written consent (not to be unreasonably withheld or delayed), provided that, in each case (x), (y) and (z), such Sublicenses are granted solely in accordance with this Section 2.2:

 

2.2.1                      Company and BVI Subsidiary shall have the right to enter into a Sublicense Agreement with a Third Party, provided that:

 

(a)                                  such Sublicense Agreement shall refer to this Agreement and shall be subordinate to and consistent with the terms and conditions of this Agreement, and, shall not limit Company’s ability to fully perform all of its obligations under this Agreement or BMS’ rights under this Agreement;

 

(b)                                  in such Sublicense Agreement, the Sublicensee shall agree in writing to be bound to Company or BVI Subsidiary, as applicable, by terms and conditions that allow Company to fully perform the corresponding terms and conditions of this Agreement;

 

(c)                                   promptly after the execution of such Sublicense Agreement, Company or BVI Subsidiary, as applicable, shall provide a full copy of such Sublicense Agreement to BMS;

 

(d)                                  Company shall remain primarily responsible for all payments due and the making of reports under this Agreement by its Sublicensees and for compliance by its

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Sublicensees with all applicable terms of this Agreement (including, without limitation, its payment obligations under Sections 11.1 and Articles 8 and 10 hereof), and Company and BVI Subsidiary shall use Commercially Reasonable Efforts to monitor their Sublicensees’ compliance with the terms of such License. Company shall remain jointly and severally liable with each of its Sublicensees (whether or not such Sublicensee is an Affiliate of Company) for any failure by such Sublicensee to comply with the terms and conditions of this Agreement;

 

(e)                                   the Sublicensee shall assume and agree in writing to be bound by and comply with the terms and conditions of this Agreement in the same manner as Company, including, without limiting the generality of the foregoing, the Sublicensee shall agree in writing (i) to maintain insurance coverage at no less than the levels set forth in Section 12.4, (ii) to keep books and records substantially in accordance with Section 8.7, including permitting audit and inspection rights in accordance with Sections 8.7.3 and 8.7.4, and (iii) the right of termination provided in Section 13.2.5;

 

(f)                                    such Sublicensee shall not have the right to grant further Sublicenses with respect to the Development or Commercialization of Licensed Products, except in accordance with and subject to all of the terms and conditions of this Section 2.2 and all of the other terms and conditions of this Agreement;

 

(g)                                  any Sublicense rights granted by Company or BVI Subsidiary in a Sublicense Agreement (to the extent such Sublicense rights are granted to Company or BVI Subsidiary in this Agreement) shall terminate effective upon the termination under Article 13 of the license from BMS to Company with respect to such sublicensed rights, provided that such Sublicense rights shall not terminate if, as of the effective date of such termination under Article 13, the Sublicensee is not in material breach of its obligations to Company under its Sublicense Agreement, the Sublicensee was previously granted an exclusive Sublicense to Develop and Commercialize the Licensed Products or Licensed Compounds, and within [* * *] days of such termination the Sublicensee agrees in writing to be bound directly to BMS under a license agreement substantially similar to this Agreement with respect to the rights Sublicensed hereunder, substituting such Sublicensee (a “ Surviving Sublicensee ”) for Company or BVI Subsidiary, and provided further that (A) such license agreement shall not prejudice any remedy either Party may have against the other in connection with such termination of this Agreement (in whole or in part); (B) the scope of the rights granted to the Surviving Sublicensee under such license agreement (with respect to licensed activities, Licensed Products and territory) shall be less than or equal to the scope of the rights that had been sublicensed by Company or BVI Subsidiary to the Surviving Sublicensee pursuant to the Sublicense Agreement; (C) Company shall no longer be obligated under this Agreement to pay amounts set forth in this Agreement, to the extent such amounts are payable based on the activities of such Surviving Sublicensee, its Affiliates and its sublicensees from and after the effective date of such termination; (D) such license agreement shall obligate the Surviving Sublicensee to pay directly to BMS amounts corresponding to those set forth in Article 8 which are payable based on the activities of such Surviving Sublicensee, its Affiliates and its sublicensees from and after the effective date of such termination; (E) the Sublicensee cures any payment default of the Company to BMS as of the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

effective date of termination; and (F) such license agreement shall not modify the rights and obligations of the Parties following any termination of this Agreement in whole or in part;

 

(h)                                  the provisions of this Section 2.2 shall also apply in the event of any subsequent amendment or modification of any such Sublicense Agreement; and

 

(i)                                     BMS shall be made an express third party beneficiary of the Sublicensee’s obligations under such Sublicense that relate to compliance with the terms and conditions of this Agreement with the direct right to enforce the same directly against the Sublicensee.

 

2.2.2                      For clarity, where provisions of this Agreement provide that Company shall be “solely” responsible or the like with respect to a matter (for example, Sections 5.4, 5.5, or 7.1), it is understood that such responsibilities may be carried out or borne on Company’s behalf by an Affiliate of Company or by a permitted Sublicensee or contractor of Company.

 

2.2.3                      It shall be a material breach of this Agreement for Company or BVI Subsidiary to enter into any Sublicense hereunder not in compliance with this Section 2.2.

 

2.3                                No Trademark License . No right or license, express or implied, is granted to Company to use any trademark, trade name, trade dress, domain name, logos, slogans, or service mark owned or Controlled by BMS or any of its Affiliates. Company, at its sole cost and expense, shall be responsible for the selection, registration and maintenance of all trademarks which it employs in connection with Licensed Products and its activities conducted pursuant to this Agreement, if any, and shall own and Control such trademarks.

 

2.4                                No Implied Licenses . No license or other right is or shall be created or granted hereunder by implication, estoppel or otherwise. All such licenses and rights are or shall be granted only as expressly provided in this Agreement.

 

2.5                                Retained Rights . All rights not expressly granted by a Party hereunder are reserved by such Party and may be used by such Party for any purpose. Without limiting the foregoing, BMS retains all rights to use and for its Affiliates to use the Licensed Compounds, the BMS Know-How and the BMS Patent Rights for any internal research purposes in the Field and to generate analogs and derivatives of the Licensed Compounds in connection therewith, and to research, develop, commercialize and promote other molecules for use with the Licensed Compounds and Licensed Products. BMS also expressly reserves and retains the right to make, have made and use any Licensed Compound for use as an intermediate or starting material in the manufacture of any compound that is not a Licensed Compound. Nothing in this Agreement shall prevent BMS and its Affiliates from using for any purpose any BMS Know-How that is in the public domain Effective Date (or enters the public domain thereafter) and is not covered by a Valid Claim of a BMS Patent Right licensed to Company hereunder.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

ARTICLE 3

 

TRANSFER OF KNOW-HOW, TECHNICAL ASSISTANCE

 

3.1                                Documentation .

 

3.1.1                      During the [* * *] day period following the Effective Date (the “ Know-How Transfer Period ”) BMS shall provide Company with electronic (or tangible embodiments, if electronic is not available) of the Know-How listed on Appendix 5 , including copies of originals of laboratory notebooks or pages thereof and, where required by Company to fulfill its duties under applicable Law, copies of manufacturing run records required to be maintained by BMS under applicable Law; provided that, with respect to BMS Know-How contained in laboratory notebooks, BMS shall only be required to provide Company with copies of those laboratory notebook pages (electronic copies, if they exist) that can be readily located without search and that contain BMS Know-How relating to Lead Compounds. Such documentation is Confidential Information of BMS shall not be used by Company for any purpose other than for the discovery, research, Development or Commercialization (including any import, manufacture, use, offer for sale, or sale) of Licensed Compounds and/or Licensed Products in accordance with this Agreement. Company shall assume full responsibility and liability to BMS for any unauthorized use or disclosure of such Confidential Information. BMS shall be responsible for the cost of providing one (1) set of copies (electronic, where they exist) only. BMS shall have no obligation to reformat or otherwise alter or modify any materials, or to create materials in electronic form, in order to provide them to Company. Any and all materials and other BMS Know-How delivered to Company pursuant to this Section 3.1 are and shall remain the sole property of BMS.

 

Without limiting the foregoing, if, within [* * *] after the Know-How Transfer Period, if Company reasonably determines that there is additional, specific BMS Know-How Controlled by BMS and its Affiliates that existed as of the Effective Date that is reasonably necessary for the continued Development or manufacture (but only those manufacturing and formulation processes, techniques and trade secrets used by BMS for making such Licensed Compounds as of the Effective Date) of any Licensed Compound or Licensed Product that has not been provided during the Know-How Transfer Period, then Company may request within such [* * *] period that BMS transfer to Company such additional BMS Know-How and BMS will endeavor to locate and provide same, provided that BMS shall not be required to conduct an unreasonable search for any such additional BMS Know-How.

 

3.1.2                      Notwithstanding Section 3.1.1 or 3.2, nothing herein shall require BMS to transfer, disclose or provide to Company (i) any reagents, assays or other tangible biological or chemical materials that are not listed on Appendix 4 , and (ii) any general information or know-how that should reasonably be known to a pharmaceutical company engaged in the research, development, manufacture or commercialization of small molecules targeting G-protein coupled receptors.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

3.1.3                      Any data or information included in the INDs to be transferred under Section 3.3 does not need to be separately transferred pursuant to Section 3.1.1 or Section 3.2.

 

3.2                                Technical Assistance . During the [* * *] day period following the Know-How Transfer Period (the “ TA Period ”), BMS shall reasonably cooperate with Company to assist Company with understanding and using the BMS Know-How provided to Company under Section 3.1. Such cooperation shall include, without limitation, providing Company with reasonable access by teleconference or in-person at BMS’ facilities (subject to BMS’ customary rules and restrictions with respect to site visits by non-BMS personnel) to BMS personnel who are appropriately qualified and experienced for such purpose, directly involved in the research and Development of Licensed Compounds and Licensed Products. In no event shall BMS be obligated to provide Company with more than (x) [* * *] of technical assistance and consultation in connection with the BMS Know-How transferred under Section 3.1 to the extent the Know-How does not relate to manufacturing Know-How, and (y) [* * *] technical assistance and consultation in connection with the BMS Know-How transferred under Section 3.1 to the extent it relates to manufacturing Know-How; provided that upon Company’s request, BMS shall provide additional technical assistance beyond the foregoing [* * *], at a mutually agreed commercially reasonable hourly rate, up to an additional [* * *]. Further: (i) such access shall be requested and coordinated through a single contact person to be designated by BMS, (ii) BMS makes no warranty, express or implied, that Company shall be able to successfully implement and use the BMS Know-How, (iii) BMS shall not be in default hereunder for any inadvertent failure to disclose all pertinent information related to the BMS Know-How, provided that such information shall be supplied to Company promptly upon discovery of such failure to disclose or upon request of Company identifying with reasonable specificity the nature of the information to be disclosed. Company shall be responsible for ensuring that its personnel who receive such assistance are appropriately qualified and experienced for such purpose, and (iv) such does not extend to support the integration of the BMS Know-How and related data and information into Company’s systems/repositories.

 

3.3                                INDs . BMS will use its commercially reasonable efforts to assign and transfer within [* * *] days after the Effective Date all of its rights, title and interests in and to any INDs for the Licensed Compounds. Company will cooperate in connection therewith and shall perform all duties under such INDs from and after such assignment. Subject to the foregoing, the Parties will reasonably cooperate to ensure an orderly transition of duties under such INDs and to fulfill applicable filing obligations with regulatory authorities.

 

3.4                                Safety Database . BMS shall transfer to Company the safety database for the Licensed Compounds, in the form in which it is held by BMS, as soon as practicable and in any event within [* * *] days after the Effective Date, and Company shall perform all responsibilities thereafter with respect to reporting of adverse events relating to the Licensed Compounds. If BMS learns of an adverse event based on work already carried out by BMS using a Licensed Compound, it will promptly notify Company of such adverse event.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

3.5                                Pharmacovigilance Agreement . Should the Parties mutually agree, and subject to the terms of this Agreement, as needed, within [* * *] months after the Effective Date, or notification to the Pharmacovigilance Departments of the execution date, BMS and the Company (under the guidance of their respective Pharmacovigilance Departments, or equivalent thereof) shall define and finalize the responsibilities the Parties shall employ to protect patients and promote their well-being in connection with the use of the Licensed Compound(s). These responsibilities shall include mutually acceptable guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of Adverse Event reports, pregnancy reports, and any other information concerning the safety of any Licensed Compound(s). Such guidelines and procedures shall be in accordance with, and enable the Parties and their Affiliates to fulfill, local and international regulatory reporting obligations to government authorities. Furthermore, such agreed procedures shall be consistent with relevant International Council for Harmonization (ICH) guidelines, except where said guidelines may conflict with existing local regulatory safety reporting requirements, in which case local reporting requirements shall prevail. Until such guidelines and procedures are set forth in a written agreement between the Parties (hereafter referred to as the “ Pharmacovigilance Agreement ”), the Party responsible for Pharmacovigilance prior to execution of this Agreement shall have sole Pharmacovigilance responsibility for the Licensed Compound(s) subject to all applicable regulations and guidelines. In the event that this Agreement is terminated, the Parties agree to implement the necessary procedures and practices to ensure that any outstanding pharmacovigilance reporting obligations are fulfilled.

 

ARTICLE 4

 

TRANSFER OF MATERIALS

 

4.1                                Materials . Within [* * *] days after the Effective Date, BMS shall transfer, free of charge, to Company those Licensed Compounds identified in Appendix 4 , ex-works (EXW) BMS’s facility in New Brunswick, NJ, in the quantities set forth in Appendix 4 (any such materials that are actually transferred, the “ Transferred Materials ”). Title and risk of loss shall be transferred to and borne by Company upon delivery of the Transferred Materials by BMS to a common carrier for shipment to Company, and Company shall be responsible for any indirect taxes levied upon the transfer, including customs duties and import VAT if applicable. Other than the Transferred Materials, unless included within the scope of BMS Know-How and subject to Section 3.2, BMS shall have no obligation to provide Company with any compounds or other materials, such as assays or biomaterials, under this Agreement. The Transferred Materials are provided “AS IS” and BMS makes no representations or warranties, express or implied, as to the Transferred Materials, including any warranty as to merchantability or fitness for a particular use or purpose. Any requalification required for Transferred Materials that are not cGMP materials will be at Company’s expense and responsibility. Company agrees that: (a) Company shall be fully responsible for its and its Affiliates’, Sublicensees’ and contractors’ use, storage, handling and disposition of the Transferred Materials, (b) under no circumstances shall BMS be liable or responsible for Company’s or its Affiliates’, Sublicensees’ and contractors’ use, storage, handling or disposition of the Transferred Materials, and (c) Company assumes sole

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

responsibility for any claims, liabilities, damages and losses that might arise as a result of Company’s and its Affiliates’, Sublicensees’ and contractors’ use, storage, handling or disposition of any Transferred Material. Company shall indemnify, defend and hold harmless BMS and its Affiliates, and their respective officers, directors, employees, agents, licensors, and their respective successors, heirs and assigns and representatives, from and against any and all damages, liabilities, losses, costs and expenses (including reasonable legal expenses, costs of litigation and reasonable attorney’s fees) arising in connection with any claims, suits, proceedings, whether for money damages or equitable relief, of any kind, arising out of or relating to Company’s, or any of its Affiliates’, Sublicensees’ or contractors’ use, storage, handling or disposition of any Transferred Material. Transferred Materials may only be provided by Company to Affiliates of Company, Sublicensees and contractors of Company.

 

ARTICLE 5

 

DEVELOPMENT

 

5.1                                Development . Company shall itself or through its Affiliates or Sublicensees use Commercially Reasonable Efforts to Develop Licensed Products, including by (i) setting forth in the Development Plan a program of Development activities and reasonable estimated timelines therefor for each phase of pre-clinical and clinical Development for Licensed Compounds and Licensed Products, and (ii) assigning appropriately qualified and experienced personnel to perform and monitor the progress of, or overseeing Third Parties who perform, such Development activities on an on-going basis. The initial Development Plan as of the Effective Date is attached hereto as Appendix 2 . During the Term, Company shall (a) promptly provide BMS no later than January 1 of each Calendar Year with a copy of the revised Development Plan for each Licensed Compound and Licensed Product for such Calendar Year and the next two Calendar Years and (b) promptly notify BMS as if, as a result of interactions with Regulatory Authorities in relation to any Licensed Product, Company reasonably determines that the estimated timelines for Development and Commercialization for Licensed Products set forth in the Development Plan are likely to be materially delayed, and shall promptly thereafter update the Development Plan to reflect such revised estimated timelines. Company shall promptly notify BMS of any material change in any study included in the Development Plan last provided to BMS of which it becomes aware and the reasons therefor.

 

5.2                                Development Reports . Company shall provide BMS with written Development reports on or before January 31 of each Calendar Year during the term of Development activities summarizing (but without disclosing specific data or results) such activities in sufficient detail to enable BMS to determine Company’s compliance with its diligence obligations in Section 5.1. Such reports shall include without limitation (a) the research and other Development activities accomplished by Company under the existing Development Plan through the end of the immediately preceding Calendar Year with respect to Licensed Compounds and Licensed Products, (b) updates on Company’s progress against the existing Development Plan, and (c) any revisions proposed to be made to any Development Plan for the then current Calendar Year; provided, however, that the first such report shall be due no later than January 31, 2017. If any

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

such Development obligations have been sublicensed to a Sublicensee, Company shall require the Sublicensee to provide to BMS (directly or through Company) the same information as required of Company hereunder with respect to the progress of the development of Licensed Compounds and Licensed Products by such Sublicensee. If requested by BMS, Company (and, if applicable, Sublicensee) personnel who prepared the report will meet with BMS (which may be by teleconference) to discuss any reasonable questions or comments that BMS might have on the report and Company’s development activities.

 

5.3                                Records . Company shall maintain complete and accurate records of all work conducted in furtherance of the research, Development and Commercialization of the Licensed Compounds and/or Licensed Products and all results, data and developments made in furtherance thereof to the extent required under applicable Laws. Such records shall properly reflect all work done and results achieved in sufficient detail and in good scientific manner to the extent required under applicable Laws.

 

5.4                                Development Responsibilities and Costs . As between the Parties, Company shall have sole responsibility for, and shall bear the cost of conducting, research and Development with respect to the Licensed Compounds and/or Licensed Products. Company shall research and Develop the Licensed Compounds and/or Licensed Products in compliance with all applicable Laws, including all legal and regulatory requirements pertaining to the design and conduct of Clinical Trials.

 

5.5                                Regulatory Responsibilities and Costs . As between the Parties, Company shall have sole responsibility for, and shall bear the cost of preparing, all regulatory filings and related submissions with respect to the Licensed Compounds and/or Licensed Products. Except as set forth in Article 13, Company shall own all INDs, Approvals and submissions in connection therewith and all Approvals shall be obtained by and in the name of Company.

 

5.6                                Competitive Compound .

 

5.6.1                      During the period that ends [* * *] years after the Effective Date, neither Company nor its Affiliates (or any Sublicensee of Company or any Affiliate of such Sublicensee) shall itself or through any Third Party, or in collaboration with any Third Party, engage, directly or indirectly in the clinical Development or Commercialization of a Competitive Compound.

 

5.6.2                      Notwithstanding Section 5.6.1, if Company or any of its Affiliates, either through its own development efforts or by acquisition, or obtains ownership of or a license to, or is acquired by or otherwise merges with an entity (or an Affiliate of such entity) that owns or has a license to, a Competitive Compound, in all such cases that would result in a violation of Section 5.6.1 (any such event, a “ Triggering Event ”), then Company shall promptly notify BMS in writing and elect (as applicable) one of the following actions within [* * *] days after such Triggering Event:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

20


 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

(a)                                  divest itself of such Competitive Compound and notify BMS in writing of such divestiture, which divestiture may occur by an outright sale to a Third Party of all of Company’s and its Affiliate’s rights to such Competitive Compound or by an outlicense arrangement under which Company has no continuing active involvement in the development or commercialization of such Competitive Compound (for clarity, efforts in connection with (i) the receipt and audit of payments in respect of the Competitive Compound, (ii) the maintenance, defense and enforcement of any applicable licensed patents, and (iii) the receipt of information to ensure compliance with the applicable agreement (including efforts to enforce or terminate same, or seek damages, for breach) shall not constitute continuing active involvement) provided that such divestiture occurs within [* * *] after the applicable Triggering Event; provided , that Company or its Affiliate shall have an additional [* * *] to effect such divestiture in the event that Company or its Affiliate can demonstrate it has used commercially reasonable efforts, but has been unable, to effect such divestiture during such [* * *] period; or

 

(b)                                  Company shall notify BMS in writing whether Company desires to negotiate terms under which the Competitive Compound would be included as a Product within this Agreement. If the Parties can agree and execute a binding agreement, within [* * *] after notice from Company electing this option, on the terms (including compensation to BMS) for including the Competitive Compound as a Licensed Product or Licensed Compound within this Agreement and Company’s Commercially Reasonable Efforts obligations under Sections 5.1 and 6.1, then Company shall not be deemed in breach of Section 5.6.1; provided, that BMS shall not be under any obligation, express or implied to negotiate or enter into any such agreement. If the Parties are unable to reach written agreement during the applicable time period, then, this Agreement shall be deemed terminated pursuant to Section 13.3.2 hereof.

 

ARTICLE 6

 

COMMERCIALIZATION

 

6.1                                Company Obligations . Company shall use Commercially Reasonable Efforts to (i) obtain Approvals in each Major Market Country (or from the EMA for the Major Market Countries in Europe) for at least one Licensed Product, (ii) effect the First Commercial Sale of each Licensed Product for which such Approvals are obtained into each Major Market Country as soon as reasonably practicable after receipt of such Approvals and (iii) Commercialize each such Licensed Product in each such Major Market Country following such First Commercial Sale therein with the goal of maximizing the Net Sales of such Licensed Product in such Major Market Country.

 

6.2                                Continued Availability . Following the First Commercial Sale of a Licensed Product in a country in the Territory and until the expiration or termination of this Agreement, Company shall be responsible for manufacturing (or having manufactured) at its sole expense and using Commercially Reasonable Efforts to maintain supplies of such Licensed Product sufficient to satisfy Company’s expected Commercialization efforts in such country.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

21



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

6.3                                Reports . Following the First Commercial Sale of a Licensed Product in a country in the Territory, Company shall provide BMS with a written report within [* * *] days of the filing of the Company Annual Report with the U.S. Securities and Exchange Commission (or if no such report is filed, then within [* * *] days after the end of a calendar year), summarizing significant commercial activities with respect to Licensed Products during the just ended Calendar Year in countries in which there has been a First Commercial Sale of a Licensed Product, broken out separately for each applicable Major Market Country, aggregated for all member states of the European Union, if applicable, and aggregated for other countries in the Territory, if applicable, that are not Major Market Countries or member states of the European Union. If requested by BMS, Company personnel who prepared the report will meet with BMS, which may be by teleconference, to discuss and answer any questions or comments that BMS might have on the report and Company’s commercialization activities

 

ARTICLE 7

 

MANUFACTURE AND SUPPLY

 

7.1                                Manufacture and Supply . As between the Parties, Company shall be solely responsible at its expense for all of its requirements for making or having made all of its requirements of the Licensed Compounds and/or Licensed Products, except for Transferred Materials.

 

ARTICLE 8

 

FINANCIAL TERMS

 

In partial consideration of the rights granted by BMS to Company pursuant to this Agreement, Company shall make the payments provided for in this Article 8.

 

8.1                                Initial Payments .

 

8.1.1                      Within three (3) business days after the Effective Date, Company shall pay to BMS a nonrefundable, noncreditable payment of Five Million Dollars ($5,000,000) in cash by wire transfer into an account designated in writing by BMS. Any amount paid by Company to BMS as a consideration for the grant by BMS of any exclusive negotiation period in relation to the subject matter of this Agreement shall be credited against the amount to be paid by Company to BMS under this Section 8.1.1.

 

8.1.2                      Within ninety (90) days after the Effective Date, Company shall pay to BMS a nonrefundable, noncreditable payment of Four Million Dollars ($4,000,000) in cash by wire transfer into an account designated in writing by BMS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

8.2                                Milestone Payments .

 

8.2.1                      Development Milestones . For each applicable Licensed Compound, Company shall pay to BMS the following one time milestone payments set forth in the table below within [* * *] days after the first achievement of the specified milestone event by Company, its Affiliates, and Sublicensees for each applicable Licensed Compound achieving such milestone event in any indication. Company shall provide written notice to BMS within [* * *] after the first achievement of the specified milestone event by Company for each applicable Licensed Compound, Affiliates, and Sublicensees. Each milestone payment shall not be refundable or returnable in any event, nor shall it be creditable against royalties or other payments:

 

(a)                                  [* * *] (or any Derivative Compound thereof) for [* * *]:

 

Milestone

 

Amount of Milestone Payment
(Dollars)

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

*

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

TOTAL:

 

$

[* * *]

 

 


* [* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(b)                                  [* * *] (or any Derivative Compound thereof) for [* * *]:

 

Milestone

 

Amount of Milestone Payment
(Dollars)

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

TOTAL:

 

$

[* * *]

 

 

(c)                                   Any Licensed Compound (including [* * *] but other than [* * *] or a Derivative Compound of [* * *]), for [* * *]:

 

Milestone

 

Amount of Milestone Payment
(Dollars)

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

TOTAL:

 

$

[* * *]

 

 

(d)                                  Any Licensed Compound (including [* * *]) other than [* * *] or Derivative Compound of [* * *] for [* * *]:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Milestone

 

Amount of Milestone Payment
(Dollars)

 

[* * *]

 

$

[* * *

]

[* * *]

 

$

[* * *

]

[* * *]

 

$

[* * *

]

[* * *]

 

$

[* * *

]

TOTAL:

 

$

[* * *

]

 

(e)                                   For purposes of this Section 8.2.1:

 

(i)                                     The set of milestone payments in the tables above shall be payable by Company to BMS upon the first achievement of each such milestone event for each such Licensed Compound to achieve the milestone event.

 

(ii)                                 Payment of the milestone payments due for milestones achieved under Sections 8.2.1(c) and (d) will be deferred until the earlier of (i) the [* * *] and (ii) the [* * *].

 

(iii)                             Indication ” shall mean any separately defined, well-categorized class of human disease, syndrome or medical condition for which a separate marketing authorization application may be filed with a Regulatory Authority. New forms, presentations, dosages or formulations Developed for a given Licensed Compound shall not be deemed to create a new Licensed Compound for milestones purposes and shall be considered the same Licensed Compound.

 

8.2.2                      Sales-Based Milestones . Each of the following milestone payments shall be paid by Company to BMS for each Licensed Product within [* * *] days after the first achievement by Company, its Affiliates, and/or Sublicensees of the corresponding Net Sales amount in a Calendar Year set forth in the table below:

 

Milestone -
First Achievement of Net Sales
in any Calendar Year of:

 

Amount of Milestone Payment
(Dollars)

 

$[* * *]

 

$

[* * *]

 

$[* * *]

 

$

[* * *]

 

$[* * *]

 

$

[* * *]

 

Total Sales-Based Milestones

 

$

150,000,000

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Each milestone payment shall not be refundable or returnable in any event, nor shall it be creditable against royalties or other payments.

 

8.3                                Sublicense Revenue Sharing . In addition to the milestones and royalty payments set forth in Section 8.2, Company shall pay to BMS the following percentage of all Sublicense Revenues Company receives in connection with any Sublicense or any assignment of rights to the BMS Patents, BMS Know-How, the Licensed Compounds and/or Licensed Products, depending on the stage of Development of the most advanced Licensed Compound or Licensed Product that is subject to the applicable Sublicense or such assignment:

 

 

 

Development stage of the most advanced Licensed Compound or
Licensed Product as of the date of the Sublicense or assignment:

 

 

 

Prior to delivery of
top line data from the
first Phase III Trial

 

Prior to the first filing
for an Approval

 

Thereafter

 

Percent of Sublicense Revenues payable to BMS

 

[* * *]

%

[* * *]

%

[* * *]

%

 

For clarity the percent stated above shall apply (i) to any particular Sublicense Revenue that is not included in the Agreement (e.g., the upfront payment from the Sublicensee or a milestone payment for a milestone event not included in the Agreement), and (ii) to the difference between (x) the Sublicense Revenue payment received by Company from a Sublicensee and (y) the payment Company pays to BMS for a particular payment under the Agreement (e.g., the difference between the milestone payment Company receives from a Sublicensee and the milestone payment Company pays to BMS for the same milestone event or the difference between the royalty rates).

 

8.4                                Royalty Payments .

 

8.4.1                      Subject to the terms of this Agreement Company shall pay to BMS tiered royalties based on the total annual worldwide Net Sales in the Territory of each Licensed Product (including all indications and formulations for such Licensed Product) during the applicable Royalty Term for such Licensed Product. The royalty payable with respect to each particular Licensed Product shall be calculated by multiplying the applicable royalty rate below by the portion of total annual worldwide Net Sales in the applicable tier in a Calendar Year of the applicable Licensed Product by Company, its Affiliates, and Sublicensees in the Territory, as follows.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Portion of total annual worldwide Net Sales
in a Calendar Year for such. Licensed
Product that falls within the following tiers:

 

Royalty Rate

 

< $[* * *]

 

[* * *]

%

> $[* * *] < $[* * *]

 

[* * *]

%

> $[* * *]

 

[* * *]

%

 

By way of example, in a given Calendar Year, if the total annual worldwide Net Sales for a Licensed Product is $[* * *], the following royalty payment would be payable under this Section 8.4 (subject to the reductions set forth below): ([* * *]) + ([* * *]) + ([* * *]) = $[* * *]. For clarity, all dosages, dosage forms, SKUs, methods of delivery and presentations of a Licensed Product containing the same Licensed Compound shall be considered as one Licensed Product for purposes of this Section 8.4.1.

 

8.4.2                      Royalty Term . Royalties shall be payable on a Licensed Product-by-Licensed Product and country-by-country basis on Net Sales of Licensed Products from the First Commercial Sale of a particular Licensed Product in a country until the later of (i) twelve (12) years after the First Commercial Sale of such Licensed Product in such country, (ii) the expiration of the last to expire BMS Patent Right that would be infringed by the manufacture, use, sale, importation or offer for sale in such country of a given Licensed Product (including by reasons of extensions thereof under applicable Laws, including patent term extensions, pediatric exclusivity or supplemental protection certificates or their equivalents in any country), or (iii) the expiration of any regulatory or marketing exclusivity for such Licensed Product in such country, including but not limited to any data exclusivity (the “ Royalty Term ”); provided that, if (ii) no longer applies, the royalty payable by Company to BMS for the remainder (if any) of the Royalty Term with respect to such Licensed Product shall be determined by a royalty rate equal to fifty percent (50%) of the royalty rate set forth in Section 8.4.1. At the end of the Royalty Term for any Licensed Product in any country, Company will have a fully paid up, perpetual, irrevocable, royalty-free license to such Licensed Product in such country.

 

8.4.3                      Royalty Conditions . The royalties under Section 8.4.1 shall be subject to the following conditions:

 

(a)                                  only one royalty shall be due with respect to the same unit of Licensed Product;

 

(b)                                  no royalties shall be due upon the sale or other transfer among any Related Party, but in such cases the royalty shall be due and calculated upon the Related Party’s Net Sales of Licensed Product to the first non-Related Party; and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(c)                                   no royalties shall accrue on the disposition of Licensed Product in reasonable quantities by any Related Party as part of an expanded access program or as bona fide samples or as donations to non-profit institutions or government agencies for non-commercial purposes or for the performance of clinical trials, provided , in each case, that such Related Party does not receive any payment for such Licensed Product exceeding the cost of goods.

 

8.4.4                      Royalty Reduction . If (i) Company, in its reasonable judgment, determines that it is required to obtain a license from any Third Party in order to avoid infringement of such Third Party’s Patent Rights as a result of the practice of the BMS Patent Rights and/or the BMS Know-How in connection with the research, Development or Commercialization of any Licensed Product, (ii) such Patent Rights cover or claim the composition or method of use, of a Licensed Product, and (iii) Company is required to pay to such Third Party a royalty, milestone payments or other monetary compensation in consideration for the grant or maintenance of such license (“ Third Party Compensation ”), then for the period during which Company owes royalties to BMS hereunder, the amounts that would otherwise have been payable as royalties to BMS under this Agreement shall be reduced by [* * *] of all Third Party Compensation payable by or on behalf of Company to such Third Party. Notwithstanding the foregoing, in no event shall the royalty reductions described in this Section 8.4.4 act to reduce the royalties payable by Company to less than [* * *] of the amounts payable by Company for a given Calendar Quarter pursuant to Section 8.4.1. For clarity, this credit will not apply with respect to Third Party patent rights covering formulation or method of manufacture of a Licensed Compound or Licensed Product. For clarity, Company may not carry over and apply any such royalty reductions, which are incurred or accrued in a Calendar Quarter and are not deducted in such Calendar Quarter, to any subsequent Calendar Quarter(s). Notwithstanding the foregoing, if the royalty rates have been reduced in a given country due to patent no longer covering the applicable Licensed Product as set forth in Section 8.4.2, the provisions of this Section 8.4.4 will not apply for such country.

 

8.4.5                      Forecast . The Company shall provide on or before [* * *] of each Calendar Year a non-binding good faith forecast of sales and royalties for the entire current and next Calendar Year.

 

8.4.6                      Effect of Patent Challenge . In the event Company (or any of its Affiliates or Sublicensees) challenges or knowingly assists (other than in response to a subpoena or court order), including without limitation by providing information, documents, advice, and/or funding, a challenge to the validity, scope, patentability or enforceability of any of the BMS Patent Rights, and such challenge is unsuccessful either because (i) Company files a suit or initiates another legal proceeding to challenging the validity or enforceability of any such BMS Patent Right and then withdraws or terminates the suit or proceeding, (ii) any challenged claim that would be infringed but for the license has been upheld, even in amended form, as determined by a court of competent jurisdiction or other legal tribunal, or (iii) Company, in connection with such challenge, fails to produce reasonably credible evidence demonstrating the invalidity or unenforceability of all applicable patent claims in the BMS Patent Rights in such country; then the royalty rates set forth in Section 8.4.1 above shall be increased by [* * *] of the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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percentages set forth above (e.g., [* * *]), retroactively effective to the date that such suit or other legal proceeding was filed or otherwise formally initiated.

 

8.5                                Manner of Payment . All payments to be made by Company under this Agreement shall be made in U.S. Dollars by wire transfer of immediately available funds to such bank account as shall be designated by BMS. Late payments shall bear interest at the rate provided in Section 8.10.

 

8.6                                Sales Reports and Royalty Payments . After the First Commercial Sale of a Licensed Product and during the term of this Agreement, Company shall furnish to BMS a written report, within [* * *] days [* * *] days if a Sublicense has been granted) after the end of each Calendar Quarter (or portion thereof, if this Agreement terminates during a Calendar Quarter), showing the amount of royalty due for such Calendar Quarter (or portion thereof). Royalty payments for each Calendar Quarter shall be due at the same time as such written report for the Calendar Quarter. With each quarterly payment, Company shall deliver to BMS a full and accurate accounting to include at least the following information:

 

8.6.1                      the total gross sales for each Licensed Product (by country) by Company and its applicable Related Parties, if any, and the calculation of Net Sales from such gross sales;

 

8.6.2                      the deductions by category of permitted deductions set forth in the Net Sales definition;

 

8.6.3                      the total Net Sales for each Licensed Product (by country) by Company and its applicable Related Parties, if any, and the calculation of Net Sales from such gross sales;

 

8.6.4                      the calculation of royalties payable in Dollars which shall have accrued hereunder in respect of such Net Sales;

 

8.6.5                      withholding taxes, if any, required by applicable Law to be deducted in respect of such royalties; and

 

8.6.6                      the exchange rates used in determining the amount of Dollars payable hereunder.

 

If no royalty or payment is due for any royalty period hereunder, Company shall so report.

 

8.7                                Sales Record Audit .

 

8.7.1                      Company shall keep, and shall cause each of its applicable Related Parties, if any, to keep, complete, true and accurate books of accounts and records in accordance with GAAP, including gross sales in accordance with GAAP and any deductions thereto in accordance with this Agreement’s Net Sales definition in connection with the calculation of Net Sales, sufficient to determine and establish the amounts payable incurred under this Agreement, and compliance with the other terms and conditions of this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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8.7.2                      Such books of accounting of Company and its Affiliates shall be kept at their principal place of business and, with all necessary supporting data and records, shall during all reasonable times for the [* * *] years next following the end of the Calendar Year to which each shall pertain, be open for inspection not more than once per Calendar Year at reasonable times by an independent certified public accountant selected by BMS and as to which Company has no reasonable objection, at BMS’ expense, for the purpose of verifying royalty statements and payments for compliance with this Agreement for any period within the preceding three (3) Calendar Years.

 

8.7.3                      Company shall include in its Sublicense Agreements with any Sublicensees, a right for Company to inspect or have such an accountant inspect, not more than once during any Calendar Year, the books of accounting and such supporting data and records of such Sublicensees for the purpose of verifying royalty statements and payments for compliance with this Agreement for any period within the preceding [* * *] Calendar Years.

 

8.7.4                      Results of any inspection under Section 8.7.2 or 8.7.3 shall be made available to both Company and BMS. The independent, certified public accountant shall disclose to BMS only the amounts that the independent auditor believes to be due and payable hereunder to BMS, details concerning any discrepancy from the amount paid (including the reasons therefor) and the amount due, and shall disclose no other information revealed in such audit.

 

8.7.5                      Such accountant must have agreed in writing to maintain all information learned in confidence, except as necessary to disclose to BMS such compliance or noncompliance by Company, and any applicable Related Parties (who must agree in the Sublicense Agreement that such audit report may be disclosed to BMS). The results of each inspection, if any, shall be binding on both Parties. BMS shall pay for such inspections, except that in the event there is any upward adjustment in aggregate royalties payable for any Calendar Year shown by such inspection of more than [* * *] of the amount paid, Company shall pay for such inspection. Any underpayments shall be paid by Company within [* * *] days after notification of the results of such inspection. Any overpayments shall be fully creditable against amounts payable in subsequent payment periods.

 

8.8                                Currency Exchange . The Company’s then current standard exchange rate methodology will be employed for the translation of foreign currency sales into Dollars, provided such methodology is used by the Company in the translation of its foreign currency operating results, is consistent with GAAP, and is audited by the Company’s independent certified public accountants in connection with the audit of the consolidated financial statements of Company, and is used for the Company’s external reporting of foreign currency operating results.

 

8.9                                Taxes .

 

8.9.1                      Each Party will pay any and all taxes levied on account of all payments it receives under this agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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8.9.2                      If laws or regulations require that taxes be withheld with respect to any royalty payments by Company to BMS under this Agreement, Company will: (a) deduct those taxes from the remittable payment, (b) pay the taxes to the proper taxing authority, and (c) send evidence of the obligation together with proof of tax payment to BMS on a reasonable and timely basis following that tax payment. Each Party agrees to cooperate with the other Party in claiming refunds or exemptions from such deductions or withholdings under any relevant agreement or treaty which is in effect. The Parties shall discuss applicable mechanisms for minimizing such taxes to the extent possible in compliance with applicable Laws. Notwithstanding the foregoing, in the event that payments are made by Company other than from the mainland U.S. (e.g., as a result of an assignment under Section 15.5.2), then Company shall, in addition to complying with the foregoing, pay an amount to BMS such that when any taxes that are required to be withheld have been deducted, BMS receives that amount it would have received had the payment been made from the mainland U.S.

 

8.9.3                      The Parties shall cooperate in accordance with applicable Laws to minimize indirect taxes (such as value added tax, sales tax, consumption tax and other similar taxes) in connection with this Agreement.

 

8.10                         Interest Due . Without limiting any other rights or remedies available to BMS, Company shall pay BMS interest on any payments that are not paid on or before the date such payments are due under this Agreement at a rate of [* * *] or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent.

 

8.11                         Financing . BMS shall have the opportunity, in its sole discretion, to purchase, as an investor, in the Financing, up to eight percent (8%) of such Financing on a fully diluted basis, with the same protections and rights afforded to other investors in the Financing.

 

8.12                         Equity Consideration . Company will, as additional consideration for the rights granted pursuant to this Agreement, issue to BMS or its Affiliates shares in the Company in an amount equal to Twelve Million Five Hundred Thousand United States Dollars ($12,500,000.00) in accordance with the terms and conditions of Appendix 6 upon the earliest to occur of:

 

8.12.1               the Initiation of the first Phase III Trial for the first Licensed Compound to reach such milestone;

 

8.12.2               an initial public offering involving the shares in the Company or the listing of any of its shares or securities on any stock exchange; and

 

8.12.3               any event resulting in a Company Change of Control.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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ARTICLE 9

 

REPRESENTATIONS AND WARRANTIES; DISCLAIMER;
LIMITATION OF LIABILITY

 

9.1                                Mutual Representations and Warranties . Each Party represents and warrants to the other Party that, as of the Effective Date: (i) it is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to enter into this Agreement and to perform its obligations under this Agreement, (ii) execution of this Agreement and the performance by such Party of its obligations hereunder have been duly authorized, (iii) this Agreement has been duly executed and delivered on behalf of such Party, and is legally binding and enforceable on each Party in accordance with its terms, (iv) the performance of this Agreement by it does not create a breach or default under any other agreement to which it is a Party, (v) the execution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, 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 such Party, (vi) no government authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any Laws currently in effect, is or will be necessary for, or in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement and such other agreements, and (vii) neither such Party, nor any of its employees, officers, subcontractors, or consultants who have rendered services relating to the Licensed Compounds: (a) has ever been debarred or is subject to debarment or convicted of a crime for which an entity or person could be debarred by the FDA under 21 U.S.C. Section 335a or (b) has ever been under indictment for a crime for which a person or entity could be so debarred.

 

9.2                                Representations, Warranties, and Covenants of BMS . BMS represents and warrants to Company that, as of the Effective Date: (a) there is no pending litigation, or litigation that has been threatened in writing, which alleges, or any written communication alleging, that BMS’ activities with respect to the research, Development or manufacture of the Lead Compounds prior to the Effective Date have infringed or misappropriated, or would infringe or misappropriate, any of the intellectual property rights of any Third Party, (b) no Third Party has challenged in writing the ownership, scope, duration, validity, enforceability, priority or right to use any BMS Patent Rights listed in Appendix la (including, by way of example, through the institution of or written threat of institution of interference, inter partes review, reexamination, protest, opposition, nullity or similar invalidity proceeding before the United States Patent and Trademark Office or any foreign patent authority or court), (c) all fees required to be paid by BMS in any jurisdiction in order to maintain the Patent Rights licensed to Company hereunder and listed in Appendix la have, to BMS’ Knowledge, been timely paid as of the Effective Date and, to BMS’ Knowledge, the claims included in any issued patents included in such Patent Rights are in full force and effect as of the Effective Date, (d) BMS has not previously assigned, transferred, conveyed, or granted any license or other rights to its right, title and interest in the BMS Patent Rights or the BMS Know-How, in any way that would materially conflict with or materially limit the scope of any of the rights or licenses granted to Company hereunder, (e) BMS’ right, title and interest to all the BMS Patent Rights listed in Appendix la are free of any lien or security interest, (f) except as set forth in Appendix 1 , BMS and its Affiliates do not own

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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or control any other Patent Rights that are necessary or, to BMS’s reasonable belief as of the Effective Date, reasonably useful to carry out the Development of Lead Compounds and/or Licensed Products containing a Lead Compound as contemplated by the Development Plan attached as Appendix 2 hereto, and (g) subject to Section 3.1.2, to BMS’ Knowledge, the documents, data and information that are included in the BMS Know-How transferred to Company pursuant to Section 3.1 constitute all of the Know-How owned or Controlled by BMS that is reasonably necessary or useful for the Development or manufacture of the Lead Compounds in accordance with the terms of this Agreement.

 

9.3                                Representations and Warranties of Company . Company represents, warrants and covenants that (a) it shall not engage in any activities that use the BMS Patent Rights and/or BMS Know-How in a manner that is outside the scope of the license rights granted to it hereunder, (b) all of its activities related to its use of the BMS Patent Rights and BMS Know-How, and the research, Development and Commercialization of the Licensed Compounds and/or Licensed Products, pursuant to this Agreement shall comply with all applicable Law, (c) prior to filing the first drug application (i.e., an NDA or its foreign equivalent) for a Licensed Product, Company shall have all licenses that are necessary in order for the manufacture, use or sale of such Licensed Product not to infringe the intellectual property of any Third Party known to Company as of such date, but excluding licenses applicable to any Third Party issued patents for which Company shall have obtained a well-reasoned, written opinion of an outside patent attorney that Company’s activities under the scope of this Agreement are not reasonably likely to infringe any Valid Claim of such Third Party issued patent, and (d) it has available to it (or will have available to it at the time any payment hereunder is due) funds necessary to consummate the transaction contemplated by this Agreement and to Develop and Commercialize the Licensed Compounds and Licensed Products in accordance with the terms of this Agreement.

 

9.4                                DISCLAIMER . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY LICENSED COMPOUNDS, LICENSED PRODUCTS, TRANSFERRED MATERIALS, THE BMS PATENT RIGHTS OR BMS KNOW-HOW OR ANY RIGHT OR LICENSE GRANTED BY BMS HEREUNDER, AND NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION OR WARRANTY BY BMS THAT ANY PATENT OR OTHER PROPRIETARY RIGHTS INCLUDED IN THE BMS PATENT RIGHTS ARE VALID OR ENFORCEABLE OR THAT USE OF THE BMS PATENT RIGHTS, BMS KNOW-HOW AND TRANSFERRED MATERIALS CONTEMPLATED HEREUNDER DOES NOT INFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY. NOTWITHSTANDING ANY TO THE CONTRARY IN THIS AGREEMENT, COMPANY ACKNOWLEDGES AND AGREES THAT THE REPRESENTATIONS AND WARRANTIES IN THIS ARTICLE 9 ARE NOT MADE WITH RESPECT TO THE BMS PATENT RIGHTS LISTED IN APPENDIX 1B AND THAT SUCH BMS PATENT RIGHTS LISTED IN APPENDIX IB ARE BEING LICENSED TO COMPANY ON AN AS-IS BASIS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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9.5                                Limitation of Liability . NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR OTHERWISE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT, WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, MULTIPLE, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL, OR LOSS OF BUSINESS); PROVIDED, HOWEVER , THAT THE FOREGOING SHALL NOT APPLY TO ANY BREACH BY A PARTY OF ARTICLE 11 HEREOF, TO A BREACH BY COMPANY OF SECTION 5.6, THE WILLFUL BREACH, WILLFUL MISCONDUCT, OR GROSS NEGLIGENCE BY A PARTY, OR FOR AMOUNTS SOUGHT BY THIRD PARTIES IN CLAIMS THAT ARE SUBJECT TO THE PARTIES’ RESPECTIVE INDEMNITY OBLIGATIONS UNDER ARTICLE 12. IN ANY CASE, BMS SHALL NOT BE LIABLE FOR ANY DAMAGES OF ANY KIND (INCLUDING DIRECT DAMAGES) IN AN AMOUNT GREATER THAN THE AMOUNTS PAID BY COMPANY TO BMS UNDER SECTIONS 8.1, AND 8.2 OF THIS AGREEMENT. FOR THE AVOIDANCE OF DOUBT, THE FOREGOING LIMITATION SHALL NOT APPLY TO OR LIMIT ANY INFRINGEMENT CLAIM BROUGHT BY A PARTY UNDER THE PATENT LAWS OF ANY COUNTRY AND ANY DAMAGES IN THE NATURE OF LOST ROYALTIES TO BMS SHALL BE CONSIDERED DIRECT DAMAGES.

 

ARTICLE 10

 

PATENT MAINTENANCE; INFRINGEMENT; PATENT EXTENSIONS

 

10.1                         Inventions . Inventorship of inventions conceived or reduced to practice in the course of research and other Development activities under this Agreement shall be determined by application of United States patent Laws pertaining to inventorship. If such inventions are jointly invented in the course of such Development activities by one or more employees or consultants or contractors of both Parties, such inventions shall be jointly owned (“ Joint Invention ”), and if one or more claims included in an issued patent or pending patent application which is filed in a patent office in the Territory claim such Joint Invention, such patent or patent application shall be jointly owned (“ Joint Patent Rights ”). If such an invention is solely invented by an employee or consultant of a Party, such invention shall be solely owned by such Party, and any patent filed claiming such solely owned invention shall also be solely owned by such Party. This Agreement shall be understood to be a joint research agreement in accordance with 35 U.S.C. § 102(c), as amended, to develop the Licensed Compounds and/or Licensed Products. Each Party shall enter into binding agreements obligating all employees and consultants performing activities under or contemplated by this Agreement, including activities related to the BMS Patent Rights, Licensed Compounds or Licensed Products, to assign his/her interest in any invention conceived or reduced to practice in the course of such activities to the Party for which such employee or consultant is providing its services, except consultants who by employment contract may only assign to their employers are treated as contractors for the purpose of this Section 10.1. With respect to contractors, Company shall use good faith and reasonable efforts to

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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secure an agreement from such contractor to assign or license (with the right to sublicense) to Company inventions (and patent rights covering such inventions) made by such contractor in performing such services for Company.

 

10.2                         Filing, Prosecution and Maintenance of BMS Patent Rights . Company will have lead responsibility, using its in-house patent counsel or outside patent counsel selected by Company (such determination and outside patent selection to be subject to BMS’ approval, such approval not to be unreasonably withheld), for the preparation, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of the BMS Patent Rights. Company shall be responsible for the costs incurred with respect to the filing, prosecution and maintenance of the BMS Patent Rights. Company shall provide BMS with semi-annual updates of the filing, prosecution and maintenance status for each of the BMS Patent Rights, and shall promptly provide copies of any material official correspondence to or from patent offices. The Parties shall reasonably consult with and cooperate with respect to the preparation, prosecution and maintenance of the BMS Patent Rights, including by providing assistance as described in Section 3.2, and will confer regarding where to prosecute the BMS Patent Rights. Company shall not take any action during prosecution and maintenance of the BMS Patent Rights that would materially adversely affect them (including reduction in claims scope), without BMS’ prior express written consent (which consent shall be considered to be given if Company notifies BMS of proposed claim amendments or cancellations and BMS fails to object within thirty (30) days of such notification). Company may file a notice with governmental patent offices of the exclusive license to the BMS Patent Rights granted to Company hereunder. Post-grant proceedings involving the BMS Patent Rights, including oppositions, cancellations, inter partes review, and the like, shall be conducted by Company at the expense of Company, and Company shall promptly notify BMS of the initiation of such proceeding (or vice versa) and Company shall give BMS the opportunity to participate, at the sole expense of BMS, and BMS shall also participate and appear as necessary under the applicable rules governing the proceeding. Any settlement or compromise of such post-grant proceeding shall be subject to the approval of BMS, which approval shall not be unreasonably withheld, delayed or conditioned.

 

10.3                         Patent Abandonment .

 

10.3.1               The Parties will confer and must mutually agree before any of the BMS Patent Rights may be abandoned in any Major Market Country; provided that BMS shall not unreasonably withhold, delay or condition its consent to a request by Company to abandon a BMS Patent Right if such abandonment will not adversely affect the amount or duration of any royalty payable to BMS hereunder. Company shall provide BMS with notice of the allowance and expected issuance date of any patent within the BMS Patent Rights, or any of the deadline for filing a new patent application, and BMS shall provide Company with prompt notice as to whether BMS desires Company to file such new patent application. Company will provide notice to BMS pursuant to Section 103.2 before abandoning any patent rights in non-Major Market Countries.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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10.3.2               Subject to Section 10.3.1, in the event that Company decides either (a) not to continue the prosecution or maintenance of a patent application or patent within the BMS Patent Rights in any country, or (b) not to file any new patent application requested to be filed by BMS, Company shall provide BMS with express written notice of this decision at least thirty (30) days prior to any pending lapse or abandonment thereof, or if a decision not to continue prosecution or maintenance is responsive to an official communication from governmental agency that is received by Company less than forty-five (45) days prior to a deadline for taking action in response thereto, then the deadline for giving such notice to BMS shall be 50% of the time remaining for response after such communication is received by Company. In such event, provided that the Parties have not expressly agreed to abandon a patent or not file a patent application under Section 10.3.1, then Company shall provide BMS with an opportunity to assume responsibility for all external costs reasonably associated with the filing and/or further prosecution and maintenance of such patent application and any patent issuing thereon (such filing to occur prior to the issuance of the patent to which the application claims priority or expiration of the applicable filing deadline, as set forth above). In the event that BMS assumes such responsibility for such filing, prosecution and maintenance costs, Company shall transfer the responsibility for such filing, prosecution and maintenance of such patent applications and patents to BMS and Company shall no longer have any right or license in and to such patent application and patents issuing therefrom under this Agreement. In such case, Company shall provide BMS with an update of the filing, prosecution and maintenance status for each of such patent applications and patents, including copies of any material official correspondence to or from patent offices. Company shall reasonably consult with and cooperate with BMS with respect to the preparation, prosecution and maintenance of such patent applications and patents. Except as described in this Section 10.3.2, Company shall not take any action during prosecution and maintenance of the BMS Patent Rights that would materially adversely affect them, without BMS’ prior express written consent, such consent not to be unreasonably withheld, delayed or conditioned if such action will not adversely affect the amount or duration of any royalty payable to BMS, and which consent shall be considered to be given if Company notifies BMS of proposed claim amendments or cancellations and BMS fails to object within thirty (30) days of such notification.

 

10.4                         Enforcement of BMS Patent Rights against Infringers .

 

10.4.1               Enforcement by Company . In the event that BMS or Company becomes aware of a suspected infringement of any BMS Patent Right in the Field relating to Licensed Compounds, Licensed Products or their manufacture, sale or use, including actual or alleged infringement under 35 USC §271(e)(2) that is or would be infringing activity involving the using, making, importing, offering for sale or selling of articles that the Party reasonably believes infringes any of the Patent Rights conferred under this Agreement, such Party shall notify the other Party promptly, including all information available to such Party with respect to such alleged infringement, and following such notification, the Parties shall confer. Company shall have the first right, but shall not be obligated, to bring an infringement action for suspected infringement in the Field at its own expense, in its own name and entirely under its own direction and control, subject to the following: (a) BMS shall reasonably assist Company (at Company’s

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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expense) in any action or proceeding being prosecuted for suspected infringement in the Field if so requested, including by being named or joined as a plaintiff to such actions or proceedings if requested by Company or required by Law, (b) BMS shall have the right to participate and be represented in any such suit by its own counsel at its own expense, (c) no settlement of any such action or proceeding which restricts the scope, or adversely affects the enforceability, of a BMS Patent Right in the Field may be entered into by Company without the prior written consent of BMS, which consent shall not be unreasonably withheld, delayed or conditioned, and further, no settlement of any such action or proceeding which pertains to the infringement of the BMS Patent Rights by virtue of the Development or Commercialization of a Licensed Compound in the Field by a Third Party that is not a Sublicensee may be entered into by Company without the prior written consent of BMS, which consent shall not be unreasonably withheld, delayed or conditioned.

 

10.4.2               Timing; Enforcement by BMS . Company will have a period of one hundred twenty (120) days after its receipt or delivery of notice and evidence pursuant to Section 10.4.1 or receipt of written notice from a Third Party that reasonably evidences such infringement of the BMS Patent Rights, to elect to so enforce such BMS Patent Rights in the applicable jurisdiction (or to settle or otherwise secure the abatement of such infringement in accordance with Section 10.4.1), provided however, that such period will be (i) more than one hundred twenty (120) days to the extent applicable Law prevents earlier enforcement of such BMS Patent Right (such as the enforcement process set forth in or under the Hatch-Waxman Act), and provided further that if such period is extended because applicable Law prevents earlier enforcement, Company shall have until the date that is thirty (30) days following the date upon which applicable Law first permits such proceeding, and (ii) less than one hundred twenty (120) days to the extent that a delay in bringing such proceeding against such alleged Third Party infringer would limit or compromise the remedies (including monetary relief, and stay of regulatory approval) available against such alleged Third Party infringer. In the event Company does not so elect (or settle or otherwise secure the abatement of such infringement) before the first to occur of (A) the expiration of the applicable period of time set forth in the preceding subsections (i) and (ii), or (B) thirty (30) days before the expiration of any time period under applicable Law, that would, if a proceeding was not filed within such time period, limit or compromise the remedies available from such proceeding, it will so notify BMS in writing and in the case where BMS then desires to commence a suit or take action to enforce the applicable BMS Patent Right in the applicable jurisdiction, BMS will thereafter have the right to commence such a suit or take such action to enforce the applicable BMS Patent Right, as applicable, at BMS’ expense, provided that BMS shall first consult with Company concerning the reasons Company elected not to bring such action and shall consider those reasons in good faith in deciding whether to bring such action. Company shall reasonably assist BMS (at BMS’ expense) in any action or proceeding being prosecuted if so requested, including by being named or joined as a plaintiff to such actions or proceedings if requested by BMS or required by Law. Company shall have the right to participate and be represented in any such suit by its own counsel at its own expense. If BMS decides to bring suit to abate any suspected infringement of any BMS Patent Right in the Field not relating to Licensed Compounds, Licensed Products or their manufacture, sale or use, including actual or alleged infringement under 35 USC §271(e)(2),

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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BMS shall inform the Company. No settlement of any action or proceeding which restricts the scope, or adversely affects the enforceability, of a BMS Patent Right may be entered into by BMS without the prior written consent of Company, which consent shall not be unreasonably withheld, delayed or conditioned.

 

10.4.3               Withdrawal . If either Party brings an action or proceeding under this Section 10.4 and subsequently ceases to pursue or withdraws from such action or proceeding, it shall promptly notify the other Party and the other Party may substitute itself for the withdrawing Party under the terms of this Section 10.4.

 

10.4.4               Damages . In the event that either Party exercises the rights conferred in this Section 10.4 and recovers any damages or other sums in such action, suit or proceeding or in settlement thereof, such damages or other sums recovered shall first be applied to all reasonable out-of-pocket costs and expenses incurred by the Parties in connection therewith, including attorneys’ fees. If such recovery is insufficient to cover all such costs and expenses of both Parties, it shall be shared in proportion to the total of such costs and expenses incurred by each Party. If after such reimbursement any funds shall remain from such damages or other sums recovered, such funds shall be retained by the Party that controlled the action or proceeding under this Section 10.4; provided, however [***].

 

10.5                         Infringement of Third Party Rights .

 

10.5.1               The Parties will promptly notify each other of any allegation that any activity under this Agreement infringes or may infringe the intellectual property rights of any Third Party.

 

10.5.2               In any legal allegation related to the infringement of a Third Party intellectual property right, Company will have the first right to control, at its expense, the defense of such allegation. BMS will have the right, at its own expense and with its own choice of counsel, to be represented in the defense of the allegation.

 

10.5.3               The Parties will reasonably cooperate with each other in all respects with all matters related to the defense of any legal allegation under this section.

 

10.6                         Patent Extensions . BMS and Company shall each reasonably cooperate with one another and shall use Commercially Reasonable Efforts in obtaining patent term extension (including any pediatric exclusivity extensions as may be available) or supplemental protection certificates or their equivalents in any country with respect to Patent Rights covering the Licensed Products. If elections with respect to obtaining such patent term extensions are to be made, Company shall have the right, at its discretion, to make the election to seek patent term extension or supplemental protection with respect to the Patent Right for which such extension or supplemental protection should be sought, provided that Company shall use Commercially

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Reasonable Efforts to make such election so as to maximize the period of marketing exclusivity for the Licensed Product. For such purpose, for all Approvals Company shall provide BMS with written notice of any expected Approval at least thirty (30) days prior to the expected date of Approval, as well as notice within ten (10) business days following receipt of each Approval confirming the date of such Approval. Notification of the receipt of an Approval shall be in accordance with Section 15.2 except that the notification shall be sent to:

 

Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President and Chief Patent Counsel
Telephone: 609-252-4825
Facsimile: 609-252-7884

 

10.7                         Data Exclusivity and Orange Book Listings . With respect to data exclusivity periods (including any available pediatric extensions) or periods under national implementations of Article 10.1 of Directive 2001/EC/83 (and all international equivalents), Company shall use Commercially Reasonable Efforts consistent with its obligations under applicable Law to seek, maintain and enforce all such data exclusivity periods available for the Licensed Products. With respect to patent listing filings in any FDA Orange Book (and equivalents) for issued patents for a Licensed Product, Company shall, consistent with its obligations under applicable Law, list in a timely manner and maintain all applicable BMS Patent Rights. At least thirty (30) days prior to an anticipated deadline for the filing of patent listing information for BMS Patent Rights, Company shall consult with BMS regarding the content of such filing, and shall consider BMS’s comments in good faith, provided that Company shall have the final decision right with respect to such filing, including the Patent Rights to be listed in any FDA Orange Book or equivalent. BMS shall provide, consistent with its obligations under applicable Law, reasonable cooperation to Company in filing and maintaining such Orange Book (and foreign equivalent) listings.

 

10.8                         Notification of Patent Certification . Company shall notify and provide BMS with copies of any allegations of alleged patent invalidity, unenforceability or non-infringement of a BMS Patent Right pursuant to (i) if the Licensed Compound is not a biologic, a Paragraph IV Patent Certification by a Third Party filing an Abbreviated New Drug Application, an application under §505(b)(2) or other similar patent certification by a Third Party, and any foreign equivalent thereof, and (ii) if the Licensed Compound is a biologic, a bioequivalent or biosimilar application other similar filing or patent certification by a Third Party, and any foreign equivalent thereof. Such notification and copies shall be provided to BMS within seven (7) days after Company receives such certification, and shall be sent to the address set forth in Section 10.4. In addition, upon request by BMS, Company shall provide reasonable assistance and cooperation (including making available to BMS documents possessed by Company that are reasonably required by BMS and making available personnel for interviews and testimony), at BMS’ cost, in any actions reasonably undertaken by BMS to contest any such patent certification.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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10.9                         No Conflict Actions . BMS shall not be required to take any action pursuant to Sections 10.4, 10.7 or 10.8 that BMS reasonably determines in its sole judgment and discretion conflicts with or violates any court or government order or decree that BMS is then subject to or otherwise may create legal liability on the part of BMS.

 

10.10                  Assignment of BMS Patent Rights . Notwithstanding any provision in this Agreement to the contrary, BMS shall have the right to transfer or assign ownership of any BMS Patent Rights as long as any such transfer or assignment is made expressly subject to the rights and licenses granted to Company under this Agreement and the transferee or assignee of the transferred or assigned BMS Patent Rights agrees in writing to prosecute and maintain such BMS Patent Rights in accordance with the terms of this Article 10.

 

ARTICLE 11

 

NONDISCLOSURE OF CONFIDENTIAL INFORMATION

 

11.1                         Nondisclosure . Each Party agrees that, for so long as this Agreement is in effect and for a period of [* * *] years thereafter, a Party receiving Confidential Information of the other Party (or that has received any such Confidential Information from the other Party prior to the Effective Date) shall (i) maintain in confidence such Confidential Information using not less than the efforts such Party uses to maintain in confidence its own proprietary industrial information of similar kind and value, (ii) not disclose such Confidential Information to any Third Party without the prior written consent of the other Party, except for disclosures expressly permitted below, and (iii) not use such Confidential Information for any purpose except those permitted by this Agreement (it being understood that this clause (iii) shall not create or imply any rights or licenses not expressly granted under Article 2).

 

11.2                         Exceptions . The obligations in Section 11.1 shall not apply with respect to any portion of the Confidential Information that the receiving Party can show by competent proof:

 

11.2.1               is publicly disclosed by the disclosing Party, either before or after it is disclosed to the receiving Party hereunder; or

 

11.2.2               was known to the receiving Party or any of its Affiliates, without any obligation to keep it confidential or any restriction on its use, prior to disclosure by the disclosing Party; or

 

11.2.3               is subsequently disclosed to the receiving Party or any of its Affiliates by a Third Party lawfully in possession thereof and is disclosed without any obligation to keep it confidential or any restriction on its use; or

 

11.2.4               is published by a Third Party or otherwise becomes publicly available or enters the public domain, either before or after it is disclosed to the receiving Party; or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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11.2.5               has been independently developed by employees or contractors of the receiving Party or any of its Affiliates without the aid, application or use of Confidential Information of the disclosing Party.

 

11.3                         Authorized Disclosure . The receiving Party may disclose Confidential Information belonging to the other Party to the extent (and only to the extent) such disclosure is reasonably necessary in the following instances:

 

11.3.1               filing or prosecuting patents as set forth in this Agreement;

 

11.3.2               Company’s research, Development or Commercialization (including any import, manufacture, use, offer for sale, or sale) activities, including Company’s regulatory filings, with respect to Licensed Compounds and/or Licensed Product, including any Approvals or applications therefor;

 

11.3.3               prosecuting or defending litigation in relation to the BMS Patent Rights, BMS Know How or this Agreement, including responding to a subpoena in a Third Party litigation, provided it has used good faith and reasonable efforts to obtain a protective order for such Confidential Information;

 

11.3.4               subject to Section 11.4, complying with applicable Laws (including the rules and regulations of the Securities and Exchange Commission or any national securities exchange) and with judicial process, if in the reasonable opinion of the receiving Party’s counsel, such disclosure is necessary for such compliance; provided, however , that except where impracticable, the receiving Party shall give the disclosing Party reasonable advance notice of such disclosure requirement (which shall include a copy of any applicable subpoena or order) and shall afford the disclosing Party a reasonable opportunity to oppose, limit or secure confidential treatment for such required disclosure, and in the event of any such required disclosure, the receiving Party shall disclose only that portion of the Confidential Information of the disclosing Party that the receiving Party is legally required to disclose;

 

11.3.5               disclosure, in connection with the performance of this Agreement and solely on a “need to know basis”, to Affiliates, existing or potential collaborators (including existing or potential co-marketing and co-promotion contractors), research collaborators, employees, consultants, or agents, each of whom prior to disclosure must be bound by written obligations of confidentiality and non-use no less restrictive than the obligations set forth in this Article 11; provided, however , that the receiving Party shall remain responsible for any failure by any Person who receives Confidential Information pursuant to this Article 11 to treat such Confidential Information as required under this Article 11; and

 

11.3.6               made by such Party to existing or potential acquirers or merger candidates; investment bankers; public and private sources of funding; existing or potential investors, venture capital firms or other financial institutions or investors for purposes of obtaining financing, provided that such Party has used good faith and reasonable efforts to secure an

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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agreement from any such Third Party to be bound by obligations of confidentiality and restrictions on use of Confidential Information that are no less restrictive than the obligations in this Agreement.

 

If and whenever any Confidential Information is disclosed in accordance with this Section 11.3, such disclosure shall not cause any such information to cease to be Confidential Information except to the extent that such disclosure results in a public disclosure of such information (otherwise than by breach of this Agreement). Where reasonably possible and subject to Section 11.4, the receiving Party shall notify the disclosing Party of the receiving Party’s intent to make such disclosure pursuant to this Section 11.3 sufficiently prior to making such disclosure so as to allow the disclosing Party adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information.

 

11.4                         Terms of this Agreement . The Parties acknowledge that the terms of this Agreement shall be treated as Confidential Information of both Parties. For the avoidance of doubt, this Section 11.4 shall in no way prevent a Party from disclosing the existence of this Agreement or any terms of this Agreement in order to seek legal advice whenever deemed appropriate by such Party or to enforce such Party’s rights under this Agreement, whether through arbitral proceedings, court proceedings or otherwise, or to defend itself against allegations or claims relating to this Agreement, or to comply with Applicable Law (except as provided in Section 11.5 below) when advised in a written opinion of outside counsel that terms of the Agreement are required to be disclosed to comply with Applicable Law.

 

11.5                         Securities Filings . Notwithstanding anything to the contrary in this Agreement, in the event either Party proposes to file with the Securities and Exchange Commission or the securities regulators of any state or other jurisdiction a registration statement or any other disclosure document which describes or refers to this Agreement under the Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as amended, any other applicable securities Law or the rules of any national securities exchange, the Party shall notify the other Party of such intention and shall use reasonable efforts to provide such other Party with a copy of relevant portions of the proposed filing not less than [* * *] prior to (but in no event later than [* * *] prior to) such filing (and any revisions to such portions of the proposed filing a reasonable time prior to the filing thereof), including any exhibits thereto relating to this Agreement, and shall use reasonable efforts to obtain confidential treatment of any information concerning this Agreement that such other Party requests be kept confidential, and shall only disclose Confidential Information which it is advised by counsel is legally required to be disclosed. No such notice shall be required under this Section 11.5 if the substance of the description of or reference to this Agreement contained in the proposed filing has been included in any previous filing made by the either Party hereunder or otherwise approved by the other Party.

 

11.6                         Publication by Company . Company may publish or present data and/or results relating to a Licensed Compound or Licensed Product developed in the Field in scientific journals and/or at scientific conferences, provided that Company shall notify BMS at least [* * *] days in advance of the intended submission for publication or presentation of any proposed

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

42



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

abstract, manuscript or presentation which discloses Confidential Information of BMS or discloses a patentable invention by delivering a copy thereof to BMS. BMS shall have [* * *] days from its receipt of any such abstract, manuscript or presentation in which to notify Company in writing of any specific, reasonable objections to the disclosure, based on concern regarding the specific disclosure of Confidential Information of BMS, and Company will delete any BMS Confidential Information, and consider any other such objections in good faith, including whether it is necessary or advisable to delete any other information from such proposed publication. Once any such abstract or manuscript is accepted for publication, Company shall provide BMS with a copy of the final version of the manuscript or abstract.

 

ARTICLE 12

 

INDEMNITY

 

12.1                         Company Indemnity . Company shall indemnify, defend and hold harmless BMS and its Affiliates, and their respective officers, directors, employees, agents, licensors, and their respective successors, heirs and assigns and representatives, from and against any and all damages, liabilities, losses, costs and expenses (including reasonable legal expenses, costs of litigation and reasonable attorney’s fees) arising in connection with any claims, suits, proceedings, whether for money damages or equitable relief, of any kind brought by any Third Party (collectively “ Losses and Claims ”) and arising out of or relating to (a) the research, Development, Commercialization (including promotion, advertising, offering for sale, sale or other disposition), transfer, importation or exportation, manufacture, labeling, handling or storage, or use of, or exposure to, any Licensed Compound or any Licensed Product by or for Company or any of its Affiliates, Distributors, Sublicensees, agents and contractors, including claims and threatened claims based on product liability, bodily injury, risk of bodily injury, death or property damage, infringement or misappropriation of Third Party patents, copyrights, trademarks or other intellectual property rights (except to the extent such infringement or misappropriation results from a breach of Section 9.2), or the failure to comply with applicable Law related to the matters referred to in this subsection (a) with respect to any Licensed Compound or any Licensed Product, (b) the prosecution, maintenance, enforcement and defense of the BMS Patents by Company, its Affiliates, Sublicensees, representatives and agents; and/or (c) the gross negligence, recklessness or willful misconduct of Company or its Affiliates or its or their respective directors, officers, employees and agents, in connection with Company’s performance of its obligations or exercise of its rights under this Agreement; except in any such case for Losses and Claims to the extent reasonably attributable to any material breach by BMS of Article 11, or BMS having committed an act or acts of gross negligence, recklessness or willful misconduct.

 

12.2                         BMS Indemnity . BMS shall indemnify, defend and hold harmless Company and its Affiliates, and their respective officers, directors, employees, agents, licensors, and their respective successors, heirs and assigns and representatives, from and against any and all Losses payable to a Third Party based on Claims brought by a Third Party arising out of or relating to (a) a material breach by BMS of Article 11 or the representations, warranties and covenants of

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

43



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

BMS set forth in Section 4.1 and/or Article 9, (b) the gross negligence, recklessness or willful misconduct of BMS or its Affiliates or its or their respective directors, officers, employees and agents, in connection with BMS’s performance of its obligations or exercise of its rights under this Agreement, and/or (c) any Development, use, manufacture, or Commercialization of BMS Reversion Products by BMS following the reversion thereof to BMS pursuant to Section 13.4 in the Territory, including any product liability claims in the Territory or any personal injury, property damage or other damage in the Territory arising therefrom; except in any such case for Losses and Claims to the extent reasonably attributable to any material breach by Company of Article 11 of this Agreement, failure of Company to comply with Applicable Law with respect to its Development or Commercialization of the Licensed Compounds or Licensed Products, or Company having committed an act or acts of gross negligence, recklessness or willful misconduct, or to the extent Company has an indemnification obligation to BMS pursuant to Section 12.1.

 

12.3                         Indemnification Procedure . A claim to which indemnification applies under Section 12.1 shall be referred to herein as an “ Indemnification Claim ”. If any Person or Persons (collectively, the “ Indemnitee ”) intends to claim indemnification under this Article 12, the Indemnitee shall notify the Party subject to the indemnification obligation (the “ Indemnitor ”) in writing promptly upon becoming aware of any claim that may be an Indemnification Claim (it being understood and agreed, however, that the failure by an Indemnitee to give such notice shall not relieve Indemnitor of its indemnification obligation under this Agreement except and only to the extent that the Indemnitor is actually prejudiced as a result of such failure to give notice). The Indemnitor shall have the right to assume and control the defense of the Indemnification Claim at its own expense with counsel selected by the Indemnitor and reasonably acceptable to the Indemnitee, provided, however , that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitee, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. If the Indemnitor does not assume the defense of the Indemnification Claim as aforesaid, the Indemnitee may defend the Indemnification Claim but shall have no obligation to do so. The Indemnitee shall not settle or compromise the Indemnification Claim without the prior written consent of the Indemnitor, and the Indemnitor shall not settle or compromise the Indemnification Claim in any manner which would have an adverse effect on the Indemnitee’s interests (including any rights under this Agreement or the scope or enforceability of the BMS Patents Rights or BMS Know-How), without the prior written consent of the Indemnitee, which consent, in each case, shall not be unreasonably withheld, delayed or conditioned if the settlement or compromise would impose no financial or other obligations or burdens on the Indemnitee. The Indemnitee shall reasonably cooperate with the Indemnitor at the Indemnitor’s expense and shall make available to the Indemnitor all pertinent information under the control of the Indemnitee, which information shall be subject to Article 11.

 

12.4                         Insurance . Company shall, beginning with the initiation of the first clinical trial for a Licensed Product, maintain at all times thereafter during the term of this Agreement, and until the later of (i) [* * *] years after termination or expiration of this Agreement or (ii) the date

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

44



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

that all statutes of limitation covering claims or suits that may be brought for personal injury based on the sale or use of a Licensed Product have expired in all states in the U.S., insurance relating to the Licensed Product from a recognized, creditworthy insurance company, on a claims-made basis, with endorsements for contractual liability and for clinical trial and product liability with coverage limits of no less than $[* * *] per claim and $[* * *] in the aggregate. Within ten (10) days following the Effective Date, and within thirty (30) days following any material change or cancellation in coverage, Company shall furnish to BMS a certificate of insurance evidencing such coverage as of such date, and in the case of cancellation, provide a certificate evidencing that Company’s replacement coverage meets the requirements in the first sentence of this Section 12.4. The foregoing insurance requirement shall not be construed to create a limit on the Company’s liability hereunder.

 

ARTICLE 13

 

TERM AND TERMINATION

 

13.1                         Term . This Agreement shall commence as of the Effective Date and, unless sooner terminated in accordance with the terms hereof or by mutual written consent, shall expire on a country-by-country basis and Licensed Product-by-Licensed Product basis, upon the expiration of the Royalty Term with respect to a given Licensed Product in the applicable country.

 

13.2                         Termination by BMS . BMS shall have the right to terminate this Agreement, at BMS’ sole discretion, as follows:

 

13.2.1               Insolvency . To the extent permitted under applicable Laws, BMS shall have the right to terminate this Agreement in its entirety, at BMS’ sole discretion, upon delivery of written notice to Company upon the filing by Company in any court or agency pursuant to any statute or regulation of the United States or any other jurisdiction a petition in bankruptcy or insolvency or for reorganization or similar arrangement for the benefit of creditors or for the appointment of a receiver or trustee of Company or its assets, upon the proposal by Company of a written agreement of composition or extension of its debts, or if Company is served by a Third Party (and not by BMS) with an involuntary petition against it in any insolvency proceeding, upon the ninety-first (91st) day after such service if such involuntary petition has not previously been stayed or dismissed, or upon the making by Company of an assignment for the benefit of its creditors.

 

13.2.2               Breach . BMS shall have the right to terminate this Agreement in its entirety, at BMS’ sole discretion, (x) as provided in Section 5.6 or (y) upon delivery of written notice to Company in the event of any material breach by Company of this Agreement (except that this Section 13.2.2 shall not apply to any breach of Sections 5.1 or 6.1, which are covered under Section 13.2.3), provided that such breach has not been cured within [* * *] days after written notice is given by BMS to Company; provided, however, that if such breach relates to the failure to make a payment when due, such breach must be cured within [* * *] days after written

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

45



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

notice thereof is given by BMS (except that in the case of a bona fide dispute over whether or to what extent a payment by Company to BMS is due, this Section 13.2.2 shall not be triggered provided that Company shall pay the amount in dispute into escrow until such dispute is resolved). Any such termination of this Agreement shall become effective at the end of the applicable cure period, unless Company has cured any such breach or default prior to the expiration of such cure period.

 

13.2.3               Termination for Failure to Develop or Commercialize . BMS shall have the right to terminate this Agreement in its entirety in the event that Company fails to fulfill its obligations to Develop Licensed Compounds and/or Licensed Products in accordance with Section 5.1, or to Commercialize Licensed Products in accordance with Section 6.1, provided that (a) Company has not cured such breach within [* * *] following written notice by BMS which notice shall be labeled as a “notice of material breach for failure to use Commercially Reasonable Efforts,” and in the case of an alleged breach of Section 6.1, the Major Market Country(ies) in which such breach has occurred. Any such termination of this Agreement shall become effective at the end of the applicable cure period, unless Company has cured any such breach or default prior to the expiration of such cure period.

 

13.2.4               Termination for Patent Challenge .

 

(a)                                  BMS shall have the right to terminate this Agreement in its entirety in the event Company (or any of its Affiliates) challenges or knowingly supports (other than as may be necessary or reasonably required to assert a cross-claim or a counter-claim, or in response to a subpoena or court or administrative law request or order), including by providing information, documents, and/or funding, a challenge to the validity, scope, enforceability or patentability of any of the BMS Patent Rights. BMS’s right to terminate this Agreement under this Section 13.2.4 may be exercised at any time after Company (or any of its Affiliates) may have challenged or knowingly supports (other than in response to a subpoena or court order) a challenge to the validity, scope, enforceability or patentability of any of the BMS Patent Rights. For the avoidance of doubt, an action by Company or any Affiliate in accordance with Article 10 to amend claims within a pending patent application within the BMS Patent Rights during the course of Company’s prosecution and maintenance of such pending patent application or in defense of a Third Party proceeding, or to make a negative determination of patentability of claims of a patent application of BMS or to abandon a patent application of BMS during the course of Company’s Prosecution and Maintenance of such pending patent application, shall not, where undertaken in accordance with Article 9 hereof, constitute a challenge under this Section 13.2.4.

 

(b)                                  If a Sublicensee of Company challenges the validity, scope or enforceability of or otherwise opposes any of the BMS Patent Rights under which such Sublicensee is sublicensed, then Company shall, at BMS’ election and upon written notice from BMS, promptly terminate such Sublicense. The Company shall include within each License Agreement with each Sublicensee a right on the part of the Company to terminate such License Agreement in the event such Sublicensee challenges or knowingly supports a Third Party in

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

46



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

challenging (other than in response to a subpoena or court order), in a judicial or administrative proceeding, including without limitation by providing information, documents, or funding, the validity, scope or enforceability of any of the BMS Patent Rights after grant of the patent and (ii) the Company shall exercise such right to terminate the License Agreement with a Sublicensee should such Sublicensee challenge or knowingly support a Third Party in challenging (other than in response to a subpoena or court order) in a judicial or administrative proceeding the validity or enforceability of any of the BMS Patent Rights after grant of the patent. If Company fails to exercise such termination right against such Sublicensee or is unable to do so because it did not include such a provision in its Sublicense, BMS may terminate this Agreement.

 

13.2.5               Termination relating to the Financing . In the event Company should be unable to close the Financing with at least gross proceeds of thirty million US dollars ($30,000,000) in equity investment and/or Indebtedness during the Financing Period (with a minimum of twenty-two million US dollars ($22,000,000) in equity investment), BMS will have the right to terminate the License in its entirety and all licensed rights will revert to BMS. “ Financing ” means successfully raising gross proceeds of thirty million US dollars ($30,000,000) in equity investment and/or Indebtedness in a single or series of equity raises (with a minimum of twenty-two million US dollars ($22,000,000) in equity investment) and “ Financing Period ” means the period ending on October 17, 2016, unless extended by mutual agreement of the Parties.

 

13.3                         Termination by Company . Company shall have the right to terminate this Agreement, at Company’s sole discretion, as follows.

 

13.3.1               (x) Upon [* * *] prior written notice in the case where Approval has not been obtained for a Licensed Product or upon [* * *] prior written notice in the case where Approval has been obtained for a Licensed Product, such termination to be effective at the end of such notice period, Company may terminate this Agreement as a whole for any reason, and (y) Company may terminate this Agreement on a country-by-country basis for any non-Major Market Country on [* * *] notice to BMS if it appears that the License is not economically viable for that country(ies).

 

13.3.2               Company may terminate this Agreement in relation to the affected Licensed Product or country in the event of a material breach by BMS, provided that such breach has not been cured within [* * *] days following written notice by Company. Any such termination of this Agreement shall become effective at the end of the applicable cure period, unless BMS has cured any such breach or default prior to the expiration of such cure period.

 

13.4                         Effect of Termination . Upon termination of this Agreement in its entirety by BMS under Section 13.2 or by Company under Section 13.3.1:

 

13.4.1               With respect to termination under Section 13.2 or 13.3.1(x), all rights and licenses granted to Company in Article 2 shall terminate, all rights of Company under the BMS Patent Rights and BMS Know-How shall revert to BMS, and Company and its Affiliates shall

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

47



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

cease all use of the BMS Patent Rights, the BMS Know-How and the Transferred Materials, and shall return to BMS all unused portions of the Transferred Materials, subject, in the case of termination pursuant to Section 13.3.1, to BMS’ reimbursement of Company’s actual costs incurred in transferring the Transferred Materials to BMS. If the termination is on a country-by-country basis under Section 13.3.1(y), the above reversion shall only apply to that country(ies). Following the effective date of such termination, all Licensed Compounds and/or Licensed Products shall thereafter be deemed “ BMS Reversion Products ”.

 

13.4.2               With respect to all regulatory filings (including all INDs and NDAs) and Approvals and all other regulatory documents necessary to further Develop and Commercialize the BMS Reversion Products, as they exist as of the date of such termination (and all of Company’s right, title and interest therein and thereto), BMS shall determine in its sole discretion which of these shall be (i) assigned to BMS, and Company shall provide to BMS one (1) copy of the applicable documents and filings, all documents and filings contained in or referenced in any such filings, together with the raw and summarized data for any preclinical and clinical studies of the BMS Reversion Products as well as any final documentation to inactivate any open INDs as BMS may elect to inactivate, subject, in the case of termination pursuant to Section 13.3.1, to BMS’ reimbursement of Company’s actual costs incurred in transferring such items to BMS, and preparing such items in connection with such transfer, or (ii) withdrawn or inactivated at Company’s expense. For clarity, BMS shall have the right to use the foregoing material information, materials and data developed by Company solely in connection with BMS’ development, manufacture and commercialization of BMS Reversion Products. BMS shall have the right to obtain specific performance of Company’s obligations referenced in this Section 13.4.2 and/or in the event of failure to obtain assignment, Company hereby consents and grants to BMS the right to access and reference (without any further action required on the part of Company, whose authorization to file this consent with any Regulatory Authority is hereby granted) any and all such regulatory filings for any regulatory or other use or purpose in the Territory. Without limiting the foregoing in this paragraph, to the extent applicable, Company’s obligations under Section 10.7 shall continue with respect to all countries in the Territory for which there is a failure to obtain assignment of all regulatory filings and Approvals.

 

13.4.3               All amounts due or payable to BMS that were accrued prior to the effective date of termination shall remain due and payable; but (except as otherwise expressly provided herein) no additional amounts shall be payable based on events occurring after the effective date of termination; provided, that the foregoing shall not be deemed to limit Company’s indemnification obligations under this Agreement for acts or omissions incurring prior to the termination date that are the subject of such indemnification even if the indemnification amount cannot be accrued or determined as of the termination date.

 

13.4.4               BMS shall have the right to retain all amounts previously paid to BMS by Company.

 

13.4.5               Should Company have any inventory of any Licensed Compound included in the BMS Reversion Products suitable for use in clinical trials, Company shall offer to sell such

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

48



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Licensed Compound to BMS at the fully burdened manufacturing cost of such Licensed Compound (but BMS shall be under no obligation to purchase same unless it agrees to do so in writing at such time).

 

13.4.6               Should Company have any inventory of any Licensed Product included in the BMS Reversion Products approved and allocated prior to termination, Company shall have six (6) months thereafter in which to dispose of such inventory (subject to the payment to BMS of any royalties due hereunder thereon) (the “ Inventory Disposal Period ”), provided however , that (i) such right shall terminate at such time that BMS purchases all remaining stocks of inventory of such BMS Reversion Product as described in this Section 13.4.6, below, and (ii) such Licensed Product shall not be sold at a discount to a purchaser that is greater than the average discount provided to such purchaser for the Licensed Product in the applicable country during the twelve (12) month period preceding such termination and, in addition, such sales shall not result in the applicable wholesaler inventory levels for such Licensed Product exceeding the average levels for the twelve (12) month period preceding such termination. Notwithstanding the foregoing, if BMS takes over responsibility for sale of the BMS Reversion Products in any country in the Territory prior to the end of the Inventory Disposal Period, BMS shall be required to purchase all remaining stocks of saleable inventory that meets BMS specifications and return policies of such BMS Reversion Product at Company’s cost of goods sold for such BMS Reversion Product, as accounted for in the Company’s audited financial statements.

 

13.4.7               Company shall provide to BMS the tangible embodiments of all Know-How owned or Controlled by Company and its Affiliates to the extent necessary for the Development and Commercialization of the BMS Reversion Products in existence as of the date of such termination, subject, in the case of termination pursuant to Section 13.3.1, to BMS’ reimbursement of Company’s actual costs and expense incurred in transferring such items, and preparing and making such items in connection with such transfer (without duplicating any amounts reimbursed pursuant to Sections 13.4.2 and 13.4.10), including Company’s manufacturing processes, techniques and trade secrets for making such BMS Reversion Products and all Know-How specifically relating to any composition, formulation, method of use or manufacture of such BMS Reversion Products, and BMS shall automatically have a perpetual, worldwide, transferable, sublicensable right and license under such Know-How solely for (a) researching, Developing, using, importing, selling and offering for sale BMS Reversion Products in the Territory, which license shall be exclusive for purposes of this subpart (a), and (b) making and having made BMS Reversion Products anywhere in the Territory for use, importation, sale and offer for sale in the Territory, which license shall be non-exclusive for purposes of this subpart (b). Company shall reasonably cooperate with BMS to assist BMS with understanding and using the Know-How provided to BMS under this Section 13.4.7. Such cooperation shall include providing BMS with reasonable access by teleconference or in-person at Company’s facilities (subject to Company’s customary rules and restrictions with respect to site visits by non-Company personnel and subject, in the case of termination pursuant to Section 13.3.1, to BMS’ reimbursement of Company’s actual out-of-pocket costs and expense incurred in connection with such cooperation).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

49


 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

13.4.8               To the extent that Company owns any trademark(s) and/or domain names that pertain specifically to an BMS Reversion Product that BMS believes would be necessary for the Commercialization of a BMS Reversion Product (as then currently marketed, but not including any marks that include, in whole or part, any corporate name or logo of Company), Company shall assign (or, if applicable, cause its Affiliate to assign) to BMS all of Company’s (and such Affiliate’s) right, title and interest in and to any registered or unregistered trademark, trademark application, trade name or internet domain name in each terminated country.

 

13.4.9               Company shall grant and hereby grants to BMS an exclusive, royalty-bearing (as set forth in Section 13.4.10), non-transferable (except as provided in Section 15.5) license, with the right to grant sublicenses, under (a) any Patent Rights owned or Controlled by Company or its Affiliates as at the effective date of termination and (b) all Patent Rights owned or Controlled by Company or its Affiliates after the date of such termination claiming any invention conceived or reduced to practice by or on behalf of Company during the term of this Agreement, in each case of (a) and (b) to the extent covering the composition of matter, use, or manufacture of BMS Reversion Products (solely to the extent actually practiced in connection with the BMS Reversion Products as of such termination effective date) and that, in each case of (a) and (b), are necessary to develop, manufacture or commercialize BMS Reversion Products. Nothing hereunder is intended to prevent Company from granting licenses under any Patent Rights owned or Controlled by Company or its Affiliates as at the effective date of termination and (b) all Patent Rights owned or Controlled by Company or its Affiliates after the date of such termination claiming any invention conceived or reduced to practice by or on behalf of Company during the term of this Agreement to the extent that the Patent Rights also cover products and/or compounds other than BMS Reversion Products or their use or manufacture.

 

13.4.10                    Company shall provide to BMS all data generated during the term of this Agreement necessary for the development and/or commercialization of the relevant BMS Reversion Products and assign (or, if applicable, cause its Affiliate to assign) to BMS all of Company’s (and such Affiliate’s) entire right, title and interest in and to all such data, subject to BMS’ reimbursement of Company’s actual costs incurred in transferring such items, and preparing and making such items in connection with such transfer (without duplicating any amounts reimbursed pursuant to Sections 13.4.2 and 13.4.7).

 

13.4.11                    Neither Party shall be relieved of any obligation that accrued prior to the effective date of such termination.

 

13.4.12                    BMS shall not owe any other compensation to Company for the research, Development and Commercialization of any BMS Reversion Product in the event of any such termination of the Agreement by BMS.

 

13.4.13                    Any costs and expenses incurred by Company in connection with the assignments and transfers made by Company under this Section 13.4 shall be borne by Company unless BMS terminates this Agreement under Section 13.2.1, in which case such costs and expenses shall be reimbursed by BMS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

50



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

13.4.14                    It is understood and agreed that BMS shall be entitled to specific performance as a remedy to enforce the provisions of this Section 13.4, in addition to any other remedy to which it may be entitled by applicable Law.

 

13.4.15                    If Company has the capability in place as of the date of such termination to commercially manufacture and supply to BMS all or part of BMS’ requirements of the applicable BMS Reversion Products for use and sale in the Territory, if BMS so elects in its sole discretion, Company shall supply to BMS for a period not to exceed [* * *] (with the period of time being within the sole discretion of BMS) as much of BMS’ requirements of such BMS Reversion Products as possible for use and sale in the Territory, at a price equal to [* * *] of Company’s documented fully-burdened manufacturing cost (determined in accordance with GAAP) for such BMS Reversion Products, under terms and conditions as may be mutually agreed between the Parties. In the event that Company has, prior to the date of such termination, engaged a Third Party to manufacture and supply any BMS Reversion Products, Company shall use reasonable efforts, at BMS’ sole cost and expense, to assist in the transfer of such supply arrangements to BMS. In the event that BMS terminates this Agreement under Section 13.2, Company shall supply BMS’ requirements of all such BMS Reversion Products in quantities manufactured for and supplied to Company by such Third Party for a period not to exceed [* * *] (with the period of time being within the sole discretion of BMS) as much of BMS’ requirements of such BMS Reversion Products as possible (not to exceed amounts needed by Company for Development and/or Commercialization by Company); provided however, if there are restrictions in the agreement between Company and such Third Party governing the manufacture and supply of such BMS Reversion Products that would preclude the period from being up to [* * *], then such period shall be up to as long a time as permitted under such agreement. Where Company has engaged a Third Party to manufacture and supply any BMS Reversion Products to Company and BMS elects to have Company supply any portion of BMS’ requirements of such BMS Reversion Products, then Company shall supply such BMS Reversion Products at a price equal to [* * *] of the cost paid by Company to such Third Party plus Company’s shipping, handling, including other reasonable costs associated with providing such BMS Reversion Products to BMS.

 

13.4.16                    Nothing in this Section 13.4 shall be deemed to limit any remedy to which either Party may be entitled by applicable Law.

 

13.5                         Effect of Termination by Company for Breach by BMS . Upon termination of this Agreement by Company pursuant to Section 13.3.2:

 

13.5.1               All rights and licenses granted to Company in Article 2 shall terminate, all rights of Company under the BMS Patent Rights and BMS Know-How shall revert to BMS, and Company and its Affiliates shall cease all use of the BMS Patent Rights, the BMS Know-How and the Transferred Materials, and shall return to BMS all unused portions of the Transferred Materials.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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13.5.2               All amounts due or payable to BMS that were accrued, or that arise out of acts or events occurring, prior to the effective date of termination or expiration shall remain due and payable; but (except as otherwise expressly provided herein) no additional amounts shall be payable based on events occurring after the effective date of termination or expiration.

 

13.5.3               BMS shall have the right to retain all amounts previously paid to BMS by Company.

 

13.5.4               Should Company have any inventory of any Licensed Product approved and allocated prior to termination for sale in a terminated country, Company shall have [* * *] thereafter in which to dispose of such inventory (subject to the payment to BMS of any royalties due hereunder thereon).

 

13.5.5               Neither Party shall be relieved of any obligation that accrued prior to the effective date of such termination or expiration.

 

13.5.6               Nothing in this Section 13.5 shall be deemed to limit any remedy to which Company may be entitled by applicable Law.

 

13.6                         Effect of Expiration of this Agreement . Upon expiration of this Agreement:

 

13.6.1               All amounts due or payable to BMS that were accrued, or that arise out of acts or events occurring, prior to the effective date of expiration shall remain due and payable; but (except as otherwise expressly provided herein) no additional amounts shall be payable based on events occurring after the effective date of expiration.

 

13.6.2               BMS shall have the right to retain all amounts previously paid to BMS by Company.

 

13.6.3               Neither Party shall be relieved of any obligation that accrued prior to the effective date of expiration.

 

13.6.4               The license with respect to BMS Patent Rights and BMS Know-How granted under Section 2.1 shall remain in effect and shall be fully paid-up.

 

13.7                         Scope of Termination . Termination of this Agreement shall be as to all countries in the Territory and all Licensed Compounds and all Licensed Products.

 

13.8                         Survival . The following provisions shall survive termination or expiration of this Agreement, as well as any other provisions which by their nature are intended to survive termination: Article 1 (as applicable), Section 4.1, Sections 8.5 through 8.10 (for three (3) years after the end of the Calendar Year in which this Agreement was terminated), Section 9.5, Section 10.1, Section 10.4 (with respect to an action, suit or proceeding commenced prior to termination), Section 10.8, Article 11, Article 12, whichever one of Sections 13.4 and 13.5 applies, this Section 13.8, Section 13.9, Article 14 and Article 15.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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13.9                         Bankruptcy . The Parties agree that in the event a Party becomes a debtor under Title 11 of the U.S. Code (“ Title 11 ”), this Agreement shall be deemed to be, for purposes of Section 365(n) of Title 11, a license to rights to “intellectual property” as defined therein. Each Party as a licensee hereunder shall have the rights and elections as specified in Title 11. Any agreements supplemental hereto shall be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of Title 11.

 

13.10                  No Limitation of Remedies . Except as herein expressly provided, notwithstanding anything to the contrary in this Agreement, except as otherwise set forth in this Agreement, termination or expiration of this Agreement shall not relieve the Parties of any liability or obligation which accrued hereunder prior to the effective date of such termination or expiration nor prejudice either Party’s right to obtain performance of any obligation. Each Party shall be free, pursuant to Article 14, to seek (without restriction as to the number of times it may seek) damages, costs and remedies that may be available under applicable Law or in equity and shall be entitled to offset the amount of any damages and costs obtained in a final determination under Article 14 of monetary damages or costs (as permitted by this Agreement) against the other Party against any amounts otherwise due to such other Party under this Agreement.

 

ARTICLE 14

 

DISPUTE RESOLUTION

 

14.1                         Resolution by Senior Executives . Except as provided in Sections 8.7 and 14.3, in the event of any dispute between the Parties in connection with this Agreement, the construction hereof, or the rights, duties or liabilities of either Party hereunder, including any disagreement as to whether there has been a material breach of this Agreement pursuant to Sections 13.2.2, 13.2.3, or 13.3.2, the Parties shall first attempt in good faith to resolve such dispute by negotiation and consultation between themselves. In the event that such dispute is not resolved on an informal basis within ten (10) Business Days, either Party may, by written notice to the other Party, refer the dispute to (i) the Chief Executive Officer of Company and (ii) if a scientific matter, the Executive Vice President & Chief Scientific Officer of BMS or, if a commercial matter, the Executive Vice President and Chief Commercial Officer of BMS for attempted resolution by good faith negotiation within thirty (30) days after such notice is received; provided, however, such executive officers of Company and BMS may each designate a senior manager to whom such dispute is delegated instead for such attempted resolution.

 

14.2                         Remedies . Except as provided in Sections 8.7 and 14.3, if any dispute between the Parties relating to or arising out this Agreement cannot be resolved in accordance with Section 14.1, each Party shall be free to pursue any or all available remedies at law or in equity, consistent with Section 15.8.

 

14.3                         Injunctive Relief . Notwithstanding anything in this Article 14, each Party shall have the right to seek injunctive or other equitable relief from a court of competent jurisdiction pursuant to Section 15.8 that may be necessary to avoid irreparable harm, maintain the status quo

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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or preserve the subject matter of the dispute, including any breach or threatened breach of Article 11.

 

ARTICLE 15

 

MISCELLANEOUS

 

15.1                         Right of First Negotiation . Upon delivery of the top-line data from the first Phase III Trial for the most advanced Licensed Product or Licensed Compound, Company shall provide written notice thereof to BMS, including a summary of all data generated by Company as of such time, including any filings with the FDA. Upon receipt of such notice, BMS will have the right to elect to exercise a right of first negotiation (“ ROFN ”) to regain the rights under the BMS Patent Rights and BMS Know-How, and take a license to any data, know-how, patent rights and other intellectual property rights generated by Company with respect to the Licensed Compounds, as they relate to such Licensed Product (either through a sublicense back to BMS or a buy-out of Company’s rights), for a period of [* * *] of the receipt of the notice by BMS. If BMS and Company, after using good faith efforts, are unable to execute a definitive agreement with respect to such transaction within such period, Company will have the right to enter into discussions with and execute any such Sublicense with respect to such Licensed Product in the Territory, subject to the applicable provisions of this Agreement relating to Sublicenses.

 

15.2                         Severability . If any one or more of the provisions of this Agreement is held to be invalid or unenforceable, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof. The Parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the Parties when entering this Agreement with respect to such provision may be realized.

 

15.3                         Notices . Any notice required or permitted to be given by this Agreement shall be in writing and shall be delivered by hand or overnight courier with tracking capabilities or mailed postage prepaid by first class, registered or certified mail, return receipt requested or electronic means with proof of delivery and addressed as set forth below unless changed by notice so given:

 

If to Company:

 

Biohaven Pharmaceutical Holding Company Ltd.
234 Church Street, Suite 304
New Haven, Connecticut 06510
Attention: Dr. Vladimir Coric, CEO
Email: [* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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With a copy to:
Mr. Douglas Gray
Locke Lord, LLP
One Financial Plaza
Providence, RI 02903
Email: [* * *]

 

If to BMS:

 

Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 & Province Line Road

Princeton, New Jersey 08543-4000
Attention: Vice President, Business Development
Email: [* * *]

 

With a copy to:

 

Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President & Assistant General Counsel, Business Development and Licensing

 

Any such notice shall be deemed delivered on the date received. A Party may add, delete, or change the person or address to whom notices should be sent at any time upon written notice delivered to the Party’s notices in accordance with this Section 15.2.

 

15.4                         Force Majeure . Neither Party shall be liable for delay or failure in the performance of any of its obligations hereunder if such delay or failure is due to causes beyond its reasonable control, including acts of God, fires, earthquakes, strikes and labor disputes, acts of war, terrorism, civil unrest or intervention of any governmental authority (“ Force Majeure ”); provided, however, that the affected Party promptly notifies the other Party and further provided that the affected Party shall use Commercially Reasonable Efforts to avoid or remove such causes of non-performance and to mitigate the effect of such occurrence, and shall continue performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the Parties shall negotiate in good faith any modifications of the terms of this Agreement that may be necessary or appropriate in order to arrive at an equitable solution.

 

15.5                         Assignment .

 

15.5.1               BMS may, without Company’s consent, (x) assign, delegate or transfer some or all of its rights and obligations hereunder to any Affiliate of BMS, and (y) assign or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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transfer, in connection with any transfer or assignment of all of the BMS Patent Rights and BMS Know-How, to any Third Party (including a successor in interest by reason of merger, consolidation or sale of substantially all of the assets of BMS to which this Agreement relates).

 

15.5.2               Company may assign or transfer all of its rights and obligations hereunder without BMS’s consent to a successor in interest by reason of merger, consolidation or sale of substantially all of the assets of Company related to the Licensed Compounds or Licensed Products (and so long as such assignment or transfer includes, without limitation, all Approvals, all manufacturing assets relating to this Agreement, and all rights and obligations under this Agreement); provided, however , that such successor in interest shall have agreed prior to such assignment or transfer to be bound by the terms of this Agreement in a writing provided to BMS and no such assignment shall relieve the Company of any obligations or liability accrued prior to the date of assignment except as may be agreed to in writing by BMS.

 

15.5.3               Subject to the foregoing, this Agreement shall inure to the benefit of, and be binding on, the Parties’ permitted successors and assigns. Any assignment or transfer in violation of the foregoing shall be null and void and wholly invalid, the assignee or transferee in any such assignment or transfer shall acquire no rights whatsoever, and the non-assigning, non-transferring Party shall not recognize, nor shall it be required to recognize, such assignment or transfer.

 

15.5.4               In the event that BMS assigns, delegates or otherwise transfers this Agreement, in whole or in part, to an Affiliate of BMS, BMS hereby agrees to be jointly and severally liable with any such Affiliates for the actions of such Affiliates and for any and all amounts that become due and payable hereunder to Company. In the event that Company assigns or otherwise transfers or assigns this Agreement to an Affiliate of Company, Company hereby agrees to be jointly and severally liable with any such Affiliates for the actions of such Affiliates and for any and all amounts that become due and payable hereunder to BMS. If Company transfers or assigns this Agreement, and such transfer or assignment has an adverse tax consequence to BMS, then Company shall make additional payments BMS under this Agreement to provide BMS the payments that would have been due to BMS had such transfer or assignment not occurred.

 

15.5.5               Notwithstanding anything to the contrary in this Agreement, in the event of any such transfer or assignment to a Third Party (including a successor in interest by reason of merger, consolidation or sale of assets permitted), the intellectual property rights of the acquiring party (if other than one of the Parties) or the acquired Party (if acquired by a Party or its Affiliates) shall not be included in the technology licensed to the other Party hereunder to the extent (x) held by such Party that is acquired or is acquiring a Third Party prior to such transaction, or (y) such technology is developed thereafter outside the scope of activities conducted with respect to the Licensed Compounds or Licensed Products.

 

15.6                         Further Assurances . Each Party agrees to do and perform all such further acts and things and shall execute and deliver such other agreements, certificates, instruments and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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documents necessary or that the other Party may deem advisable in order to carry out the intent and accomplish the purposes of this Agreement and to evidence, perfect or otherwise confirm its rights hereunder.

 

15.7                         Waivers and Modifications . The failure of any Party to insist on the performance of any obligation hereunder shall not be deemed to be a waiver of such obligation. Waiver of any breach of any provision hereof shall not be deemed to be a waiver of any other breach of such provision or any other provision on such occasion or any succeeding occasion. No waiver, modification, release or amendment of any obligation under or provision of this Agreement shall be valid or effective unless in writing and signed by each of the Parties.

 

15.8                         Choice of Law . This Agreement shall be governed by, enforced, and shall be construed in accordance with the laws of the State of New York without regard to its conflicts of law provisions (other than section 5-1401 of the New York General Obligations Law).

 

15.9                         Jurisdiction . Each Party irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or out of any transaction contemplated hereby. Each Party agrees to commence any such action, suit or proceeding either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County. Each Party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County or (ii) the United States District Court for the Southern District of New York, and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

15.10                  Publicity . Each Party agrees not to issue any press release or other public statement disclosing other information relating to this Agreement or the transactions contemplated hereby without the prior written consent of the other Party, such consent not to be unreasonably withheld, delayed or conditioned, provided, however , that any disclosure which is required by Law or the rules of a securities exchange, as reasonably advised by the disclosing Party’s outside counsel, and provided, further , that Company may from time to time issue public statements relating to the ongoing Development and/or Commercialization of Licensed Compounds and/or Licensed Products (excluding disclosure of the financial terms of this Agreement) pursuant to this Agreement without the prior written consent of BMS. The Parties agree that any such required disclosure shall not contain confidential business or technical information and, if disclosure of confidential business or technical information is required by Law, the Parties shall use appropriate diligent efforts to minimize such disclosure and obtain confidential treatment for any such information which is disclosed to a governmental agency. Each Party agrees to provide to the other Party a copy of any public announcement regarding this

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Agreement or the subject matter thereof as soon as reasonably practicable under the circumstances prior to its scheduled release. Except under extraordinary circumstances, each Party shall provide the other with an advance copy of any such announcement at least five (5) business days prior to its scheduled release. Each Party shall have the right to expeditiously review and recommend changes to any such announcement and, except as otherwise required by Law, the Party whose announcement has been reviewed shall remove any information the reviewing Party reasonably deems to be inappropriate for disclosure. The contents of any announcement or similar publicity which has been reviewed and approved by the reviewing Party can be re-released by either Party without a requirement for re-approval.

 

15.11                  Relationship of the Parties . Each Party is an independent contractor under this Agreement. Nothing contained herein is intended or is to be construed so as to constitute BMS and Company as partners, agents or joint venturers. Neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement or undertaking with any Third Party.

 

15.12                  Headings . Headings and captions are for convenience only and are not be used in the interpretation of this Agreement.

 

15.13                  Entire Agreement . This Agreement constitutes the entire agreement between the Parties as to the subject matter of this Agreement, and supersedes and merges all prior negotiations, representations, agreements and understandings regarding the same.

 

15.14                  Counterparts; Electronic Delivery . This Agreement may be executed in counterparts with the same effect as if both Parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. Signatures to this Agreement transmitted by email in “portable document format” (“ .pdf ”), or by any other electronic means intended to preserve the original graphic and pictorial appearance of this Agreement shall have the same effect as physical delivery of the paper document bearing original signature.

 

15.15                  Performance by Affiliates . Each Party recognizes that the other Party may perform some or all of its obligations under this Agreement through Affiliates to the extent permitted under this Agreement; provided, however , that such other Party shall remain responsible for the performance by its Affiliates as if such obligations were performed by such other Party.

 

15.16                  Exports . Company agrees not to export or re-export, directly or indirectly, any information, technical data, the direct product of such data, samples or equipment received or generated under this Agreement in violation of any applicable export control Laws.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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15.17                  Interpretation .

 

15.17.1                    Each of the Parties acknowledges and agrees that this Agreement has been diligently reviewed by and negotiated by and between them, that in such negotiations each of them has been represented by competent counsel and that the final agreement contained herein, including the language whereby it has been expressed, represents the joint efforts of the Parties and their counsel. Accordingly, in interpreting this Agreement or any provision hereof, no presumption shall apply against any Party as being responsible for the wording or drafting of this Agreement or any such provision, and ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision.

 

15.17.2                    The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The word “any” shall mean “any and all” unless otherwise clearly indicated by context.

 

15.17.3                    Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any Laws herein shall be construed as referring to such Laws as from time to time enacted, repealed or amended, (c) any reference herein to any Person shall be construed to include the Person’s successors and assigns, (d) the words “herein”, “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections or Appendices, unless otherwise specifically provided, shall be construed to refer to Articles, Sections and Appendices of this Agreement; and (f) the term “and/or” in a sentence shall be construed such that the phrase “X and/or Y” means “X or Y, or both X and Y”.

 

15.17.4                    This Agreement should be interpreted in its entirety and the fact that certain provisions of this Agreement may be cross-referenced in a Section shall not be deemed or construed to limit the application of other provisions of this Agreement to such Section and vice versa.

 

* * *

 

[SIGNATURE PAGE FOLLOWS]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers.

 

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD

 

 

 

 

 

 

 

 

By:

/s/ Vlad Coric, M.D.

 

 

 

(Signature)

 

 

 

 

 

 

Name:

Vlad Coric, M.D.

 

 

 

 

 

 

Title:

CEO

 

 

 

 

 

 

Date:

July 8, 2016

 

 

 

 

 

 

 

 

 

BRISTOL-MYERS SQUIBB COMPANY

 

 

 

 

 

 

 

 

 

By:

/s/ Graham R. Brazier

 

 

 

(Signature)

 

 

 

 

 

 

Name:

Graham R. Brazier

 

 

 

 

 

 

Title:

Vice President, Business Development

 

 

 

 

 

 

Date:

July 8, 2016

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Appendix 1a

 

BMS Patent Rights covering the Lead Compounds

 

Docket
Number

 

Country

 

Filing Number

 

Filing
Date

 

Grant Number

 

Grant
Date

 

Expiry
Date

 

Status

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

 

 

 

 

 

 

 

 

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Appendix 1b

 

BMS Patent Rights other than those covering the Lead Compounds

 

Docket Number

 

Country

 

Filing
Number

 

Filing
Date

 

Publication

 

Publication
Number

 

Grant
Number

 

Grant Date

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

 

 

 

 

 

 

 

 

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

62


 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix 2

 

Initial Development Plan

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

63



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix 3

 

Lead Compounds

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

64



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix 4

 

Transferred Materials to be provided by BMS

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

65



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix 5
Documentation to be provided

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

66



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix 6

 

[* * *]

 

Exhibit A to Appendix 6

See attached.

 

Exhibit B to Appendix 6

See attached.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

67




Exhibit 10.2

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

ALS BIOPHARMA AGREEMENT

 

THIS AGREEMENT (the “Agreement”) by and among ALS Biopharma, LLC, a Delaware limited liability company having a place of business at 3805 Old Easton Road, Doylestown, PA 18902 (“ALS”), Fox Chase Chemical Diversity Center Inc., a Delaware corporation having a place of business at 3805 Old Easton Road, Doylestown, PA 18902 (“FCCDC”) and Biohaven Pharmaceutical Holding Company, Ltd., a British Virgin Island company with a business office located at 234 Church Street, Suite 301, New Haven, Connecticut 06520 (“Biohaven”) is effective as of the date of final execution (“EFFECTIVE DATE”).

 

1.                    BACKGROUND

 

1.1                  FCCDC has been developing a series of riluzole-based pro-drugs and certain patent applications related thereto and any other patents or patent applications related to the subject matter of this Agreement together with any continuations, divisionals, and continuations-in-part, to the extent the claims of any such patent or patent application arc directed to the subject matter described in the patent applications, any reissues, re-examinations, or extensions thereof, or substitutes therefor; and the relevant international equivalents of any of the foregoing have been filed in the name of FCCDC alone listed on Appendix B hereto (collectively, the “SECONDARY PATENT RIGHTS”) or in conjunction with Rutgers University (“Rutgers”) hereinafter listed on Appendix A hereto (the “ORIGINAL PATENT RIGHTS” and together with the SECONDARY PATENT RIGHTS, the “PATENT RIGHTS”). If any patents or patent applications covering IMPROVEMENTS are created, they shall also become part of the PATENT RIGHTS.

 

1.2                  FCCDC has entered into (i) a License Agreement with ALS dated August 21, 2014 to allow ALS the right to exploit, utilize, develop and license the PATENT RIGHTS (the “ALS LICENSE”) and (ii) a Collaboration Agreement with Rutgers dated as of July 2013 related to riluzole pro-drugs for Melanoma and amyotrophic lateral sclerosis, allowing Rutgers to develop and exploit the ORIGINAL PATENT RIGHTS (the “COLLABORATION AGREEMENT”).

 

1.3                  Pursuant to the ALS LICENSE and COLLABORATION AGREEMENT, ALS has obtained the right from FCCDC and Rutgers to grant licenses, including exclusive licenses, for the ORIGINAL PATENT RIGHTS.

 

1.4                  ALS wishes to enter into this Agreement with Biohaven to further develop and commercialize the technology, compounds, and methods related to the PATENT RIGHTS, including the development of IMPROVEMENTS.

 

1.5                  Biohaven has indicated to both ALS and FCCDC that it needs to own the PATENT RIGHTS, including the IMPROVEMENTS, in order to help Biohaven better develop drugs, raise money and otherwise exploit the PATENT RIGHTS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.6                  ALS and Biohaven desire to enter into a separate collaboration agreement regarding jointly exploring additional Indications for prodrugs of riluzole other than ALS, GAD and oncology, including jointly applying for non-dilutive research grant funding and jointly conducting the related research.

 

1.7                  ALS and FCCDC are willing to transfer pursuant to an ASSIGNMENT the PATENT RIGHTS, including any IMPROVEMENTS, to Biohaven, subject to the terms and conditions of this Agreement, and Biohaven is willing to accept such ASSIGNMENT, each on the terms and conditions set forth herein.

 

1.8                  In consideration of these statements and mutual promises, ALS, FCCDC and Biohaven agree to the terms of this Agreement,

 

2.                    DEFINITIONS

 

The following terms used in this Agreement shall be defined as set forth below:

 

2.1                  “AFFILIATE” shall mean, with respect to a party, any entity or person that directly or indirectly controls, is controlled by or is under common control with ALS, FCCDC or Biohaven. For purposes of this definition, “control” means possession of the power to direct the management of such entity or person, whether through ownership of more than fifty percent (50%) of voting securities, by contract or otherwise.

 

2.2                  “ASSIGNMENT” shall mean the assignment of PATENT RIGHTS and the assignment of any IMPROVEMENTS by ALS to Biohaven in the form of the assignment document attached hereto as Exhibit A hereto.

 

2.3                  “CLINICAL TRIAL” shall mean a PHASE I CLINICAL TRIAL, PHASE II CLINICAL TRIAL, PHASE III CLINICAL TRIAL, or a PIVOTAL TRIAL.

 

2.4                  “CONFIDENTIAL INFORMATION” shall mean all information disclosed by one party to the other during the negotiation of or under this Agreement in any manner, whether orally, visually or in tangible form, that relates to riluzole pro-drugs, the PATENT RIGHTS or the Agreement itself, unless such information is subject to an exception described in Article 8.2; provided, however , that CONFIDENTIAL INFORMATION that is disclosed in tangible form shall be marked “Confidential” at the time of disclosure or shall be of the type that a reasonable person would deem to be confidential and CONFIDENTIAL INFORMATION that is disclosed orally or visually shall be identified as confidential at the time of disclosure and subsequently reduced to writing, marked confidential and delivered to the other party within thirty (30) days of such disclosure. CONFIDENTIAL INFORMATION shall include, without limitation, materials, know-how and data, technical or non-technical, trade secrets, inventions, methods and processes, whether or not patentable. Notwithstanding any other provisions of this Article 4, CONFIDENTIAL INFORMATION of Biohaven that is subject to Article 8 of this Agreement is limited to information that Biohaven supplies

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

pursuant to Biohaven’s obligations under Articles 7 and 9 of this Agreement, unless otherwise mutually agreed to in writing by the parties.

 

2.5                  “EARNED ROYALTY” is defined in Article 6.1.

 

2.6                  “EFFECTIVE DATE” is defined in the introductory paragraph of this Agreement.

 

2.7                  “FDA” shall mean the U.S. Food and Drug Administration.

 

2.8                  “FIELD” shall mean the manufacturing, use, sale and/or marketing of therapeutics and related diagnostics for any INDICATION of the treatment of humans or animals.

 

2.9                  “IMPROVEMENT means any modification, enhancement, new formulation, new use, new indication or other improvement of any of the PATENT RIGHTS, PATENT METHOD or PATENT PRODUCT, provided that the manufacture, use, sale or import of such modification, enhancement or improvement, new use, new indication or improvement, if unlicensed, would fall within the scope of one or more claims of any of the PATENT RIGHTS. In addition, IMPROVEMENT shall include any data, information, discoveries, conceptions, ideas, inventions, innovations, improvements, enhancements, modifications, technological developments, processes, procedures, methods, techniques, systems, designs, protocols, formulae, formulations, molecules, compounds, compositions, specifications, trade secrets, know how, test results, studies, analyses, raw material sources, samples, production technology, results of research and development, programs and information and works of authorship, and all recordings, graphs, drawings, reports, analyses, and other documents and other information in any form whether or not specifically listed herein and whether or not patentable, copyrightable, or susceptible to any other forma legal protection, made or conceived or reduced to practice in connection with the Research Plan as set forth in Appendix C. For avoidance of doubt, all IMPROVEMENTS that constitute patents or patent applications shall be added to, and made a part of, the PATENT RIGHTS without further reference thereto. ALS and FCCDC covenant and agree that from time to time if requested by Biohaven, each and/or both will execute and deliver such further ASSIGNMENT documents as may be necessary or desirable to transfer such IMPROVEMENTS to Biohaven in a form substantially similar to Exhibit A attached hereto.

 

2.10           “IND” shall mean an investigational new drug application filed with the FDA prior to beginning clinical trials in humans in the United States or any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States.

 

2.11           “INDICATION(S)” shall mean any disease, illness, mental condition or other malady of humans or animals. INDICATION shall specifically include treatment of amyotrophic lateral sclerosis, [* * *].

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

2.12           “INITIATE” or “INITIATION” or “INITIATES” or any variant thereof shall mean, with respect to a CLINICAL TRIAL, the first dose of a PATENT PRODUCT administered to a human subject by or on behalf of Biohaven, LICENSEE, or any of their respective AFFILIATES.

 

2.13           “INSOLVENT” shall (i) have the meaning set forth in the United States Federal Bankruptcy Law, as amended from time to time, or (ii) mean that a party has commenced bankruptcy, reorganization, receivership or insolvency proceedings, or any other proceeding under any Federal, state or other law.

 

2.14           “LICENSEE” shall mean any third party licensed by Biohaven to make, have made, use, sell, have sold, import, export or practice any PATENT PRODUCT.

 

2.15           “LICENSEE INCOME” shall mean consideration in any form received by Biohaven or an AFFILIATE in connection with a grant to any LICENSEE or ASSIGNEE of a license, cross-license, option, or other right, license, privilege or immunity to make, have made, use, sell, have sold, distribute, practice, import or export PATENT PRODUCTS, but excluding consideration included within EARNED ROYALTIES. LICENSEE INCOME shall include, without limitation, any license signing fee, license maintenance fee, option fee or other payment pursuant to an option, unearned portion or any minimum royalty payment received by Biohaven, equity, distribution or joint marketing fee, research and development funding in excess of Biohaven’s cost of performing such research and development, and any consideration received for an equity interest in, extension of credit by or other investment in Biohaven to the extent such consideration exceeds the fair market value of the equity or other interest as determined by an independent appraiser mutually agreeable to the parties. LICENSEE INCOME shall also include any sale or extension of credit to Biohaven for less than fair market value, as determined by an independent appraiser. In case an extension of credit or loan to Biohaven by a third party is forgiven in whole or in part by the third party, such amount shall constitute LICENSEE INCOME.

 

2.16           “NDA” shall mean New Drug Application filed with the FDA.

 

2.17           “NET SALES” shall mean:

 

(a)                    gross invoice price received from the sale, lease or other transfer, practice or disposition of the PATENT PRODUCTS, or from services performed using or constituting PATENT PRODUCTS by Biohaven, LICENSEES or any of their respective AFFILIATES or ASSIGNEES to third parties, except as set forth in Article 2.17(b), less the following deductions, provided they actually pertain to the disposition of the PATENT PRODUCTS and are separately invoiced:

 

i.                                 all discounts, credits and allowances on account of returns;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

ii.                              freight to customers and insurance on PATENT PRODUCTS paid by Biohaven;

 

iii.                           duties, taxes and other governmental charges levied on the sale, transportation, delivery or practice of PATENT PRODUCTS, but not including income taxes; and

 

iv.                          unpaid accounts or bad debt, provided that the foregoing shall not exceed [* * *] of the amounts invoiced in 2.16(a).

 

No deductions shall be made for any other costs or expenses, including but not limited to [* * *].

 

(b)                    Notwithstanding anything contained herein to the contrary, “NET SALES” shall not include the gross invoice price for PATENT PRODUCTS sold to, or services performed using PATENT PRODUCTS for, any AFFILIATE unless such AFFILIATE is an end-user of any PATENT PRODUCT, in which case such consideration shall be [* * *].

 

(c)                     There shall be no deductions, except as specified in this Article 2.17, made to [* * *].

 

(d)                    There shall be no deductions made to NET SALES for the purpose of [* * *].

 

2.18           “OBSERVER RIGHTS” shall mean the right to be admitted to all Board of Director meetings, except for compensation and/or executive session discussions.

 

2.19           “PATENT METHOD” shall mean any method, procedure, service or process the practice of which is claimed by a VALID CLAIM of a PATENT RIGHT, or which uses a PATENT PRODUCT of the type defined in the definition of PATENT PRODUCT.

 

2.20           “PATENT PRODUCT’ shall mean any product (including any drug candidate, chemical compound, formulation apparatus or kit) or component part thereof, if the manufacture, use, sale, import, export or practice thereof is claimed by a VALID CLAIM of the PATENT RIGHTS or any PATENT METHOD.

 

2.21           “PATENT RIGHTS” shall have the meaning set forth in Articles 1.1 and 2.9.

 

2.22           “PHASE I CLINICAL TRIAL” shall mean a human clinical trial constituting the initial introduction of an investigational new drug into humans, as defined in 21 C.F.R §312.21(a) and as practiced according to the standards of the pharmaceutical industry.

 

2.23           “PHASE II CLINICAL TRIAL” shall mean a human clinical trial conducted to evaluate the effectiveness of a drug for a particular INDICATION in patients with a disease and to determine the common short-term side effects and risks associated with the drug as

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

defined in 21 C.F.R §312.21(b) and as practiced according to the standards of the pharmaceutical industry.

 

2.24           “PHASE III CLINICAL TRIAL” shall mean expanded controlled and uncontrolled human clinical trials performed after PHASE II CLINICAL TRIAL(S) evidence suggesting effectiveness of an investigational new drug, as defined by 21 C.F.R §312.21(c), and as practiced according to the standards of the pharmaceutical industry for a Phase III clinical trial and prior to the filing of an NDA or comparable request for marketing approval.

 

2.25           “PIVOTAL TRIAL” shall mean a controlled human clinical trial to evaluate the safety and efficacy of a PATENT PRODUCT in which data are sufficient to form the basis for the filing of an NDA. A PIVOTAL TRIAL may not necessarily be a PHASE III CLINICAL TRIAL.

 

2.26           “PREEMPTIVE RIGHTS” shall mean the right of a PARTY to purchase shares of the COMPANY in any offering in proportion to its share or warrant holdings. If a warrant expires, terminates or is exercised, the PREEMPTIVE RIGHTS attached to such warrant expire as well.

 

2.27           “REASONABLE COMMERCIAL EFFORTS” shall mean documented efforts that are consistent with those utilized by companies of similar size and type that have successfully developed products and services similar to the PATENT PRODUCTS.

 

2.28           “TERM” is defined in Article 3.3.

 

2.29           “TERRITORY” shall mean worldwide.

 

2.30           “VALID CLAIM” shall mean a pending, issued or unexpired claim of the PATENT RIGHTS that has not been pending as a patent application for more than [* * *] years from the date of filing of the earliest priority application, so long as such claim shall not have been irrevocably abandoned or declared to be invalid in a final unappealable decision of a court or other authority or competent jurisdiction through no fault or cause of Biohaven; provided, however , that if a pending claim results in an issued patent after the period indicated in this Article 2.28, it shall thereafter again be a VALID CLAIM.

 

3.                    PATENT RIGHTS ASSIGNMENT AND TERM

 

3.1                  Subject to all the terms and conditions of this Agreement, and upon payment in full to ALS of the consideration described in Article 5.1(a), ALS and FCCDC shall make the ASSIGNMENT, and transfer and convey the PATENT RIGHTS to Biohaven, including the right to license the PATENT RIGHTS, pursuant to an Assignment of Patents and Patent Applications substantially in the form of Exhibit A attached hereto. For the avoidance of doubt, ALS and FCCDC shall assign to Biohaven the ORIGINAL PATENT RIGHTS it owns subject to the previously existing rights of Rutgers, and shall

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

6



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

assign to Biohaven their rights in the SECONDARY PATENT RIGHTS free and clear of any claim or encumbrance. ALS and FCCDC shall assign and transfer and convey the IMPROVEMENTS to Biohaven, using a form substantially like the ASSIGNMENT, and when the IMPROVEMENTS are created, free and clear of any claim or encumbrance.

 

3.2                  To the extent that any invention included within the PATENT RIGHTS has been funded in whole or in part by the United States government, the United States government retains certain rights in such invention as set forth in 35 U.S.C. §200-212 and all regulations promulgated thereunder, as amended, and any successor statutes and regulations (the “FEDERAL PATENT POLICY”). Biohaven acknowledges and shall comply with all aspects of the FEDERAL PATENT POLICY applicable to the PATENT RIGHTS, including the obligation that PATENT PRODUCTS used or sold in the United States be manufactured substantially in the United States. Nothing contained in this Agreement obligates or shall obligate ALS or FCCDC to take any action that would conflict in any respect with its past, current or future obligations to the United States Government under the FEDERAL PATENT POLICY with respect to the PATENT RIGHTS.

 

3.3                  Unless terminated earlier as provided in Article 12, the term of this Agreement (the “TERM”) shall commence on the EFFECTIVE DATE, and shall expire on a country-by-country basis, on the date on which the last of the VALID CLAIMS of the PATENT RIGHTS in such country expires, lapses or is declared to be invalid by a non-appealable decision of a court or other authority of competent jurisdiction.

 

3.4                  Nothing in this Agreement shall be construed to grant or assign by implication, estoppel or otherwise any licenses or rights under any other patents of any party other than the PATENT RIGHTS. Except as expressly provided in this Agreement, under no circumstances will a party, as a result of this Agreement, obtain any interest in or any other right to any technology, know-how, patents, patent applications, materials or other intellectual or proprietary property of any other party.

 

3.5                  In the event that Biohaven affirmatively abandons the making, having made, using, selling, having sold, development, exploitation, licensing, researching, exporting or importing of all PATENTED PRODUCTS covered by one or more claims of any patent or patent application in the PATENT RIGHTS for PATENT PRODUCTS, Biohaven agrees to reassign to ALS all of its ownership interest in the applicable patent and/or patent application to ALS. Should Biohaven cease operation (other than by sale, merger or consolidation with another entity) and is not prohibited by contract law (including any applicable bankruptcy law) or otherwise from transferring the PATENT RIGHTS’ to ALS, Biohaven shall do so. All costs and expenses of such reassignment shall be borne by ALS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

7



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

4.                    DUE DILIGENCE

 

4.1                  Biohaven shall use all REASONABLE COMMERCIAL EFFORTS to diligently commercialize and develop markets for the PATENT PRODUCTS.

 

4.2                  Biohaven shall immediately send ALS a notice of reversion if at any time Biohaven abandons or suspends its research, development or marketing of all the PATENT PRODUCTS, or its intent to research, develop and market PATENT PRODUCTS.

 

4.3                  Biohaven agrees that ALS shall be entitled to a license back with respect to any such PATENT RIGHTS as Biohaven may choose from time to time not to pursue or exploit at present or in the future, as Biohaven determines in its sole discretion. ALS shall pay all costs and expenses associated with any such license of PATENT RIGHTS.

 

5.                    PAYMENTS AND MILESTONES

 

5.1                  Initial Payments .

 

(a)                    In exchange for the Assignment of Patents and Patent Applications set forth in Section 3.1 hereof, Biohaven shall pay to ALS the sum of One Million Dollars ($1,000,000.00) within Ten (10) Days of the EFFECTIVE DATE.

 

(b)                    Biohaven shall pay an additional One and One Half Million Dollars ($1,500,000) to ALS in three equal installments over eighteen (18) months from the EFFECTIVE DATE as funding for research by ALS upon a mutually agreed upon research budget and scheduling for the sole purpose of research related to riluzole prodrugs or their analogs and uses thereof as agreed to by Biohaven (the “Research Plan”). The parties shall endeavor to complete an agreed upon Research Plan within [* * *]-days of the EFFECTIVE DATE and shall be appended to this Agreement as Appendix C when complete.

 

(c)                     ALS shall make all payments to FCCDC required under the Original ALS LICENSE from the amounts paid to ALS by Biohaven pursuant to this Section

 

5.2                  Milestones and other Consideration

 

(a)                    Biohaven shall pay to ALS the sum of [* * *] Dollars ($[* * *]) within [* * *] days of [* * *].

 

(b)                    Biohaven shall pay ALS the sum of [* * *] Dollars ($[* * *]) within [* * *] days of [* * *].

 

(c)                     Promptly after the EFFECTIVE DATE (but in no event more than forty-five (45) business days thereafter), Biohaven shall grant to ALS one Hundred (100) Shares of its common shares. In addition, promptly after the EFFECTIVE DATE (but in no event more than forty-five (45) business days thereafter), ALS shall receive 550 warrants for Biohaven stock that vest immediately with a strike price of $2800 and 650 additional warrants of Biohaven stock that vest upon the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

filing of the first IND for a PATENT PRODUCT with a strike price of $2800. A form of the warrant is attached in Appendix D.

 

(d)                    As a condition to the foregoing, ALS agrees to become a party to the Biohaven Stockholder Agreement dated as of January 6, 2014, as amended from time to time. ALS will receive OBSERVER RIGHTS upon the filing of the first IND for a PATENT PRODUCT. The warrants granted to ALS will also have PREEMPTION RIGHTS.

 

(e)                     Any of the payments in this Section 5.2 shall be payable in cash, or, upon the mutual agreement of ALS and Biohaven, some or all of any such payment may be made to ALS in equity of Biohaven, its successors or assigns, with the valuation of such equity to be based on the last round of financing, if Biohaven (or its successors or assigns) is a private company, or at the public stock price, if Biohaven (or its successors or assigns) is a public company on the date that such payment is accrued.

 

(f)                      During the TERM while Biohaven remains a private company, ALS shall be granted the opportunity to participate in equity offerings of Biohaven as other current shareholders of Biohaven are offered, upon the same terms and conditions (including valuation) as such other shareholders in such equity offering.

 

5.3                  Neither the consideration set forth in Article 5.1 nor the milestone royalty of Article 5.2 shall be credited against EARNED ROYALTIES payable under Article 6.1.

 

6.                    EARNED ROYALTIES

 

6.1                  During the TERM of this Agreement, Biohaven and its AFFILIATES, LICENSEES and ASSIGNS shall pay to ALS an earned royalty on worldwide annual cumulative NET SALES of PATENT PRODUCTS with a VALID CLAIM as follows: (a) for any [* * *] Indication at a rate of [* * *] percent ([* * *]%) per annum; (b) for an [* * *] Indication at a rate of [* * *] percent ([* * *]%) per annum; and (c) for all Indications other that as set forth in (i) and (ii) hereof, at a rate of [* * *] percent ([* * *]%) per annum (“EARNED ROYALTIES”).

 

Biohaven shall pay all EARNED ROYALTIES accruing to ALS on a quarterly basis within [* * *] days of the end of each quarter during the TERM beginning in the first year in which NET SALES occur.

 

6.2                  All EARNED ROYALTIES and other payments due under this Agreement shall be paid to ALS in United States Dollars. In the event that conversion from foreign currency is required in calculating a payment under this Agreement, the exchange rate used shall be the Interbank rate quoted by Citibank at the time the payment is due. If overdue, any EARNED ROYALTIES, milestones or any other payments due under this Agreement

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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shall bear interest until payment in full at a per annum rate of [* * *] percent ([* * *]%) above the prime rate in effect at Citibank on the due date.

 

6.3                  In the event that Biohaven is required to pay THIRD PARTY ROYALTIES (as defined below), then Biohaven may deduct an amount equal to [* * *] percent ([* * *]%) of any THIRD PARTY ROYALTIES actually paid by Biohaven from any EARNED ROYALTY amounts due to ALS hereunder; provided, however , that in no event shall the EARNED ROYALTIES under this Article 6.3 otherwise due to ALS be less than [* * *] percent ([* * *]%) of the EARNED ROYALTIES that would be payable to ALS absent the effects of this Article 6.3. “THIRD PARTY ROYALTIES” shall mean royalties actually paid by Biohaven to a third party pursuant to one or more agreements entered into by Biohaven to license patents that otherwise would be infringed by Biohaven, its AFFILIATES, LICENSEES or ASSIGNEES due to the manufacture, use or sale in the TERRITORY of the PATENT PRODUCT, such obligation to pay THIRD PARTY ROYALTIES to be determined on a country-by-country or territory-by-territory basis for each PATENT PRODUCT. Notwithstanding the foregoing, this Section 6.3 shall not apply to either (1) [* * *]; or (2) [* * *].

 

7.                    LICENSES

 

7.1                  Biohaven, its AFFILIATES, LICENSEES or ASSIGNEES shall pay the EARNED ROYALTY to ALS or its assignee on NET SALES received by Biohaven, its AFFILIATES, LICENSEES or ASSIGNEES from the PATENT RIGHTS based on Article 6 above, regardless of the royalty rates payable by LICENSEES to Biohaven under a separate license agreement.

 

7.2                  Biohaven agrees that it has sole responsibility to promptly:

 

(a)                    provide ALS with a copy of any amendments to licenses granted by Biohaven related to the PATENT RIGHTS and to notify ALS of termination of any such license; and

 

(b)                    deliver copies to ALS of all reports provided to Biohaven by LICENSEES. Such reports from LICENSEES shall include the information required to be provided by Biohaven hereunder.

 

7.3                  ALS acknowledges that it has no interest or claim in any LICENSEE INCOME, but only is due EARNED ROYALTIES related to any LICENSEE or ASSIGNEE use of the PATENT RIGHTS as provided in Article 6 above.

 

7.4                  Subject to the terms of this Agreement, Biohaven hereby grants to ALS a nonexclusive license for the Patent Rights without the right to transfer assign or sublicense, for the sole purpose of conducting research for the Research Plan.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

7.5                  Subject to the terms of this Agreement, ALS hereby grants to Biohaven a nonexclusive license to any and all trade secrets and know-how ALS has that are related to, necessary or useful to practice the Patent Rights for the purpose of using, making, manufacturing, selling and promoting Licensed Products in the Territory.

 

8.                    CONFIDENTIALITY AND PUBLICITY

 

8.1                  Subject to the parties’ rights and obligations pursuant to this Agreement, ALS and Biohaven agree that during the TERM and for [* * *] years thereafter, each of them:

 

(a)                    will keep confidential and will cause their AFFILIATES and, in the case of Biohaven, its LICENSEES, to keep confidential, CONFIDENTIAL INFORMATION disclosed to it by the other party, by taking whatever action the party receiving the CONFIDENTIAL INFORMATION would take to preserve the confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be less than reasonable care; and

 

(b)                    will only disclose that part of the other’s CONFIDENTIAL INFORMATION to its officers, employees or agents (including, without limitation, advisors such as its attorneys and accountants) (collectively, “REPRESENTATIVES”)who are advised of its confidential nature, who agree to keep such confidential and who need to know such CONFIDENTIAL INFORMATION for purposes of carrying out its rights and responsibilities under this Agreement, except that Biohaven may disclose Confidential Information to its investors. potential investors, banks, AFFILIATES, LICENSEES, ASSIGNEES and advisors; and

 

(c)                     will not use the other party’s CONFIDENTIAL INFORMATION other than as expressly permitted by this Agreement or disclose the other’s CONFIDENTIAL INFORMATION to any third parties (other than to its REPRESENTATIVES under requirements of confidentiality) under any circumstance without advance written permission from the other party; and

 

(d)                    will be responsible for any breach by this Article 8 by its REPRESENTATIVES as if such REPRESENTATIVES were party hereto; and

 

(e)                     will, within [* * *] days of termination of this Agreement, destroy or return all the CONFIDENTIAL INFORMATION disclosed to it by the other party pursuant to this Agreement except for one copy which may be retained by the recipient for monitoring compliance with this Article 8 and any surviving clauses.

 

8.2                  The obligations of confidentiality described above shall not pertain to that part of the CONFIDENTIAL INFORMATION that:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

(a)                    is shown to have been known to or developed by the recipient prior to the disclosure by the disclosing party; or

 

(b)                    is at the time of disclosure or has become thereafter publicly known through no fault or omission attributable to the recipient; or

 

(c)                     is rightfully given to the recipient from sources independent of the disclosing party; or

 

(d)                    is independently developed by the receiving party without use of or reference to the CONFIDENTIAL INFORMATION of the other party; or

 

(e)                     is required to be disclosed by law in the opinion of recipient’s attorney, but only after the disclosing party is, to the extent legally permissible, given prompt written notice and an opportunity to seek a protective order.

 

8.3                  The financial terms of this Agreement constitute CONFIDENTIAL INFORMATION of each party.

 

8.4                  Covenant Not to Compete .  (a) Each of ALS, FCCDC and Allen Reitz (individually a “POTENTIAL COMPETITOR” and collectively the “POTENTIAL COMPETITORS”) hereby agrees that for a period of [* * *] years, such POTENTIAL COMPETITOR will not, singly, jointly, or as an employee, agent or partner of any partnership or as an officer, agent, employee, director, stockholder (except of not more than one percent (1%) of the outstanding stock of any company listed on a national securities exchange or actively traded in the over-the-counter market) or investor in any other corporation or entity, or as a consultant, advisor, or independent contractor to any such partnership, corporation or entity, or in any other capacity, directly, indirectly or beneficially, (i) own, manage, operate, join, control, or participate in the ownership, management, operation, or control of, or work for (as an employee, agent, consultant, advisor or independent contractor), or permit the use of his name by, or provide financial or other assistance to, any person, partnership, corporation, or entity which is in direct or indirect competition anywhere in Europe, the United States or Canada (the “PROTECTED TERRITORY”) with Biohaven’s sale of prodrugs of riluzole or PATENTED PRODUCTS, including, but not limited to, the business of designing, manufacturing, marketing, and selling PATENTED PRODUCTS, riluzole prodrugs or their analogs, [* * *] ; (ii) induce or attempt to induce any employee of Biohaven who, on the date hereof or at any time during the period covered by this restrictive covenant is an employee of Biohaven, to terminate his or her employment with Biohaven; provided , that this prohibition shall not apply to solicitations made to the public or the industry generally or employing any person who responds to such general solicitation, and that no POTENTIAL COMPETITOR shall be prohibited from employing any such person who contacts such POTENTIAL COMPETITOR on his or own initiative without any prohibited solicitation, or (iii) induce or attempt to induce any person, business, or entity which is a supplier, dealer, wholesaler, retailer, distributor or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

customer of Biohaven or which otherwise is a contracting party with Biohaven, as of the date hereof or at any time during the period covered by this restrictive covenant, to terminate or modify in any way adverse to the interests of Biohaven, any written or oral agreement or understanding with Biohaven. Biohaven and each POTENTIAL COMPETITOR agree that the covenants set forth in this Section 8.4 have been negotiated with advice of counsel in the course of the sale of the PATENT RIGHTS, from which sale each POTENTIAL COMPETITOR shall receive substantial economic benefit, and therefore Biohaven and each POTENTIAL COMPETITOR agree that these covenants shall be enforced to the fullest extent permitted by law. Accordingly; if in any judicial or similar proceeding a court or any similar judicial body shall determine that such covenant is unenforceable because it covers too extensive a geographical area or survives too long a period of time, or for any other reason, then the parties intend that such covenant shall be deemed to cover only such maximum geographical area and maximum period of time and shall otherwise be deemed to be limited in such manner as will permit enforceability by such court or similar body.

 

8.5                  Specific Performance . Each POTENTIAL COMPETITOR agrees that any breach by it or him of the provisions of Section 8.4 above may cause irreparable damage to Biohaven and that the recovery by Biohaven of money damages may not constitute an adequate remedy for such breach. Accordingly, each POTENTIAL COMPETITOR agrees that the provisions of Sections 8.4 above may be specifically enforced against him or it in addition to any other rights or remedies available to Biohaven on account of any such breach, and each Potential Competitor expressly waives the defense in any equitable proceeding that there is an adequate remedy at law for any such breach.

 

9.                    REPORTS, RECORDS AND INSPECTIONS

 

9.1                  Biohaven, its AFFILIATES and ASSIGNS shall, within [* * *] days after its accounting firm delivers the annual financials for the applicable calendar year in which NET SALES are calculated, provide ALS with a written report detailing the NET SALES and uses, if any, made by Biohaven, its LICENSEES and AFFILIATES of PATENT PRODUCTS during the preceding calendar quarter and calculating the payments due pursuant to Article 6. NET SALES of PATENT PRODUCTS shall be deemed to have occurred on the date of invoice for such PATENT PRODUCTS. Each such report shall be certified and signed by an officer of Biohaven (or the officer’s designee), and must include:

 

(a)                    the number or amount, as appropriate, of PATENT PRODUCTS manufactured, sold, practiced, leased or otherwise transferred or disposed of by Biohaven, LICENSEES and AFFILIATES;

 

(b)                    a calculation of NET SALES for the applicable reporting period in each country, including the gross invoice prices charged for the PATENT PRODUCTS and any permitted deductions made, pursuant to Article 2.17 and/or Article 6.3;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

(c)                     a calculation of total EARNED ROYALTIES or other payment due, including any exchange rates used for conversion; and

 

(d)                    names and addresses of all LICENSEES.

 

9.2                  Biohaven, its AFFILIATES and its LICENSEES shall keep and maintain complete and accurate records and books containing an accurate accounting of all data in sufficient detail to enable verification of EARNED ROYALTIES and other payments under this Agreement. Biohaven shall preserve such books and records for [* * *]years after the calendar year to which they pertain. Such books and records shall be open to inspection by ALS or an independent certified public accountant selected by ALS, at ALS’s expense, no more frequently than [* * *] per fiscal quarter, during normal business hours upon [* * *] days’ prior written notice, for the purpose of verifying the accuracy of the reports and computations rendered by Biohaven. In the event Biohaven underpaid the amounts due to ALS with respect to the audited period by more than [* * *] percent ([* * *]%), Biohaven shall pay the reasonable cost of such examination, together with the deficiency not previously paid and interest from the due date of such payment within [* * *] days of receiving notice thereof from ALS.

 

10.             PATENT PROTECTION

 

10.1           After the EFFECTIVE DATE, Biohaven shall be responsible for any and all present and future on-going costs of filing, prosecution and maintenance of the PATENT RIGHTS. Upon the EFFECTIVE DATE, any and all such United States and foreign territory patent applications, and resulting issued patents shall become the property of Biohaven.

 

10.2           After the EFFECTIVE DATE, Biohaven shall be responsible for present and future ongoing costs and strategies of filing, prosecution and maintenance of all foreign patent applications, and patents contained in the PATENT RIGHTS in the countries outside the United States in the TERRITORY.

 

10.3           If Biohaven does not intend to pay the expenses of filing, prosecuting or maintaining a given patent application or a given patent in any country including the United States, or fails to pay the expenses of filing, prosecuting or maintaining a given patent application or patent in the United States, then Biohaven shall give ALS prompt written notice of such abandonment pursuant to Section 4.3 hereof unless it determines in good faith that such would not be in its best interest.

 

10.4           The costs mentioned in Articles 10.2 and 10.3 shall include, but are not limited to, any present and future taxes, annuities, working fees, maintenance fees, renewal and extension charges. ALS shall use its REASONABLE COMMERCIAL EFFORTS to provide Biohaven with a schedule of proposed patent filings, including jurisdictions and instruct patent counsel to provide fee estimates for review by Biohaven.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

10.5           All patent applications under the PATENT RIGHTS shall be prepared, prosecuted, filed and maintained by patent counsel chosen by Biohaven. Biohaven shall instruct patent counsel to keep ALS, FCCDC and Biohaven fully informed of the progress of all patent applications and patents, and to give ALS, FCCDC and Biohaven reasonable opportunity to comment on the type and scope of useful claims and the nature of supporting disclosures. ALS shall have no liability to Biohaven for damages; whether direct, indirect or incidental, consequential or otherwise, allegedly arising from its good faith decisions, actions and omissions in connection with such prosecution.

 

10.6           Biohaven shall mark, and shall require its AFFILIATES and LICENSEES to mark, all PATENT PRODUCTS that are tangible products, with the numbers of all patents included in PATENT RIGHTS that cover the PATENT PRODUCTS. Without limiting the foregoing, all PATENT PRODUCTS shall be marked in such a manner as to conform with the patent marking notices required by the law of any country where such PATENT PRODUCTS are made, sold, used or shipped, including, but not limited to, the applicable patent laws of that country.

 

11.             INFRINGEMENT AND LITIGATION

 

11.1           Each party shall promptly notify the other in writing in the event that it obtains knowledge of infringing activity by third parties, or it is sued or threatened with an infringement suit, in any country in the TERRITORY, as a result of activities that concern the PATENT RIGHTS, and shall supply the other party with documentation of the infringing activities that it possesses.

 

11.2           During the TERM of this Agreement:

 

(a)                    Biohaven shall have the first right to defend the PATENT RIGHTS against infringement or interference by third parties. This right includes bringing any legal action for infringement and defending any counter claim of invalidity or action of a third party for declaratory judgment for non-infringement or non-interference. If, in the reasonable opinion of Biohaven’s counsel, ALS and/or FCCDC is required to be a named party to any such suit for standing purposes, Biohaven may join ALS and/or FCCDC as a party; provided , however , that Biohaven shall keep ALS and FCCDC reasonably apprised of all developments in any such action. Biohaven may settle such suits solely in its own name and moiety at its own expense and through counsel of its own selection; provided further , that to the extent that ALS believes that the EARNED ROYALTIES payable to ALS hereunder were reduced by such infringement, ALS shall be permitted to join any suit brought by Biohaven at ALS’ own cost and expense, and in such event seek compensation from such third party for its proportional share of any EARNED ROYALTIES determined by the court to be lost because of such infringement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

(b)                    In the event Biohaven is permanently enjoined from exercising its rights under the PATENT RIGHTS pursuant to an infringement action brought by a third party, or if both Biohaven and ALS elect not to undertake the defense or settlement of a suit alleging infringement for a period of [* * *] months from notice of such suit, then either party shall have the right to terminate this Agreement in the country where the suit was filed with respect to the PATENT RIGHTS following [* * *] days’ written notice to the other party in accordance with the terms of Article 14.1.

 

12.             TERMINATION

 

12.1           ALS shall have the right to terminate this Agreement or its applicability to one or more countries within the Territory upon [* * *] day’s prior written notice to Biohaven (such notice, a “TERMINATION NOTICE”) in the event Biohaven:

 

(a)                    fails to make any undisputed payment due and payable pursuant to this Agreement within the [* * *] day period after receipt of written notice a TERMINATION NOTICE from ALS; or

 

(b)                    commits a material breach of any other material provision of this Agreement which is not cured (if capable of being cured) or if such breach is not capable of being cured within [* * *] day period after receipt of a TERMINATION NOTICE from ALS; or

 

(c)                     as contemplated by Section 11.2(b) as to one or more countries within the Territory.

 

12.2           This Agreement shall terminate automatically in the event Biohaven shall cease to carry on its business or becomes INSOLVENT, or a petition in bankruptcy is filed against Biohaven and is consented to, acquiesced in or remains undismissed for [* * *] days, or Biohaven makes a general assignment for the benefit of creditors, or a receiver is appointed for Biohaven.

 

12.3           Biohaven shall have the right to terminate this Agreement or its applicability to one or more countries within the Territory upon [* * *] days’ prior written notice to ALS:

 

(a)                    in the event ALS commits a material breach of any of the provisions of this Agreement and such breach is not cured (if capable of being cured) within the [* * *] day period after receipt of written notice thereof from Biohaven, or upon receipt of such notice if such breach is not capable of being cured; or

 

(b)                    as to a specific country if no VALID CLAIMS exist in such country; or

 

(c)                     as contemplated by Section 11.2(b) as to one or more countries within the Territory.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

12.4           Upon termination of this Agreement or the partial termination of this Agreement in a specific country or countries, for any reason, the following shall occur:

 

(a)                    if the Agreement is terminated as to a specific country, no further EARNED ROYALTIES are due from PATENT PRODUCT sales within the applicable country or countries;

 

(b)                    if the Agreement is terminated in total because no VALID CLAIM exists for a PATENT PRODUCT, no additional EARNED ROYALTIES are due or payable.

 

(c)                     no additional reports specified under Article 4 or 9 shall be required as to a terminated country or countries (other than any reports relating to the period prior to such termination); and

 

(d)                    all undisputed payments incurred up to and including the effective date of termination shall be due and payable to ALS.

 

12.5           Termination of this Agreement shall not affect any rights or obligations accrued prior to the effective date of such termination, and specifically Biohaven’s obligation to pay all EARNED ROYALTIES and other payments specified by Article 4 and Article 6. In particular, but without limitation, the following provisions shall survive any termination: Article 8, the preservation and inspection obligations of Article 9, Article 12, this Article 12.5, Article 13.6, Article 13.8, Article 14, Article 6, Article 15.1, and Article 16. The parties agree that claims giving rise to indemnification may arise after the TERM or termination of the Agreement.

 

12.6           The rights provided in this Article 12 shall be in addition and without prejudice to any other rights, whether at law or in equity, which the parties may have with respect to any default or breach of the provisions of this Agreement.

 

12.7           Waiver by either party of one or more defaults or breaches shall not deprive such party of the right to terminate because of any subsequent default or breach.

 

13.             INDEMNIFICATION; INSURANCE; WARRANTIES AND COVENANTS

 

13.1           Biohaven shall indemnify, defend and hold harmless ALS and its officers, directors, employees (including, without limitation, Allen Reitz), and agents (collectively, “ALS INDEMNITEES’’), from and against any claim, liability, cost, expense, damage, deficiency, less, or obligation, of .any kind or nature (including, without limitation, reasonable attorneys’ fees and other costs and expenses of defense) (collectively, “CLAIMS”), based upon, arising out of or otherwise relating to this Agreement, including, without limitation, any cause of action relating to product liability, or any theory of liability (including without limitation tort, warranty; or strict liability) or the death, personal injury, or illness of any person or out of damage to any property related

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

in any way to the PATENT RIGHTS granted under this Agreement; or resulting from the production, manufacture, sale, use, lease, or other disposition or consumption or advertisement of the LICENSED PRODUCTS by Biohaven, its AFFILIATES, LICENSEES or any other transferees; or in connection with any Statement, representation or warranty of Biohaven, its AFFILIATES, LICENSEES or any other transferees with respect: to the PATENT PRODUCTS. Biohaven shall not settle or compromise the CLAIM without the prior written. consent of ALS, such consent not to be unreasonably withheld or delayed. Without limiting the foregoing, ALS may withhold its consent to any settlement or compromise that would in any manner constitute or incorporate an admission by ALS or require ALS to take or refrain from taking any action.

 

13.2           ALS shall indemnify, defend and hold harmless Biohaven and its officers, directors, employees, and agents (collectively, “BIOHAVEN INDEMNITEES”), from and against any CLAIMS, based upon, arising out of or otherwise relating to this Agreement, e’ the PATENT RIGHTS transferred under this Agreement; or in connection with any statement, representation or warranty of ALS or its AFFILIATES with respect to the PATENT PRODUCTS. ALS shall not settle or compromise the CLAIM without the prior written consent of Biohaven, such consent not to be unreasonably withheld or delayed. Without limiting the foregoing, Biohaven may withhold its consent to any settlement or compromise that would in any manner constitute or incorporate an admission by Biohaven or require Biohaven to take or refrain from taking any action.

 

13.3           Representations and Warranties or ALS . ALS represents and warrants to Biohaven, as of the date hereof and during the TERM, that: (a) ALS is a limited liability company duly formed, validly existing and in good. standing under the laws of the State of Delaware; (b) the Agreement and obligations expressed to be assumed by it under this Agreement are legal, valid, binding and enforceable obligations against ALS in Accordance with their respective terms; (c) the entry into and performance by ALS of this Agreement does not and will not conflict with any law or regulation applicable to it, or its constitutional documents; (d) other than Rutgers, ALS has not sold, assigned, licensed, endorsed, pledged, transferred, deposited under any agreement, or hypothecated the PATENT RIGHTS, or otherwise disposed of or created any encumbrance on the PATENT RIGHTS, and, other than Rutgers, no person, firm, corporation, agency or government. other than that ALS has or has asserted any right, title, claim or interest in the PATENT RIGHTS; (e) there is no action, suit or proceeding pending or currently threatened against ALS which questions the validity of this Agreement or the right of ALS to enter into this Agreement or transfer the PATENT RIGHTS, or to consummate the transactions contemplated hereby; and (f) to the best knowledge and belief of ALS, the PATENT RIGHTS do not infringe the intellectual property rights daily other person; (g) ALS, its affiliates and Allen Reitz do not have or intend to file any intellectual property rights related to riluzole, riluzole related compounds, analogs or prodrugs, riluzole combination compounds or chemical entities that are not included in the PATENT RIGHTS.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

13.4           Representations and Warranties of FCCDC . FCCDC represents and warrants to Biohaven, as of the date hereof and during the term of the Agreement, that: (a) FCCDC is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware; (b) the Agreement and obligations expressed to be assumed by it under this Agreement are legal, valid, binding and enforceable obligations against FCCDC in accordance with their respective terms; (c) the entry into and performance by FCCDC of this Agreement does not and will not conflict with any law or regulation applicable to it, or its constitutional documents; (d) other than Rutgers, FCCDC has not sold, assigned, licensed, endorsed, pledged; transferred, deposited under any agreement, or hypothecated the PATENT RIGHTS, or otherwise disposed of or created any encumbrance, on the PATENT RIGHTS, and, other than Rutgers, no person, firm, corporation, agency or government other than the FCCDC has or has asserted any right, title, claim or interest in the PATENT RIGHTS; (e) there is no action, suit or proceeding, pending or currently threatened against FCCDC which questions the. validity of this Agreement or the right of FCCDC to enter into this Agreement or transfer the PATENT RIGHTS, or to consummate the transactions contemplated hereby; and (f) to the best knowledge and belief of FCCDC, the PATENT RIGHTS do not infringe the intellectual property rights of any other person; (g) FCCDC, its affiliates and Allen Reitz do not. have or intend to file for any intellectual property rights related to riluzole, riluzole related compounds, analogs or prodrugs, riluzole combination compounds or chemical entities that are not included in the PATENT RIGHTS.

 

14.             NOTICES

 

14.1           Any monetary payment, notice or other communication required by this Agreement (a) shall be in writing, (b) may be delivered personally or sent by reputable overnight courier with written verification of receipt or by registered or certified first class United States Mail, postage prepaid, return receipt requested, (c) shall be sent to the following addresses or to such other address as such party shall designate by written notice to the other party, and (d) shall be effective upon receipt:

 

FOR ALS :

FOR Biohaven :

Allen B. Reitz, Ph.D.
ALS Biopharma LLC
3805 Old Easton Road
Doyletown, PA 18902
[* * *]

 

President
Biohaven Pharmaceuticals
234 Church Street, Suite 301
New Haven, CT 06520

FOR FCCDC :

Locke Lord LLP
2800 Financial Plaza
Providence, RI 02903
Attn.: Douglas G. Gray
[* * *]

Allen B. Reitz, Ph.D.
Fox Chase Center for Chemical
Diversity Center, Inc.
3805 Old Easton Road
Doyletown, PA 18902

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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15.    LAWS, FORUM AND REGULATIONS

 

15.1           Any matter arising out of or related to this Agreement shall be governed by and in accordance with the substantive laws of the State of Delaware, without regard to its conflicts of law principles, except where the federal laws of the United States are applicable and have precedence. Any dispute arising out of or related to this Agreement shall be brought exclusively in a court of competent jurisdiction in the State of Delaware, and the parties hereby irrevocably submit to the jurisdiction of such courts.

 

15.2           Biohaven shall comply, and shall cause its AFFILIATES and LICENSEES to comply, with all foreign and United States federal, state, and local laws, regulations, rules and orders applicable to the testing, production, transportation, packaging, labeling, export, practice, sale and use of the PATENT PRODUCTS. In particular, Biohaven shall be responsible for assuring compliance with all United States export laws and regulations applicable to this Agreement and Biohaven’s activities under this Agreement.

 

16.    MISCELLANEOUS

 

16.1           This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

 

16.2           This Agreement constitutes the entire agreement of the parties relating to the PATENT RIGHTS and PATENT PRODUCTS, and all prior representations, agreements and understandings, written or oral, are merged into it and are superseded by this Agreement.

 

16.3           The provisions of this Agreement shall be deemed separable. If any part of this Agreement is rendered void, invalid, or unenforceable, such determination shall not affect the validity or enforceability of the remainder of this Agreement unless the part or parts which are void, invalid or unenforceable shall substantially impair the value of the entire Agreement as to either party.

 

16.4           Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement.

 

16.5           No person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners or joint venturers with each other or any third party; and neither party shall be deemed the agent of the other.

 

16.6           This Agreement may not be amended or modified except by written agreement executed by each of the parties.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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16.7           Biohaven, or any LICENSEE or assignee, will not create, assume or permit to exist any lien, pledge, security interest or other encumbrance on this Agreement.

 

16.8           The failure of any party hereto to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver of either such provision or of the right of such party thereafter to enforce each and every provision of this Agreement.

 

16.9           This Agreement may be executed in any number of counterparts and any party may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

 

16.10    Publicity . Neither Biohaven nor ALS will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other party’s express prior written consent, except as required under Laws or by any governmental agency or by the rules of any stock exchange on which the securities of the disclosing Party are listed, in which ease the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other Party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure. Notwithstanding the foregoing, ALS and Biohaven agree to issue a joint press release regarding the Agreement with wording to be mutually agreed upon.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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IN WITNESS to their Agreement, the parties have caused this Agreement to be executed in duplicate originals by their duly authorized representatives.

 

 

ALS BIOPHARMA, LLC

BIOHAVEN PHARMACEUTICALS
HOLDING COMPANY LTD


 

 

 

 

By:

/s/ Allen B. Reitz

 

By:

/s/ Declan Doogan

 

Name:

Allen B. Reitz

 

 

Name:

Declan Doogan

 

Title:

CEO

 

 

Title:

Chairman

 

 

 

FOX CHASE CHEMICAL CENTER
FOR CHEMICAL DIVERSITY
 CENTER INC.
 

ALLEN REITZ, individually as to
Sections 8.4 and 8.5

 

 

 

 

 

By:

/s/ Allen B. Reitz

 

By:

/s/ Allen B. Reitz

 

Name:

Allen B. Reitz

 

 

 

 

Title:

CEO

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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EXHIBIT A

 

Assignment of Patents and Patent Applications

 

KNOW ALL MEN BY THESE PRESENTS , that ALS Biopharma LLC (“ ALS ”), a Delaware corporation having a place of business at 3805 Old Easton Road, Doylestown, PA 18902 (the “ Assignor ”) and Biohaven Pharmaceutical Holding Company Ltd. , a company organized and existing under the laws of the Territory of the British Virgin Islands and having a place of business at 234 Church Street, Suite 301, New Haven, Connecticut 06520 (the “ Assignee ”) have entered into an agreement with ALS Biopharma, LLC, dated as of August   , 2015 (the “ Agreement ”), pursuant to which the Assignor agreed to sell and Assignee agreed to buy patent and patent application rights listed on Exhibit A hereto. Except as otherwise stated herein, all terms used herein shall have the same meaning as set forth in the. Agreement.

 

W I T N E S S E T H:

 

WHEREAS , Assignor will receive substantial benefit from the consummation of the transaction contemplated by the Agreement; and

 

WHEREAS , Assignor is the owner of the patents which are pending and registered as listed on the schedule annexed hereto and made a part hereof as Appendix A ; and

 

WHEREAS , Assignor is the owner of certain patent rights which are pending and registered as listed on the schedule annexed hereto and made a part hereof as Appendix B ; and

 

WHEREAS , Assignee is desirous of acquiring the entire right, title and interest in said pending and registered patents and the issued letter patent thereof; and

 

WHEREAS , Assignee would not have entered into the Agreement nor consummated the transaction contemplated thereby unless it received all right, title and interests in and to the patents and patent applications listed on Exhibit Appendix A and Appendix B; and

 

NOW, THEREFORE , for ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby sell assign, transfer and set over unto Assignee all of its right, title and interest in and to the patents and patent applications listed in Appendix A and Appendix B , including, without limiting the generality of the foregoing, the right of priority to file corresponding applications in any and all countries; the patents to be held by Assignee for its own use and enjoyment and for the use and enjoyment of its successors and assigns as fully and entirely as they would have been held and enjoyed by Assignor had such assignment not been made.

 

Assignor hereby authorizes and requests the duly authorized officials of any jurisdiction to take such action as may be required to give effect to the sale, assignment and transfer made herein, including the issuance of any patents and patent applications on Appendix A and Appendix B to Assignee, its successors and assigns; and Assignor further agrees, at no additional cost or expense

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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to Assignor, to do all things as Assignee may reasonably request to effectuate such sale, assignment and transfer in respect to each such patent and patent applications.

 

If Assignor owns or has rights to any patents or patent applications relating to prodrugs of riluzole that are not listed on Appendix A and Appendix B , Assignor agrees to assign such patents and patent applications to Assignee, and Assignor further agrees, at no additional cost or expense to Assignor, to do all things as Assignee may reasonably request to effectuate such sale, assignment and transfer in respect to each such patent and patent applications.

 

IN WITNESS WHEREOF , Assignor, expressly intending to be legally bound hereby, has caused this assignment to be executed as of the     day of July, 2015.

 

 

ALS BIOPHARMA LLC

 

 

 

 

 

 

 

By:

 

 

 

Name: Allen B. Reitz, Ph.D.

 

 

Title: President

 

ACKNOWLEDGMENT

 

STATE OF

COUNTY OF

 

On this      day of August, 2015, Allen B. Reitz; Ph.D. personally appeared before me, and to me personally known, stating that the foregoing instrument was signed on behalf of him, and acknowledged the execution of the instrument as his free act and deed.

 

 

 

 

 

 

 

Notary Public

[SEAL]

 

My Commission Expires:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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APPENDIX A

 

ORIGINAL PATENT RIGHTS

 

[* * *]

 

APPENDIX B

 

SECONDARY PATENT RIGHTS

 

[* * *]

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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APPENDIX C

 

RESEARCH PLAN

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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EXHIBIT B

 

FORM OF WARRANT

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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WARRANT No. 1

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 6, 2014, BY AND AMONG BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD. (THE “ COMPANY ”), CERTAIN STOCKHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “ STOCKHOLDERS AGREEMENT ”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. A COPY OF THE STOCKHOLDERS AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

Warrant Certificate No.: 1

 

Original Issue Date: August 15, 2015

 

FOR VALUE RECEIVED, BIOHAVEN PHARMACEUTICAL HOLDING COMPANY, LTD., a British Virgin Island company (the “ Company ”), hereby certifies that ALS BIOPHARMA, LLC, a Delaware limited liability company, or its registered assigns (the “ Holder ”) is entitled to purchase from the Company Five Hundred Fifty (550) duly authorized, validly issued, fully paid and nonassessable Common Shares at a purchase price per share of U.S.$2,800.00 (subject to adjustment as provided herein, the “ Exercise Price ”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in Section 1 hereof.

 

This Warrant has been issued pursuant to the terms of the ALS Biopharma Agreement, dated as of August 10, 2015 (the “ ALS Agreement ”), among the Company, Fox Chase Chemical Diversity Center Inc., a Delaware corporation, and the Holder.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.             Definitions . As used in this Warrant, the following terms have the respective meanings set forth below:

 

Aggregate Exercise Price ” means an amount equal to the prod net of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise Date in accordance with the terms of this Warrant.

 

ALS Agreement ” has the meaning set forth in the preamble.

 

Board ” means the board of directors of the Company.

 

Business Day ” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the British Virgin Islands are authorized or obligated by law or executive order to close.

 

Common Shares ” means the common shares, no par value, of the Company, and any capital stock into which such Common Shares shall have been converted, exchanged. or reclassified following the date hereof

 

Company ” has the meaning set forth in the preamble.

 

Exercise Date ” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

Exercise Notice ” has the meaning set forth in Section 3(a)(i) .

 

Exercise Period ” has the meaning set forth in Section 2 .

 

Exercise Price ” has the meaning set forth in the preamble.

 

Fair Market Value ” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Shares for such day on all United States securities exchanges on which the Common Shares may at the time be listed; (b) if there have been no sales of the Common Shares on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Shares on all such exchanges at the end of such day; (c) if on any such day the Common Shares are not listed on a United States securities exchange, the closing sales price of the Common Shares on the principal stock exchange on which the Common Shares may at the time be listed; (d) if on any such day the Common Shares are not listed on a United States securities exchange and there is no other principal stock exchange on which the Common Shares are listed, the closing sales price of the Common Shares as quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association for such day; or (d) if there have been no sales of the Common Shares on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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the average of the highest bid and lowest asked prices for the Common Shares quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided , that if the Common Shares are listed on any securities exchange under clause (a), (b) or (c) above; the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Shares are not listed on any United States securities exchange or any other principal stock exchange and are not quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the “Fair Market Value” of the Common Shares shall be the fair market value per share as determined jointly by the Board and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the Common Shares within a reasonable period of time (not to exceed ten (10) Business Days) from the Company’s receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne equally by the Company and the Holder.

 

Holder ” has the meaning set forth in the preamble.

 

Original Issue Date ” means August 15, 2015.

 

OTC Bulletin Board ” means the Financial Industry Regulatory Authority OTC Bulletin Board electronic inter-dealer quotation system.

 

Person ” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

Pink OTC Markets ” means the OTC Markets Group Inc. electronic inter-dealer quotation system, including OTCQX, OTCQB and OTC Pink.

 

Stockholders Agreement ” has the meaning set forth in the legend endorsed hereon.

 

Warrant ” means this Warrant No. 1 and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

Warrant Shares ” means the Common Shares or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.

 

2.                                       Term of Warrant . Subject to the terms and conditions hereof, at any time or from time to time after the date hereof and prior to 5:00 p.m., New York time, on the tenth (10th) anniversary of the date hereof or, if such day is not a Business Day, on the closest preceding Business Day (the “ Exercise Period ”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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3.                                       Exercise of Warrant .

 

(a)                                  Exercise Procedure . This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

 

(i)                                      surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto as Exhibit A (each, an “ Exercise Notice ”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)                                   payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b) .

 

(b)                                  Payment of the Aggregate Exercise Price . Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Notice, by the following methods:

 

(i)                                      by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price; or

 

(ii)                                   by instructing the Company to issue Warrant Shares then issuable upon all or any part of this Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender this Warrant in exchange for the number of Warrant Shares as is computed using the following formula:

 

X = Y(A-B) ÷ A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder;

 

Y = the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 3(a) ;

 

A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date; and

 

B = the Exercise Price in effect under this Warrant as of the applicable Exercise Date.

 

In the event of any withholding of Warrant Shares to effect a net settlement pursuant to clause (ii) above where the number of shares issuable thereunder is not a whole number, the number of shares issued by the Company on a net basis under clause (ii) shall be rounded down to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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incremental fraction of a share being so withheld by the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld multiplied by (y) the Fair Market Value per Warrant Share as of the Exercise Date.

 

(c)                                   Delivery of Stock Certificates . Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)  hereof), the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, with any appropriate transfer restrictions thereon, together with cash in lieu of any fraction of a share, as provided in Section 3(d)  hereof. The stock Certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to compliance with Section 6 below, such other Person’s name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

(d)                                  Fractional Shares . The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                   Delivery of New Warrant . Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c)  hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

 

(f)                                    Valid Issuance of Warrant and Warrant Shares; Payment of Taxes . With respect to the exercise of this warrant, the Company hereby represents, covenants and agrees:

 

(i)                                      This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                   All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any shareholder of the Company and free and clear of all taxes, liens and charges.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

6



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

(iii)                                The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)                               The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any primary securities exchange upon which Common Shares or other securities constituting Warrant Shares are listed at the time of such exercise.

 

(v)                                  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided , that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

(g)                                   Conditional Exercise . Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to he made in connection with a sale of the Company (pursuant to a merger, safe of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                  Reservation of Shares . During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Shares or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.

 

4.                                       Adjustment to Exercise Price and Number of Warrant Shares . The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4 (in each case, after taking into consideration any prior adjustments pursuant to this Section 4 ).

 

(a)                                  Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Shares . If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Shares or any other capital stock of the Company that is payable in Common Shares, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Shares into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

7



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4(a)  shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

(b)                                  Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger . In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(a) ), in each case which entitles the holders of Common Shares to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Shares, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Shares reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(b)  shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions, The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b) , the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(b)  with respect to this Warrant.

 

(c)                                   Certificate as to Adjustment .

 

(i)                                      As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)                                   As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

 

(d)                                  Notices . In the event:

 

(i)                                      that the Company shall take a record of the holders of its Common Shares (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                   of any capital reorganization of the Company, any reclassification of the Common Shares of the Company, any consolidation or Merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

 

(iii)                                of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

9



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

which the holders of record of Common Shares (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their Common Shares (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

 

5.                                       Stockholders Agreement . All Warrant shares issuable upon exercise of this Warrant are and shall become subject to, and have the benefit of, the Stockholders Agreement, and the Holder shall be required, for so long as the Holder holds any Warrant Shares, to become and remain a party to the Stockholders Agreement.

 

6.                                       Transfer of Warrant . Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B , together with funds sufficient to pay any transfer taxes described in Section 3(f)(v)  in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the, assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

7.                                       Holder Not Deemed a Stockholder; Limitations on Liability . Except as otherwise specifically provided herein and far common shares held directly by Holder not subject to this Warrant, prior to the issuance to the Holder of the Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

8.                                       Replacement on Loss; Division and Combination .

 

(a)                                  Replacement of Warrant on Loss . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

10



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided , that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)                                  Division and Combination of Warrant . Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with .a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant and the Stockholders Agreement as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

 

9.                                       No Impairment . The Company shall not, by amendment of its Articles of Association or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any ether voluntary action, avoid. or seek to avoid the observance or performance of any of the terms to he observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.

 

10.                                Compliance with the Securities Act .

 

(a)                                  Agreement to Comply with the Securities Act; Legend . The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “ Securities Act ”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

11



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

(b)                                  Representations of the Holder . In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                                      The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

 

(ii)                                   The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                                The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

 

11.                                Warrant Register . The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

 

12.                                Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

12



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12 ).

 

If to the Company:

Biohaven Pharmaceutical Holding Company Ltd.

 

234 Church Street, Suite 301

 

New Haven, CT 06520

 

E-mail: [***]

 

Attention:

Vice President

 

 

If to the Holder:

ALS Biopharma LLC

 

3805 Old Easton Road

 

Doyletown, PA 18902

 

E-mail: [***]

 

Attention:

Allen B. Reitz, Ph.D.

 

13.                                Cumulative Remedies . Except to the extent expressly provided in Section 7 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

14.                                Equitable Relief . Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

 

15.                                Entire Agreement . This Warrant, together with the Stockholders Agreement and the ALS Agreement, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Warrant, the Stockholders Agreement and the ALS Agreement, the statements in the body of this Warrant shall control.

 

16.                                Successor and Assigns . This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

13


 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

17.                                No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

18.                                Headings . The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

 

19.                                Amendment and Modification; Waiver . Except as otherwise provided herein, this Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as at waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

20.                                Severability . If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

21.                                Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the Territory of the British Virgin Islands without giving effect to any choice or conflict of law provision or rule (whether of the Territory of the British Virgin Islands or any other jurisdiction) that would cause the application of the domestic substantive laws of any other jurisdiction.

 

22.                                Submission to Jurisdiction . Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the courts located in Road Town, Tortola, British Virgin Islands, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

14



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

23.                                Waiver of Jury Trial . Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

 

24.                                Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

 

25.                                No Strict Construction . This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

15



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

 

 

BIOHAVEN PHARMACEUTICAL

 

HOLDING COMPANY LTD.

 

 

 

By:

/s/ Vlad Coric

 

Name: Vlad Coric MD

 

Title: CEO

 

 

 

Accepted and agreed,

 

 

 

ALS Biopharma LLC

 

 

 

By:

/s/ Allen B. Reitz

 

Name: Allen B. Reitz

 

Title: CEO

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

16



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

EXHIBIT A

 

Form of Exercise Notice

 

(To be executed by the Holder to purchase Common Shares

under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)                                  The undersigned is the Holder of Warrant No. 1 (the “Warrant”) issued by Biohaven Pharmaceutical Holding Company Ltd., a British Virgin Islands corporation (the “Company”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

 

(2)                                  The undersigned hereby exercises its right to purchase           Warrant Shares pursuant to the Warrant.

 

(3)                                  The Holder intends that payment of the Exercise Price shall be made as (check one):

 

o                                     Cash Exercise

 

o                                     “Cashless Exercise” under Section 10

 

(4)                                  If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $               in immediately available funds to the Company in accordance with the terms of the Warrant.

 

(5)                                  Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.

 

Dated:                                                                                                                                                                  , 20

 

Name of Holder:

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Exhibit B

 

Biohaven Pharmaceutical Holding Company Ltd.

 

FORM OF ASSIGNMENT

 

(To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                               (the “Transferee”) the right represented by the within Warrant to purchase            shares of Common Stock of Biohaven Pharmaceutical Holding Company Ltd. (the “Company”) to which the within Warrant relates and appoints                            attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

Dated:                                                           , 20

 

 

 

 

(Signature must conform in all respects to

 

name of holder as specified on the face of the

 

Warrant)

 

 

 

 

 

Address of Transferee

 

 

In the presence of:

 

 

 

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

AMENDMENT NO. 1 TO

ALS BIOPHARMA AGREEMENT

 

This Amendment No. 1 to ALS Biopharma Agreement (this “Amendment”), by and among ALS Biopharma, LLC, a Delaware limited liability company having a place of business at 3805 Old Easton Road, Doylestown, PA 18902 (“ALS”), Fox Chase Chemical Diversity Center Inc., a Delaware corporation having a place of business at 3805 Old Easton Road, Doylestown, PA 18902 (“FCCDC”) and Biohaven Pharmaceutical Holding Company, Ltd., a British Virgin Island company with a business office located at 234 Church Street, Suite 301, New Haven, Connecticut 06520 (“Biohaven”) is effective as of February     , 2017 (the “Effective Date”).

 

WHEREAS, Biohaven, ALS and FCCDC entered into the ALS Biopharma Agreement (the “Original Agreement”) on August 10, 2015; and

 

WHEREAS, the parties desire to amend the Original Agreement to remove ALS’s Observer Rights (as defined in the Original Agreement) upon the effectiveness of the registration statement for the initial public offering of the Company’s common shares.

 

NOW, THEREFORE, the parties agree to amend the Original Agreement as follows, with such changes being effective upon the effectiveness of the registration statement for the initial public offering of the Company’s common shares:

 

1.                                       Section 2.18 of the Original Agreement is deleted in its entirety and replaced by the words “Intentionally omitted.”

 

2.                                       The second sentence of Section 5.2(d) (“ALS will receive OBSERVER RIGHTS upon the filing of the first IND for a PATENT PRODUCT.”) is deleted in its entirety.

 

3.                                       The remaining terms and conditions of the Original Agreement will remain in full force and effect.

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives.

 

ALS BIOPHARMA, LLC

BIOHAVEN PHARMACEUTICAL

 

HOLDING COMPANY LTD

 

 

 

 

By:

/s/ Allen B. Reitz

 

By:

/s/ Vlad Coric MD

 

Name:

Allen B. Reitz

 

 

Name:

Vlad Coric MD

 

Title:

CEO

 

 

Title:

CEO

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

FOX CHASE CHEMICAL CENTER

ALLEN REITZ, individually as to

FOR CHEMICAL DIVERSITY

Sections 8.4 and 8.5

CENTER INC.

 

 

 

By:  

/s/ Allen B. Reitz

 

/s/ Allen B. Reitz

 

Name:

Allen B. Reitz

 

 

 

Title:

CEO

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

20




Exhibit 10.3

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

LICENCE AGREEMENT

 

This License Agreement (the “ Agreement ”) is made and entered into effective as of 5 October 2016 (the “ Effective Date ”) by and between AstraZeneca AB, a company incorporated in Sweden under no. 556011-7482 with its registered office at SE-151 85 Sodertalje, Sweden and with offices at SE-431 83 Molndal, Sweden (“ AstraZeneca ”) and BioHaven Pharmaceutical Holding Company Ltd. a British Virgin Islands business corporation with a registered office address of P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands (“ Licensee ”). AstraZeneca and Licensee are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties.

 

BACKGROUND

 

AstraZeneca owns and controls certain intellectual property rights with respect to the Licensed Compounds (as defined herein) and Licensed Products (as defined herein) in the Territory (as defined herein); and

 

AstraZeneca wishes to grant a license to Licensee and Licensee wishes to take, a license under such intellectual property rights to develop and commercialize Licensed Products in the Territory, in each case in accordance with the terms and conditions set forth below.

 

NOW, THEREFORE , in consideration of the premises and the mutual promises and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

 

Article 1
DEFINITIONS

 

Unless otherwise specifically provided herein, the following terms shall have the following meanings:

 

1.1                                AAA ” has the meaning set forth in Section 11.5.2.

 

1.2                                Affiliate ” means, with respect to a Party, any Person that, directly or indirectly, through one (1) or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means: (i) the possession, directly or indirectly, of the power to direct the management or policies of a business entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance or otherwise; or (ii) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

 

1.3                                Agreement ” has the meaning set forth in the preamble hereto.

 

1.4                                Anti-Corruption Laws ” means the U.S. Foreign Corrupt Practices Act, as amended, the UK Bribery Act 2010, as amended, and any other applicable anti-corruption laws and laws for the prevention of fraud, racketeering, money laundering or terrorism.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.5                                Applicable Law ” means applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time, including the FFDCA and the Anti-Corruption Laws.

 

1.6                                Arbitrators ” has the meaning set forth in Section 11.5.3.

 

1.7                                AstraZeneca ” has the meaning set forth in the preamble hereto.

 

1.8                                AstraZeneca Know-How ” means (i) the Know-How which is Controlled by AstraZeneca or any of its Affiliates as of the Effective Date or at any time during the time of the Agreement and that is (ii) reasonably necessary for the Exploitation of Licensed Compound(s) in the Field in the Territory, but excluding any Information to the extent claimed by published AstraZeneca Patents.

 

1.9                                AstraZeneca Patents ” means (i) the Patents that are Controlled by AstraZeneca or any of its Affiliates as of the Effective Date or at any time during the term of the Agreement and that are (ii) reasonably necessary for the Exploitation of a Licensed Compound(s) in the Field in the Territory. The AstraZeneca Patents as of the Effective Date are listed in Schedule B.

 

1.10                         AstraZeneca Regulatory Documentation ” means Regulatory Documentation Controlled by AstraZeneca or any of its Affiliates as of the Effective Date relating exclusively to the Licensed Compound(s) in the Field in the Territory.

 

1.11                         AstraZeneca’s Anti-Corruption Rules and Policies ” means the Key Principles from AstraZeneca’s ABAC and External Interactions Policies regarding anti-bribery and corruption issues, available on AstraZeneca’s website, www.astrazeneca.cam/sustainability/ethical-business-practices.html, as the same may be amended, modified or supplemented from time to time.

 

1.12                         Audit ” has the meaning set forth in Section 8.6.5.

 

1.13                         Auditor ” has the meaning set forth in Section 5.11.

 

1.14                         Authorized Generic Version ” means, with respect to a pharmaceutical product, any other pharmaceutical product that (i) is sold under the Drug Approval Application for the first product or any supplement or amendment thereto, (ii) is sold under a different Trademark than the first product and (iii) has an NDC number that differs from the NDC number for the first product (other than on a temporary basis as may be necessary to launch the second product in the Territory).

 

1.15                         Breaching Party ” has the meaning set forth in Section 9.2.1.

 

1.16                         Business Day ” means a day other than a Saturday or Sunday or a day on which banking institutions in New York are permitted or required to be closed.

 

1.17                         Calendar Quarter ” means each successive period of three (3) calendar months commencing on 1 January, 1 April, 1 July and 1 October, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of 1 January, 1 April, 1 July or 1 October after the Effective Date and the last Calendar Quarter shall end on the last day of the Term.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.18                         Calendar Year ” means each successive period of twelve (12) calendar months commencing on 1 January and ending on 31 December, except that the first Calendar Year of the Term shall commence on the Effective Date and end on 31 December of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on 1 January of the year in which the Term ends and end on the last day of the Term.

 

1.19                         Combination Product ” means a Licensed Product that is comprised of or contains a Licensed Compound as an active ingredient together with one (1) or more other active ingredients or Delivery Systems and is sold either as a fixed dose/unit or as separate doses/units in a single package.

 

1.20                         Commercialization ” means any and all activities directed to the preparation for sale of, offering for sale of or sale of a Licensed Product, including activities related to marketing, promoting, distributing and importing such Licensed Product and interacting with Regulatory Authorities regarding any of the foregoing. When used as a verb, to Commercialize” and “Commercializing” means to engage in Commercialization and “Commercialized” has a corresponding meaning.

 

1.21                         Commercially Reasonable Efforts ” means, with respect to the performance of Development, Commercialization or Manufacturing activities with respect to a Licensed Compound or a Licensed Product by Licensee, the carrying out of such activities using efforts and resources comparable to the efforts and resources commonly used in the research-based bio-pharmaceutical industry for compounds or products of similar market potential at a similar stage in development or product life. “ Commercially Reasonable Efforts ” shall be determined on a country-by-country (or region-by-region, where applicable) and indication-by-indication basis, without regard to the particular circumstances of Licensee, including any other product opportunities of Licensee.

 

1.22                         Confidential Information ” has the meaning set forth in Section 6.1.

 

1.23                         Control ” means, with respect to any item of Information, Regulatory Documentation, material, Patent or other intellectual property right, possession of the right, whether directly or indirectly and whether by ownership, license or otherwise (other than by operation of the license and other grants in Section 2.1), to grant a license, sublicense or other right (including the right to reference Regulatory Documentation) to or under such Information, Regulatory Documentation, Patent or other intellectual property right as provided for herein without violating the terms of any agreement with any Third Party and at no cost to the Party granting the rights unless the Party being granted the rights agrees to pay any such costs (including milestones and royalties) associated with such grant.

 

1.24                         Controlling Party ” has the meaning set forth in Section 6.5.

 

1.25                         Delivery System ” means any delivery system comprising equipment, instrumentation, one or more devices, or other components designed to assist in, or useful for, the administration of a Licensed Compound or a Licensed Product.

 

1.26                         Development ” means all activities related to research, pre-clinical and other non-clinical testing, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control, clinical studies, including Manufacturing in support thereof, statistical analysis and report writing, the preparation and submission of Drug Approval Applications, regulatory affairs with respect to the foregoing and all other activities necessary or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory Approval. When used as a verb, “ Develop ” means to engage in Development.

 

1.27                         Dispute ” has the meaning set forth in Section 10.5.

 

1.28                         Dollars ” or “$” means United States Dollars.

 

1.29                         Drug Approval Application ” means a New Drug Application as defined in the FFDCA or any corresponding foreign application in the Territory, including, with respect to the European Union, a Marketing Authorization Application filed with the EMA pursuant to the centralized approval procedure or with the applicable Regulatory Authority of a country in Europe with respect to the mutual recognition or any other national approval.

 

1.30                         Effective Date ” has the meaning set forth in the preamble hereto.

 

1.31                         EMA ” means the European Medicines Agency and any successor agency thereto.

 

1.32                         Enforcing Party ” has the meaning set forth in Section 6.3.2.

 

1.33                         European Union ” or “ EU ” means the economic, scientific and political organization of member states as it may be constituted as at the Effective Date.

 

1.34                         Existing Patents ” has the meaning set forth in Section 7.2.

 

1.35                         Expert ” has the meaning set forth in Section 11.5.2.

 

1.36                         Exploit ” means to make, have made, import, use, sell or offer for sale, including to research, develop, commercialize, register, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of. “ Exploitation ” means the act of Exploiting a compound, product or process.

 

1.37                         FDA ” means the United States Food and Drug Administration and any successor agency thereto.

 

1.38                         FFDCA ” means the United States Food, Drug, and Cosmetic Act, as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).

 

1.39                         Field ” means all human uses.

 

1.40                         Financing ” shall mean that successful completion of the issuing of equity offered by the Licensee which raises at least thirty million US Dollars (USD$30,000,000).

 

1.41                         Financing Period ” shall mean the period of ninety (90) days from the Effective Date.

 

1.42                         First Commercial Sale ” means, with respect to a Licensed Product and a country, the first sale for monetary value for use or consumption by the end user of such Licensed Product in such country after

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Regulatory Approval for such Licensed Product has been obtained in such country. Sales prior to receipt of Regulatory Approval for such Licensed Product, such as so-called “ treatment IND sales, ” “ named patient sales, ” and “ compassionate use sales, ” shall not be construed as a First Commercial Sale.

 

1.43                         GAAP ” means, with respect to a Party or its Affiliates or its or their Sublicensees, United States generally accepted accounting principles, International Financial Reporting Standards or such other similar national standards as such Party, Affiliates or its or their Sublicensee adopts, in each case, consistently applied.

 

1.44                         Generic Product ” means, with respect to a particular mode of administration and dosage strength of a Licensed Product, any other prescription pharmaceutical product that (i) contains the same active ingredient(s) as such Licensed Product, (ii) has the same mode of administration and dosage strength as such Licensed Product and (ii) is “ therapeutically equivalent ” as evaluated by the FDA, applying the definition of “ therapeutically equivalent ” set forth in the preface to the FDA’s Orange Book (or, with respect to any country in the Territory outside the United States, is similarly substitutable under equivalent Applicable Law in such country), with respect to such mode of administration and dosage strength, as such Licensed Product.

 

1.45                         Government Official ” means (i) any Person employed by or acting on behalf of a government, government-controlled agency or entity or public international organization, (ii) any political party, party official or candidate, (iii) any Person who holds or performs the duties of an appointment, office or position created by custom or convention or (iv) any Person who holds himself out to be the authorized intermediary of any of the foregoing.

 

1.46                         Hatch-Waxman Act ” means the U.S. “Drug Price Competition and Patent Term Restoration Act” of 1984, as set forth at 21 U.S.C. §355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV).

 

1.47                         Improvements ” means any invention, discovery, development or modification with respect to a Licensed Compound or a Licensed Product or relating to the Exploitation thereof, whether or not patented or patentable, including any enhancement in the efficiency, operation, Manufacture, ingredients, preparation, presentation, formulation, means of delivery (including the development of any Delivery System or enhancement thereto) or dosage of such Licensed Compound or Licensed Product, any discovery or development of any new or expanded indications for such Licensed Compound or Licensed Product, or any discovery or development that improves the stability, safety or efficacy of such Licensed Compound or Licensed Product.

 

1.48                         IND ” means (i) an investigational new drug application filed with the FDA for authorization to commence clinical studies and its equivalent in other countries or regulatory jurisdictions and (ii) all supplements and amendments that may be filed with respect to the foregoing.

 

1.49                         Indemnification Claim Notice ” has the meaning set forth in Section 9.3.1.

 

1.50                         Indemnified Party ” has the meaning set forth in Section 8.3.1.

 

1.51                         Information ” means all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

control data and information, including study designs and protocols, assays and biological methodology, in each case (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed.

 

1.52                         Infringement ” has the meaning set forth in Section 5.3.1.

 

1.53                         Initiation ” means, with respect to a clinical study, the first dosing of the first human subject in such clinical study.

 

1.54                         Invoiced Sales ” has the meaning set forth in the definition of “ Net Sales.

 

1.55                         Knowledge ” means the actual knowledge (but without any duty to conduct any investigation with respect to such facts and information) of AstraZeneca’s [* * *] or Licensee’s [* * *] or any person holding a position equivalent to such job title (but only to the extent such position exists).

 

1.56                         Licensed Compounds ” means the pharmaceutical compounds known as [* * *], or any compound that is within the scope of a Valid Claim of the AstraZeneca Patents listed in Schedule B.

 

1.57                         Licensed IP ” means AstraZeneca Know-How and AstraZeneca Patents.

 

1.58                         Licensed Product ” means any product that is comprised of or contains a Licensed Compound, alone or in combination with one (1) or more other active ingredients, in any and all forms, presentations, dosages and formulations, which, for clarity, shall include any Delivery Systems that are sold with, or for the administration of, such Licensed Compound. Licensed Products shall be construed accordingly.

 

1.59                         Licensed Product Agreement ” means, with respect to a Licensed Product or any Improvement, any agreement entered into by and between Licensee or any of its Affiliates or its or their Sublicensees, on the one hand and one (1) or more Third Parties, on the other hand, that is reasonably necessary for the Exploitation of such Licensed Product in the Field in the Territory, including (i) any agreement pursuant to which Licensee, its Affiliates or its or their Sublicensees receives any license or other rights to Exploit such Licensed Product, (ii) supply agreements pursuant to which Licensee, its Affiliates or its or their Sublicensees obtain or will obtain quantities of such Licensed Product, (iii) clinical trial agreements, (iv) contract research organization agreements and (v) service agreements.

 

1.60                         Licensee ” has the meaning set forth in the preamble hereto.

 

1.61                         Licensee Know-How ” means all Information Controlled by Licensee or any of its Affiliates or its or their Sublicensees as of the Effective Date or at any time during the Term that is (i) not generally known and (ii) reasonably necessary for the Exploitation of a Licensed Compound or a Licensed Product or any Improvement thereto, but excluding any Information to the extent covered or claimed by published Licensee Patents.

 

1.62                         Licensee Patents ” means all of the Patents Controlled by Licensee or any of its Affiliates or its or their Sublicensees as of the Effective Date or at any time during the Term that are reasonably necessary (or, with respect to Patent applications, would be reasonably necessary if such Patent applications were to issue as Patents) for the Exploitation of a Licensed Compound or a Licensed Product or any Improvement thereto.

 

1.63                         Licensee Representatives ” has the meaning set forth in Section 7.6.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.64                         Licence Shares ” has the meaning set forth in Section 4.2.1

 

1.65                         Losses ” has the meaning set forth in Section 8.1.

 

1.66                         Major European Territory ” means [* * *].

 

1.67                         Manufacture ” and “ Manufacturing ” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labelling, shipping and holding of a product or any intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance and quality control.

 

1.68                         Material Anti-Corruption Law Violation ” means a violation of an Anti-Corruption Law relating to the subject matter of this Agreement that would, if it were publicly known, in the reasonable view of AstraZeneca, have a material adverse effect on AstraZeneca or on the reputation of AstraZeneca because of its relationship with Licensee.

 

1.69                         Net Sales ” means, with respect to a Licensed Product for any period, the gross amount billed or invoiced by Licensee, its Affiliates or its or their Sublicensees (including distributors of Authorized Generic Versions of Licensed Product(s)) to Third Parties for the sale of a Licensed Product (the “ Invoiced Sales ”), less deductions for:

 

1.69.1               normal and customary [* * *];

 

1.69.2               amounts repaid or credited [* * *];

 

1.69.3               freight, postage, shipping and insurance expenses [* * *];

 

1.69.4               customs and excise duties and other taxes or duties [* * *];

 

1.69.5               rebates and similar payments made [* * *];

 

1.69.6               the portion of [* * *] fees paid [* * *];

 

1.69.7               that portion of the [* * *] fee [* * *]; and

 

1.69.8               any actual bad debt expense recorded in accordance with GAAP from customers related to sales of a Licensed Product, such bad debt not to exceed [* * *] less the deductions set forth in 1.69.1-1.69.7.

 

Any of the deductions listed above that involves a payment by Licensee, its Affiliates or its or their Sublicensees shall be taken as a deduction in the Calendar Quarter in which the payment is accrued by such entity. For purposes of determining Net Sales, a Licensed Product shall be deemed to be sold when invoiced and a “ sale ” shall not include [* * *]. Licensee’s, its Affiliates’ or its or their Sublicensees’ transfer of any Licensed Product to an Affiliate or Sublicensee shall not result in any Net Sales, unless such Licensed Product is consumed or administered by such Affiliate or Sublicensee in the course of its commercial activities. With respect to any Licensed Product that is consumed or administered by Licensee or its Affiliates or its or their Sublicensees, Net Sales shall include [* * *].

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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In the event that a Licensed Product is sold in any country in the form of a Combination Product, Net Sales of such Combination Product shall be adjusted by [* * *]; provided that the invoice price in a country for each Licensed Product that contains only the Licensed Compound(s) and each product that contains solely active ingredient(s) other than the Licensed Compound(s) included in the Combination Product shall be for a quantity comparable to that used in such Combination Product and of substantially the same class, purity and potency. If either such Licensed Product that contains the Licensed Compound(s) as its sole active ingredient or a product that contains an active ingredient (other than the Licensed Product) in the Combination Product as its sole active ingredient(s) is not sold separately in a particular country, the Parties shall negotiate in good faith a reasonable adjustment to Net Sales in such country that takes into account the medical contribution to the Combination Product of and all other factors reasonably relevant to the relative value of, the Licensed Compound(s), on the one hand and all of the other active ingredient(s), collectively, on the other hand.

 

[* * *], if such basis cannot be determined, in accordance with Licensee’s, its Affiliates’ or its or their Sublicensees’ existing allocation method; provided that any such allocation to a Licensed Product shall be (i) done in accordance with Applicable Law, including any price reporting laws, rules and regulations and (ii) subject to clause (i), in no event no greater than a pro rata allocation, such that the portion of each of foregoing rebates, discounts and other forms of reimbursements shall not be included as deductions from Invoiced Sales hereunder in any amount greater than [* * *] to which such foregoing rebate, discount or other form of reimbursement, as applicable, are granted.

 

Subject to the above, Net Sales shall be calculated in accordance with the standard internal policies and procedures of Licensee, its Affiliates or its or their Sublicensees, which must be in accordance with GAAP.

 

1.70                         Non-Breaching Party ” has the meaning set forth in Section 9.2.1.

 

1.71                         Notice Period ” shall have the meaning set forth in Section 9.2.1.

 

1.72                         Party ” and “ Parties ” have the meaning set forth in the preamble hereto.

 

1.73                         Patents ” means: (i) all national, regional and international patents and patent applications, including provisional patent applications; (ii) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications; (iii) any and all patents that have issued or in the future issue from the foregoing patent applications ((i) and (ii)), including utility models, petty patents, innovation patents and design patents and certificates of invention; (iv) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((i), (ii) and (iii)); and (v) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.

 

1.74                         Payment ” has the meaning set forth in Section 4.6.1.

 

1.75                         Person ” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.76                         Phase 2b Study ” shall mean a clinical study conducted in any country that is intended to explore the efficacy and safety of a Licensed Product or Licensed Compound; e.g., through use of a variety of doses, dose response and duration of effect, that would satisfy the requirements of 21 CFR 312.21(b), or an equivalent Clinical Study required by a Regulatory Authority in a jurisdiction outside of the United States.

 

1.77                         Prosecuting Party ” has the meaning set forth in Section 5.2.1.

 

1.78                         Provisions ” has the meaning set forth in Section 7.6.6.

 

1.79                         Regulatory Approval ” means, with respect to a country in the Territory, any and all approvals (including Drug Approval Applications), licenses, registrations or authorizations of any Regulatory Authority necessary to commercially distribute, sell or market a Licensed Product or any Improvement thereto in such country, including, where applicable, (i) pricing or reimbursement approval in such country, (ii) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto) and (iii) labelling approval.

 

1.80                         Regulatory Authority ” means any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of Licensed Compounds or Licensed Products or any Improvement thereto in the Territory, including the FDA in the United States and the EMA in the European Union.

 

1.81                         Regulatory Documentation ” means: all (i) applications (including all INDs and Drug Approval Applications), registrations, licenses, authorizations and approvals (including Regulatory Approvals); (ii) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents with respect thereto, including all adverse event files and complaint files; and (iii) clinical and other data contained or relied upon in any of the foregoing; in each case ((i), (ii) and (iii)) relating to a Licensed Compound or a Licensed Product or any Improvement thereto.

 

1.82                         Regulatory Exclusivity Period ” means, with respect to each Licensed Product in any country in the Territory, any period of data, market or other regulatory exclusivity (other than Patent exclusivity) granted or afforded by Applicable Law or by a Regulatory Authority in such country that confers exclusive marketing rights with respect to such Licensed Product in such country or prevents another party from using or otherwise relying on any data supporting the approval of the NDA or supporting the MAA for such Licensed Product without the prior written consent of the NDA-holder or MAA-holder, as applicable, such as new chemical entity exclusivity, new use or indication exclusivity, new formulation exclusivity, orphan drug exclusivity, non-patent related paediatric exclusivity or any other applicable marketing or data exclusivity, including any such periods listed in the FDA’s Orange Book or any such periods under national implementations in the EU of Article 10 of Directive 2001/83/ED, Article 14(11) of Parliament and Council Regulation (EC) No. 726/2004, Parliament and Council Regulation (ED) No. 141/2000 on orphan medicines, Parliament and Council Regulation (ED) No. 1901/2006 on medicinal products for paediatric use and all international equivalents of any of the foregoing.

 

1.83                         Retained Rights ” mean, with respect to the Licensed Compounds and Licensed Products in the Field in the Territory, the rights of AstraZeneca, its Affiliates and its and their licensors, (sub)licensees and contractors to perform its and their obligations under this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.84                         Royalty Term ” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period beginning on the date of the First Commercial Sale of such Licensed Product in such country and ending on the latest to occur of: (i) ten years from such First Commercial Sale or (ii) the expiration of the last-to-expire AstraZeneca Patent in such country that contains a Valid Claim that, if asserted against a Person, would, in the absence of a license, be sufficient to prevent the sale or use by such Person of all Generic Products with respect to such Licensed Product in such country.

 

1.85                         Senior Officer ” means, with respect to AstraZeneca, [* * *] and with respect to Licensee, [* * *].

 

1.86                         Sublicensee ” means a Person, other than an Affiliate, that is granted a sublicense by Licensee or its Affiliate under the grants in Section 2.1, as provided in Section 2.2, including any distributors of Authorized Generic Versions of a Licensed Product, irrespective of whether such distributor is granted a sublicense hereunder.

 

1.87                         Tax ” or “ Taxation ” means any form of tax or taxation, levy, duty, charge, social security charge, contribution, or withholding of whatever nature (including any related fine, penalty, surcharge or interest) imposed by, or payable to, a Tax Authority.

 

1.88                         Tax Authority ” means any government, state or municipality, or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official anywhere in the world, authorized to levy Tax.

 

1.89                         Term ” has the meaning set forth in Section 9.1.

 

1.90                         Terminated Territory ” means each country with respect to which this Agreement is terminated by; (a) AstraZeneca pursuant to Section 9.2.1; (b) by Licensee pursuant to Section 9.2.3; or,(c) if this Agreement is terminated in its entirety, the entire Territory.

 

1.91                         Termination Notice ” has the meaning set forth in Section 9.2.1.

 

1.92                         Territory ” means the world, other than any Terminated Territory.

 

1.93                         Third Party ” means any Person other than AstraZeneca, Licensee and their respective Affiliates.

 

1.94                         Third Party Claims ” has the meaning set forth in Section 8.1.

 

1.95                         Third Party Infringement Claim ” has the meaning set forth in Section 6.4.

 

1.96                         Third Party Patent Right ” has the meaning set forth in Section 5.6.

 

1.97                         Top Line Data ” means with respect to a clinical study, a summary of demographic data, the data for the primary endpoint and a summary of safety data, which are based on an unblinded, locked database. All data will be collected in a 21 CFR 11 validated database with full audit trail.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.98                         United States ” or “ U.S. ” means the United States of America and its territories and possessions (including the District of Columbia and Puerto Rico).

 

1.99                         Valid Claim ” means (i) a claim of any issued and unexpired Patent whose validity, enforceability or patentability has not been affected by (a) irretrievable lapse, abandonment, revocation, dedication to the public or disclaimer or (b) a holding, finding or decision of invalidity, unenforceability or non-patentability by a court, governmental agency, national or regional patent office or other appropriate body that has competent jurisdiction, such holding, finding or decision being final and unappealable or unappealed within the time allowed for appeal or (ii) a claim of a pending Patent application that was filed and is being prosecuted in good faith and has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application; provided, however, that if a claim of a pending patent application shall not have issued within [* * *] years after the earliest filing date from which such claim takes priority, such claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until a patent issues with such claim.

 

1.100                  VAT ” has the meaning set forth in Section 4.7.2.

 

Article 2
GRANT OF RIGHTS

 

2.1                                Grants to Licensee . Subject to Section 2.2 and the other terms and conditions of this Agreement, AstraZeneca hereby grants to Licensee:

 

2.1.1                      an exclusive (even as to AstraZeneca and its Affiliates) license (or sublicense, as the case may be), with the right to grant sublicenses in accordance with Section 2.2, under the Licensed IP to Exploit the Licensed Compounds and Licensed Products in the Field in the Territory and;

 

2.1.2                      an exclusive (including with regard to AstraZeneca and its Affiliates) license and right of reference, with the right to grant sublicenses in accordance with Section 2.2, under the AstraZeneca Regulatory Documentation that AstraZeneca or its Affiliates Control as of the Effective Date as necessary for purposes of Exploiting the Licensed Compounds and Licensed Products in the Field in the Territory.

 

2.2                                Sublicenses . Subject to Section 2.4.1, Licensee shall have the right to grant sublicenses (or further rights of reference), through multiple tiers of sublicensees, under the licenses and rights of reference granted in Section 2.1, to its Affiliates and other Persons; provided that any such sublicenses shall be (i) subject to AstraZeneca’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, except Licensee may grant a sublicense to an Affiliate with notice but without consent provided that such a sublicense shall terminate automatically in the event that such Affiliate ceases to be an Affiliate of Licensee; and (ii) consistent with, and expressly made subject to, the terms and conditions of this Agreement. Licensee shall cause each Sublicensee to comply with the applicable terms and conditions of this Agreement, as if such Sublicensee were a Party to this Agreement. Licensee hereby (x) guarantees the performance of its Affiliates and permitted Sublicensees that are sublicensed as permitted herein and the grant of any such sublicense shall not relieve Licensee of its obligations under this Agreement, except to the extent they are satisfactorily performed by such Sublicensee and (y) waives any requirement that AstraZeneca exhaust any right, power or remedy, or proceed against any Sublicensee for any obligation or performance under this Agreement prior to proceeding directly against Licensee. A copy of any sublicense agreement executed by Licensee shall be provided to AstraZeneca within [* * *] days after its execution; provided that the financial terms of any such sublicense agreement to the extent not pertinent to an understanding of a Party’s obligations or benefits under this Agreement may be redacted.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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2.3                                Limitations Applicable to License Grants.

 

2.3.1                      No Other Rights Granted by AstraZeneca . Except as expressly provided herein and without limiting the foregoing, AstraZeneca grants no other right or license, including any rights or licenses to the AstraZeneca Patents, the AstraZeneca Know-How, the AstraZeneca Regulatory Documentation or any other Patent or other intellectual property rights not otherwise expressly granted herein.

 

2.4                                AstraZeneca’s Right of First Negotiation.

 

2.4.1                      Upon receipt by Licensee or its Affiliates of Top Line Data from the first Phase 2b Study for a Licensed Product, Licensee shall provide written notice to AstraZeneca that it has received such data together with (1) a summary of Top Line Data and (if any) (2) additional data generated (by or on behalf of the Licensee) with respect to the Licensed Products not previously provided to AstraZeneca.

 

2.4.2                      For [* * *] days after receipt of such notice, AstraZeneca shall have an exclusive right to exercise a right of first negotiation to (1) have Licensee sublicense (or license, as the case may be) AstraZeneca with respect to such Licensed Product, or (2) buy-out Licensee’s rights with respect to such Licensed Product.

 

2.4.3                      If AstraZeneca does not give any notice within such [* * *] day period, gives notice that it does not wish to exercise the right of first negotiation within such [* * *] day period, or if AstraZeneca gives notice that it does wish to exercise the right of first negotiation within such [* * *] day period, but the Parties, after using good faith efforts (and this shall include, in the case of the Licensee, negotiating with AstraZeneca to the exclusion of all other Third Parties), are unable to execute a definitive agreement with respect to such transaction within [* * *] days of receipt of AstraZeneca’s notice, Licensee will have the right to enter into discussions with one or more Third Parties with respect to such Licensed Product and execute any agreement(s) thereon as it may, in its sole discretion, elect.

 

Article 3
TRANSITIONAL, DEVELOPMENT, REGULATORY AND COMMERCIALIZATION ACTIVITIES.

 

3.1                                Transition Plan . In order to transfer the Development responsibility to Licensee as contemplated hereunder, the Parties shall use Commercially Reasonable Efforts to comply with the transition plans set forth as Schedule C (collectively the “ Transition Plan ”), which, for clarity, shall consist of those plans for AstraZeneca to transfer to Licensee: (a) regulatory obligations in respect of the Regulatory Documentation from AstraZeneca (or its Third Party contractors); (b) the amounts of inventory of Licensed Compound set forth on Schedule A; (c) results and data from all pre-clinical studies conducted prior to the Effective Date; (d) Licensed Compound manufacturing technology within the AstraZeneca Know-How; and (e) other such AstraZeneca Know-How in existence as of the Effective Date and reasonably necessary for use in connection with the Development of the Licensed Product and (f) AstraZeneca will make available to Licensee , at Licensee’s cost, an appropriately qualified AstraZeneca personnel to provide consulting and technical scientific support to Licensee with respect to the transfer of the AstraZeneca Know-How. (collectively, the “ Transfer Activities ”). All costs to be borne by Licensee in connection with the Transition Plan are identified therein.

 

3.2                                Transfer Activities . AstraZeneca and Licensee will initiate the Transfer Activities promptly after the Effective Date in accordance with a time plan as specified in the Transition Plan. After completion of the Financing AstraZeneca shall execute and deliver a letter to the applicable Regulatory Authority

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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authorizing Licensee to cross-reference the existing INDs and other drug approval applications covering the Product. AstraZeneca and Licensee shall use Commercially Reasonable Efforts to perform the Transfer Activities and complete such Transfer Activities within the time periods specified in the Transition Plan.

 

3.3                                Development .

 

3.3.1                      Diligence . After the Effective Date and after completion of relevant Transfer Activities, Licensee shall be solely responsible for all aspects of the Development of the Licensed Compounds and Licensed Products in the Field in the Territory. Licensee shall use Commercially Reasonable Efforts to Develop, and obtain and maintain Regulatory Approvals for, Licensed Products for use in the Field in the Territory.

 

3.3.2                      Development Costs . Licensee shall be responsible for all of its costs and expenses in connection with the Development of, and obtaining and maintaining Regulatory Approvals for, the Licensed Products in the Field in the Territory.

 

3.3.3                      Development Records . Licensee shall, and shall cause its Affiliates and its and their Sublicensees to, maintain, in good scientific manner, complete and accurate books and records pertaining to Development of Licensed Products hereunder, in sufficient detail to verify compliance with its obligations under this Agreement. Such books and records shall (i) be appropriate for patent and regulatory purposes, (ii) be in compliance with Applicable Law, (iii) properly reflect all work done and results achieved in the performance of its Development activities hereunder, (iv) record only such activities and not include or be commingled with records of activities outside the scope of this Agreement and (v) be retained by Licensee for at least [* * *] years after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Law. AstraZeneca shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such books and records maintained pursuant to this Section 3.3.3; provided that AstraZeneca shall maintain such records and information disclosed therein in confidence accordance with Article 6.

 

3.3.4                      Development Reports . Within [* * *] days following the end of each Calendar Year during which Licensee is conducting Development activities hereunder, Licensee shall provide AstraZeneca with a detailed written report of such Development activities it has performed, or caused to be performed, since the preceding report, its Development activities in process and the future activities it expects to initiate during the following twelve (12)-month period. Each such report shall contain sufficient detail to enable AstraZeneca to assess Licensee’s compliance with its obligations set forth in Section 3.3.1 including: (i) Licensee’s, or its Affiliates’ or its or their Sublicensees’ activities with respect to achieving Regulatory Approvals of Licensed Products in the Territory and (ii) clinical study results and results of other Development activities.

 

3.4                                Regulatory Activities .

 

3.4.1                      Regulatory Approvals . Subject to the Retained Rights, except as otherwise set forth in this Section 3.4., Licensee shall have the sole right to prepare, obtain and maintain Drug Approval Applications (including the setting of the overall regulatory strategy therefor), other Regulatory Approvals and other submissions (including INDs) and to conduct communications with the Regulatory Authorities, for Licensed Products in the Field in the Territory in its name.

 

3.4.2                      Recalls, Suspensions or Withdrawals . Licensee shall notify AstraZeneca promptly (but in no event later than [* * *]) following its determination that any event, incident or circumstance has occurred that may result in the need for a recall, market suspension or market withdrawal of a Licensed Product in

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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the Field in the Territory and shall include in such notice the reasoning behind such determination and any supporting facts. As between the Parties, Licensee shall have the right to make the final determination whether to voluntarily implement any such recall, market suspension or market withdrawal in the Field in the Territory; provided that prior to any implementation of such a recall, market suspension or market withdrawal, Licensee shall consult with AstraZeneca and shall consider AstraZeneca’s comments in good faith. If a recall, market suspension or market withdrawal is mandated by a Regulatory Authority in the Territory, as between the Parties, Licensee shall initiate such a recall, market suspension or market withdrawal in compliance with Applicable Law. For all recalls, market suspensions or market withdrawals undertaken pursuant to this Section 3.4.2, as between the Parties, Licensee shall be solely responsible for the execution thereof. Subject to Article 8, Licensee shall be responsible for all costs of any such recall, market suspension or market withdrawal, except in the event and to the extent that a recall, market suspension or market withdrawal resulted from AstraZeneca’s or its Affiliate’s breach of its obligations hereunder or from such AstraZeneca’s or its Affiliate’s fraud, gross negligence or wilful misconduct, in which case, AstraZeneca shall bear the expense of such recall, market suspension or market withdrawal.

 

3.4.3                      Global Safety Database . Licensee shall establish, hold and maintain (at Licensee’s sole cost and expense) the global safety database for Licensed Products.

 

3.5                                Commercialization .

 

3.5.1                      Diligence . As between the Parties, Licensee shall be solely responsible for Commercialization of the Licensed Products in the Field throughout the Territory at Licensee’s own cost and expense. Licensee shall use Commercially Reasonable Efforts to Commercialize the Licensed Products throughout the Territory.

 

3.5.2                      Commercialization Costs; Booking of Sales; Distribution . Except as otherwise provided in this Agreement, Licensee shall be responsible for all of its costs and expenses in connection with the Commercialization of the Licensed Products in the Field in the Territory. Licensee shall invoice and book sales, establish all terms of sale (including pricing and discounts) and warehouse and distribute the Licensed Products in the Field in the Territory and perform or cause to be performed all related services. Licensee shall handle all returns, recalls or withdrawals, order processing, invoicing, collection, distribution and inventory management with respect to the Licensed Products in the Territory.

 

3.5.3                      Commercialization Records . Licensee shall maintain complete and accurate books and records pertaining to Commercialization of Licensed Products hereunder, in sufficient detail to verify compliance with its obligations under this Agreement and which shall be in compliance with Applicable Law and properly reflect all work done and results achieved in the performance of its Commercialization activities. Such records shall be retained by Licensee for at least [* * *] years after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Law.

 

3.5.4                      Commercialization Reports . Without limiting Section 3.3.4, within [* * *] days following the end of each Calendar Quarter, commencing upon the First Commercial Sale of a Licensed Product and thereafter, Licensee shall provide to AstraZeneca with detailed written reports of such Commercialization activities it has performed, or caused to be performed, since the preceding report and the future activities it expects to initiate during the following twelve (12)-month period. Each such report shall contain sufficient detail to enable AstraZeneca to assess Licensee’s compliance with its obligations set forth in Sections 3.5.1 and 3.5.2, including, including in each case: (i) sales force size and allocation; (ii) the number and position of

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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details in the applicable period; (iii) the nature of promotional activities and Licensed Product sampling activities; (iv) market and sales promotional programs; (v) the conduct of advertising, public relations and other promotional programs, including professional symposia and speaker and peer-to-peer activity programs used in the Commercialization of such Licensed Product; and (vi) Net Sales for such Licensed Product in the Territory.

 

3.6                                Statements and Compliance with Applicable Law . Licensee shall and shall cause its Affiliates to, comply with all Applicable Law with respect to the Exploitation of Licensed Products. Licensee shall avoid and shall use commercially reasonable efforts to cause its Affiliates and its and their Sublicensees employees, representatives, agents, and distributors to avoid, taking or failing to take, any actions that Licensee knows or reasonably should know would jeopardize the goodwill or reputation of AstraZeneca or the Licensed Products or any Trademark associated therewith.

 

3.7                                Supply of Licensed Compounds .

 

3.7.1                      AstraZeneca shall provide to Licensee upon written request such quantities of Licensed Compounds as it holds in its inventory. For clarity, AstraZeneca shall be under no obligation to Manufacture, or have Manufactured, Licensed Compounds. LICENSEE AGREES THAT ALL SUCH LICENSED COMPOUNDS ARE PROVIDED “AS IS” AND WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED.

 

3.7.2                      As between the Parties, once AstraZeneca’s inventory of Licensed Compounds has been exhausted, for the supply of all further quantities of Licensed Compounds, Licensee shall have the sole responsibility for procuring and shall at its own expense Manufacture (or having Manufactured) and shall supply the Licensed Compounds and Licensed Products for its Development and Commercialization activities in the Territory.

 

3.8                                Subcontracting . Subject to Section 2.2, Licensee may subcontract with a Third Party to perform any or all of its obligations hereunder (including by appointing one or more distributors); provided that (i) no such permitted subcontracting shall relieve Licensee of obligation hereunder (except to the extent satisfactorily performed by such subcontractor) or any liability and Licensee shall be and remain fully responsible and liable therefor and (ii) the agreement pursuant to which Licensee engages any Third Party subcontractor must (a) be consistent in all material respects with this Agreement, (b) contain terms obligating such subcontractor to comply with the confidentiality, intellectual property and all other relevant provisions of this Agreement and (c) contain terms obligating such subcontractor to permit AstraZeneca rights of inspection, access and audit substantially similar to those provided to AstraZeneca in this Agreement. Licensee shall ensure that each subcontractor accepts and complies with all of the applicable terms and conditions of this Agreement as if such permitted subcontractor were a Party to this Agreement. Licensee hereby waives any requirement that AstraZeneca exhaust any right, power or remedy, or proceed against any subcontractor for any obligation or performance under this Agreement prior to proceeding directly against Licensee.

 

Article 4
PAYMENTS AND RECORDS

 

4.1                                Upfront Payment . In partial consideration of the rights granted by AstraZeneca to Licensee hereunder, Licensee shall within thirty (30) days of the Effective Date make a non-refundable, non-creditable payment to AstraZeneca of five million US Dollars (USD$5,000,000).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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4.2                                Equity

 

4.2.1                      In the event that Licensee closes the Financing during the Financing Period, Licensee shall issue, as fully paid up, to AstraZeneca ten million US Dollars (USD$10,000,000) worth of its Common Shares of no par value per share (“ Common Shares ”) valued at the price per share paid by the investors in the Financing (“ Licence Shares ”), regardless of whether AstraZeneca also participated in the Financing as noted above. It is agreed that the consideration payable by AstraZeneca to the Licensee for the issue of the Licence Shares is the grant by AstraZeneca to the Licensee as made in accordance with Section 2.1 (“ Allotment Consideration ”); which Allotment Consideration represents the full consideration payable by AstraZeneca to the Licensee for the issue of the Licence Shares. Accordingly the Licence Shares are issued to AstraZeneca as fully paid up (and non-assessable) and no further amounts can be demanded or otherwise claimed by the Licensee in respect of the Licence Shares. AstraZeneca would then become a party to Licensee’s 2016 Shareholders’ Agreement dated as of July 7, 2016, as amended (“ Shareholders’ Agreement ”). The purchase terms and joinder terms of the Shareholders’ Agreement of the Common Shares would include, in favour of AstraZeneca (and in respect of the Licensee), the right to appoint a Board observer, the right to such information as may be shared with one or more other shareholders, the right to purchase additional Common Shares and all other rights granted under the Financing agreements with respect to the Common Shares (“ Applicable AZ Rights ”). The Licensee shall procure that its memorandum and articles of association (“ Articles ”) are amended, in a form being acceptable to AstraZeneca, so as to include therein (for so long as AstraZeneca is a shareholder in the Licensee) the Applicable AZ Rights and the (below referred) AZ Conversion Rights. In the event that any person (whether an existing shareholder or not) is offered the right to acquire preferred shares of the Licensee (or any class of shares of the Licensee other than Common Shares) or the right to convert Common Shares to preferred shares of the Licensee (or any class of shares of the Licensee other than Common Shares), AstraZeneca shall (in each such case) have the same right (collectively the “ AZ Conversion Rights ”). For clarity, any such conversion shall be conducted on the basis that one Common Share shall convert to one preferred share (or one share of such other class of shares that is not a Common Share). In the event the terms of the Financing include (or are later amended to impose) any pay-to-play provision on the holders of Common Shares with respect to future financings, then solely for the purpose of determining AstraZeneca’s “pro rata portion” of Common Shares for such pay-to-play provision, such pro rata portion shall not include the Licence Shares. The License Shares shall vest (and be issued to AstraZeneca as fully paid) as follows! (i) 50% vests, and shall be issued by the Licensee to AstraZeneca as fully paid, upon close of the Financing and (ii) the remaining 50% vests, and shall be issued by the Licensee to AstraZeneca as fully paid, (at the same price per share as the initial 50% of shares referenced in (i) above) upon the earlier of any of the following: (a) initiation of a Phase 2b Study or equivalent clinical trial with Licensed Product; or (b) any liquidity event for the Licensee which shall include, without limitation, an initial public offering of the Licensee or one of its Affiliates, any change of control of the Licensee or one of its Affiliates or any assignment of the Licensee’s rights and obligations in and to this Agreement.

 

4.2.2                      In addition to the rights granted in Section 4.2.1, AstraZeneca shall have the right, but not the obligation, to participate in the Financing, as an investor, by acquiring up to eight percent (8%) of such financing on a fully-diluted basis.

 

4.2.3                      The Licensee agrees that it shall not, without the prior written consent of AstraZeneca, redeem or otherwise acquire (whether pursuant to Section 176 of the BVI Business Companies Act 2004 as amended, or otherwise) the Licence Shares, or any other shares, held by AstraZeneca in the capital of the Licensee.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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4.3                                Milestones .

 

4.3.1                      Regulatory Milestones.

 

(i)                                      [* * *]. In partial consideration of the rights granted by AstraZeneca to Licensee hereunder, the following amounts shall accrue to AstraZeneca from Licensee after the achievement of each of the following milestone events with respect to a Licensed Product in [* * *], which shall be non-refundable, non-creditable and fully earned upon the achievement of the applicable milestone event:

 

1.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]);

 

2.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]); and

 

3.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]).

 

Each milestone in this Section 4.3.1 shall be accrued on a Licensed Product-by-Licensed Product basis based on the first achievement of such milestone for the applicable Licensed Product, and shall be paid after the first commercial booking for the Licensed Product.

 

(ii)                                   [* * *]. In partial consideration of the rights granted by AstraZeneca to Licensee hereunder, the following payments amounts shall accrue to AstraZeneca from Licensee after the achievement of each of the following milestone events with respect to a Licensed Product in [* * *], which shall be non-refundable, non-creditable and fully earned upon the achievement of the applicable milestone event:

 

1.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]);

 

2.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]); and

 

3.                                       within [* * *] days of [* * *], [* * *] US Dollars (USD$[* * *]).

 

Each milestone in this Section 4.3.2 shall be accrued on a Licensed Product-by-Licensed Product basis based on the first achievement of such milestone for the applicable Licensed Product, and shall be paid after the first commercial booking for the Licensed Product.

 

4.3.2                      Commercial Milestones . In partial consideration of the rights granted by AstraZeneca to Licensee hereunder, Licensee shall pay to AstraZeneca the following payments, which shall be non-refundable, non-creditable and fully earned upon the first achievement of the applicable milestone event:

 

(i)                                      in the event that the aggregate of all Net Sales of all Licensed Product(s) made by Licensee or any of its Affiliates or its or their Sublicensees in a given Calendar Year exceeds [* * *] US Dollars (USD$[* * *]) for such Calendar Year, Licensee shall pay to AstraZeneca a one-time fee of [* * *] US Dollars (USD$[* * *]);

 

(ii)                                   in the event that the aggregate of all Net Sales of all Licensed Product(s) made by Licensee or any of its Affiliates or its or their Sublicensees in a given Calendar Year exceeds [* * *] US Dollars (USD$[* * *]) for such Calendar Year, Licensee shall pay to AstraZeneca a one-time fee of [* * *] Dollars (USD$[* * *]); and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(iii)                                in the event that the aggregate of all Net Sales of all Licensed Product(s) made by Licensee or any of its Affiliates or its or their Sublicensees in a given Calendar Year exceeds [* * *] US Dollars (USD$[* * *]) for such Calendar Year, Licensee shall pay to AstraZeneca a one-time fee of [* * *] US Dollars (USD$[* * *]).

 

In the event that in a given Calendar Year more than one (1) of the foregoing thresholds set forth in clauses (i) through (iii) of this Section 4.3.2. is exceeded, Licensee shall pay to AstraZeneca a separate milestone payment with respect to each such threshold that is exceeded in such Calendar Year. Each such milestone payment shall be due within [* * *] days of the date the milestone was achieved. Each milestone payment in this Section 4.3.2 shall be payable only upon the first achievement of such milestone in a given Calendar Year and no amounts shall be due for subsequent or repeated achievements of such milestone in subsequent Calendar Years.

 

4.3.3                      Determination that Milestones Have Occurred . Licensee shall notify AstraZeneca promptly of the achievement of each of the events identified as a milestone in Section 4.3.1 or Section 4.3.2. In the event that, notwithstanding the fact that Licensee has not provided AstraZeneca such a notice, AstraZeneca believes that any such milestone has been achieved, it shall so notify Licensee in writing and the Parties shall promptly meet and discuss in good faith whether such milestone has been achieved. Any dispute under this Section 4.3.3 regarding whether or not such a milestone has been achieved shall be subject to resolution in accordance with Section 10.5.

 

4.4                                Royalties .

 

4.4.1                      Royalty Rates . As further consideration for the rights granted to Licensee hereunder, commencing upon the First Commercial Sale of a Licensed Product in the Territory, Licensee shall pay to AstraZeneca a royalty on Net Sales with respect to each Licensed Product in each country in the Territory on a Licensed Product-by-Licensed Product and country-by-country basis during each Calendar Year at the following rates:

 

(i)                                      for that portion of Net Sales of Licensed Products in the Territory during a Calendar Year less than or equal to [* * *] US Dollars (USD$[* * *]), a royalty rate of [* * *] percent ([* * *]%);

 

(ii)                                   for that portion of Net Sales of Licensed Products in the Territory during a Calendar Year greater than [* * *] US Dollars (USD$[* * *]) but less than or equal to [* * *] US Dollars (USD$[* * *]), a royalty rate of [* * *] percent ([* * *]%); and

 

(iii)                                for that portion of Net Sales of Licensed Products in the Territory during a Calendar Year greater than [* * *] US Dollars (USD$[* * *]), a royalty rate of [* * *] percent ([* * *]%).

 

4.4.2                      Royalty Term . Licensee shall have no obligation to pay any royalty with respect to Net Sales of any Licensed Product in any country after the Royalty Term for such Licensed Product in such country has expired. Upon termination of the Royalty Term with respect to a Licensed Product in any country, the license grants to Licensee in Section 2.1, as applicable, with respect to such Licensed Product shall convert to non-exclusive and shall become fully paid-up with respect to such country.

 

4.4.3                      Reductions . In the event that:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(i)                                      during the Royalty Term for a Licensed Product in a country in the Territory, the [* * *] has [* * *] for such Licensed Product in such country and the [* * *] such Licensed Product [* * *] in such country or the country in which such Licensed Product is Manufactured [* * *], then, commencing upon [* * *] and [* * *] for such Licensed Product in such country thereafter, the royalty rates set forth in Section 4.4.1 with respect to such country, each shall be reduced [* * *]; and

 

(ii)                                   Licensee enters into an agreement with a Third Party in order to obtain a license to a Third Party Patent Right with respect to a Licensed Product pursuant to Section 4.6 that is necessary to Exploit such Licensed Product in the Field in a country in the Territory, Licensee shall be entitled to deduct from royalties payable hereunder in a given Calendar Year with respect to such Licensed Product in such country [* * *] of royalties paid to such Third Party in such Calendar Year under such agreement, solely to the extent that such royalties are (a) [* * *] and (b) [* * *].

 

4.4.4                      Maximum Amount of Royalty Reduction . In no event shall the amounts payable to AstraZeneca under Section 4.4 be reduced by operation of Section 4.4.3 by more than [* * *]. No unused reduction may be carried over into any subsequent Calendar Year. For clarity, to the extent the adjustments in Section 4.4 or this 4.4.4 cover periods in which payments are due based on more than one royalty rate described in Section 4.4.1, the Net Sales to which such adjustments apply shall be [* * *].

 

4.5                                Royalty Payments and Reports . Licensee shall calculate all amounts payable to AstraZeneca pursuant to Section 4.4 at the end of each Calendar Quarter, which amounts shall be converted to Dollars, in accordance with Section 4.6. Licensee shall pay to AstraZeneca the royalty amounts due with respect to a given Calendar Quarter within [* * *] days after the end of such Calendar Quarter. Each payment of royalties due to AstraZeneca shall be accompanied by a statement specifying the amount of Invoiced Sales, Net Sales and deductions taken to arrive at Net Sales attributable to each Licensed Product in each country the Territory during the applicable Calendar Quarter (including such amounts expressed in local currency and as converted to Dollars) and a calculation of the amount of royalty payment due on such Net Sales for such Calendar Quarter. Without limiting the generality of the foregoing, Licensee shall require its Affiliates and Sublicensees to account for their Net Sales and to provide such reports with respect thereto, as if such sales were made by Licensee.

 

4.6                                Mode of Payment; Offsets . All payments to AstraZeneca under this Agreement shall be made by deposit of Dollars in the requisite amount to such bank account as AstraZeneca may from time to time designate by notice to Licensee. For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), Licensee shall convert any amount expressed in a foreign currency into Dollar equivalents using its, its Affiliate’s or Sublicensee’s, as applicable, standard conversion methodology consistent with GAAP.

 

4.7                                Sublicence Revenue . In the event Licensee sublicenses a Licensed Product to a Third Party (other than AstraZeneca) any time prior to delivery of the Top Line Data from the first Phase 2b Study, then Licensee shall pay AstraZeneca [* * *] of all upfront, pre-clinical and clinical development and regulatory and commercial approval milestones Licensee receives from such Sublicensee under such sublicence together with all milestones and royalties outlined above. In the event Licensee sublicenses a Licensed Product to a Third Party (other than AstraZeneca) any time after delivery of the Top Line Data from the first Phase 2b Study, then Licensee shall pay AstraZeneca [* * *] of all upfront, pre-clinical and clinical development and regulatory and commercial approval milestones Licensee receives from such Sublicensee under such sublicence together with all milestones and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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royalties outlined above. For clarity, the duty to make such percentage payments on Sublicensee revenue set forth in this Section 4.7 shall apply except in the event that the application of such payments would be to increase a payment already payable to AstraZeneca pursuant to Section 4.3 or Section 4.4. For illustration purposes only, if a Sublicensee pays Licensee [* * *] US Dollars (USD$[* * *]) for [* * *], the Licensee shall only be obliged to pay AstraZeneca [* * *] US dollars (USD$[* * *]) for such event (as opposed to [* * *] US Dollars (USD$[* * *]) comprising [* * *] US Dollars (USD$[* * *]) (pursuant to Section 4.3) plus [* * *] US Dollars (USD$[* * *]) being [* * *] of [* * *] US Dollars (USD$[* * *]) (pursuant to this Section 4.7)).

 

4.8                                Taxes .

 

4.8.1                      General . The milestones and royalties payable by Licensee to AstraZeneca pursuant to this Agreement (each, a “ Payment ”) shall be paid free and clear of any and all taxes (which, for clarity, shall be the responsibility of Licensee), except for any withholding taxes required by Applicable Law. Except as provided in this Section 4.8, AstraZeneca shall be solely responsible for paying any and all taxes (other than withholding taxes required by Applicable Law to be deducted from Payments and remitted by Licensee) levied on account of, or measured in whole or in part by reference to, any Payments it receives. Licensee shall deduct or withhold from the Payments any taxes that it is required by Applicable Law to deduct or withhold. Notwithstanding the foregoing, if AstraZeneca is entitled under any applicable tax treaty to a reduction of rate of, or the elimination of, applicable withholding tax, it may deliver to Licensee or the appropriate governmental authority (with the assistance of Licensee to the extent that this is reasonably required and is requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve Licensee of its obligation to withhold such tax and Licensee shall apply the reduced rate of withholding or dispense with withholding, as the case may be; provided that Licensee has received evidence of AstraZeneca’s delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least [* * *] days prior to the time that the Payments are due. If, in accordance with the foregoing, Licensee withholds any amount, it shall pay to AstraZeneca the balance when due, make timely payment to the proper taxing authority of the withheld amount and send to AstraZeneca proof of such payment within [* * *] days following such payment.

 

4.8.2                      Value Added Tax . Notwithstanding anything contained in Section 4.8.1, this Section 4.8.2 shall apply with respect to value added tax (“ VAT ”). All Payments are exclusive of VAT. If any VAT is chargeable in respect of any Payments, Licensee shall pay VAT at the applicable rate in respect of any such Payments following the receipt of a VAT invoice in the appropriate form issued by AstraZeneca in respect of those Payments, such VAT to be payable on the later of the due date of the payment of the Payments to which such VAT relates and [* * *] days after the receipt by Licensee of the applicable invoice relating to that VAT payment.

 

4.9                                Interest on Late Payments . If any payment due to either Party under this Agreement is not paid when due, then such paying Party shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) of [* * *], such interest to run from the date on which payment of such sum became due until payment thereof in full together with such interest.

 

4.10                         Financial Records . Licensee shall and shall cause its Affiliates and its and their Sublicensees to, keep complete and accurate financial books and records pertaining to the Commercialization of Licensed Products hereunder, including books and records of Invoiced Sales and Net Sales of Licensed Products, in sufficient detail to calculate and verify all amounts payable hereunder. Licensee shall and shall cause its Affiliates and its and their Sublicensees to, retain such books and records until the later of (i) [* * *] years after the end of the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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period to which such books and records pertain, (ii) the expiration of the applicable tax statute of limitations (or any extensions thereof) and (iii) for such period as may be required by Applicable Law.

 

4.11                         Audit . At the request of AstraZeneca, Licensee shall and shall cause its Affiliates and its and their Sublicensees to, permit AstraZeneca or an independent auditor designated by AstraZeneca and reasonably acceptable to Licensee, at reasonable times and upon reasonable notice, to audit the books and records maintained pursuant to Section 4.10 to ensure the accuracy of all reports and payments made hereunder. Except as provided below, the cost of this audit shall be borne by AstraZeneca, unless the audit reveals, with respect to a period, a variance of more than [* * *] from the reported amounts for such period, in which case Licensee shall bear the cost of the audit. Unless disputed pursuant to Section 4.12 below, if such audit concludes that (i) additional amounts were owed by Licensee, Licensee shall pay the additional amounts, with interest from the date originally due as provided in Section 4.9 or (ii) excess payments were made by Licensee, AstraZeneca shall reimburse such excess payments, in either case ((i) or (ii)), within [* * *] days after the date on which such audit is completed by Astra2eneca.

 

4.12                         Audit Dispute . In the event of a dispute with respect to any audit under Section 4.11, AstraZeneca and Licensee shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [* * *] days, the dispute shall be submitted for resolution to a certified public accounting firm jointly selected by each Party’s certified public accountants or to such other Person as the Parties shall mutually agree (the “ Auditor ”). The decision of the Auditor shall be final and the costs of such arbitration as well as the initial audit shall be borne between the Parties in such manner as the Auditor shall determine. Not later than [* * *] days after such decision and in accordance with such decision, Licensee shall pay the additional amounts, with interest from the date originally due as provided in Section 4.9 or AstraZeneca shall reimburse the excess payments, as applicable.

 

Article 5
INTELLECTUAL PROPERTY

 

5.1                                Ownership of Intellectual Property .

 

5.1.1                      Ownership of Technology . Subject to Section 5.1.2, as between the Parties, each Party shall own all right, title and interest in and to any and all Information, Improvements and other inventions that are conceived, discovered, developed or otherwise made by or on behalf of such Party or its Affiliates or its or their (sub)licensees (or Sublicensee(s)), as applicable, under or in connection with this Agreement, whether or not patented or patentable and any and all Patents and other intellectual property rights with respect thereto .

 

5.1.2                      United States Law . The determination of whether Information, Improvements and other inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Law in the United States as such law exists as of the Effective Date irrespective of where such conception, discovery, development or making occurs.

 

5.1.3                      Assignment Obligation . Each Party shall cause all Persons who perform activities for such Party under this Agreement or who conceive, discover, develop or otherwise make any Information, Improvement or other inventions by or on behalf of either Party or its Affiliates or its or their (sub)licensees (or Sublicensees) under or in connection with this Agreement to be under an obligation to assign (or, if such Party is unable to cause such Person to agree to such assignment obligation despite such Party’s using commercially reasonable efforts to negotiate such assignment obligation, then to grant an exclusive license under)

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

their rights in any Information, Improvement and inventions resulting therefrom to such Party, except where Applicable Law requires otherwise and except in the case of governmental, not-for-profit and public institutions that have standard policies against such an assignment (in which case, a suitable license or right to obtain such a license, shall be obtained).

 

5.2                                Maintenance and Prosecution of Patents.

 

5.2.1                      In General . As between the Parties, (1) Licensee shall through counsel of its choice, prepare, file, prosecute and maintain the AstraZeneca Patents, including any related interference, re-issuance, re-examination and opposition proceedings with respect thereto, in the Territory, in each case, the cost and expense of which shall be borne by the Licensee. For purposes of this Section 5.2, the Party prosecuting, maintaining or undertaking other related activities pursuant to the foregoing sentence with respect to a Patent shall be the “ Prosecuting Party. ” The Prosecuting Party shall periodically inform the other Party of all material steps with regard to the preparation, filing, prosecution and maintenance of the AstraZeneca Patents, in the Territory, including by providing the non-Prosecuting Party with a copy of material communications to and from any patent authority in the Territory regarding such Patents and by providing the non-Prosecuting Party drafts of any material filings or responses to be made to such patent authorities in the Territory sufficiently in advance of submitting such filings or responses so as to allow for a reasonable opportunity for the non-Prosecuting Party to review and comment thereon. The Prosecuting Party shall consider in good faith the requests and suggestions of the non-Prosecuting Party with respect to such drafts and with respect to strategies for filing and prosecuting such Patents in the Territory and furthermore shall incorporate such requests and suggestions subject to the Prosecuting Party’s consent, such consent not to be unreasonably withheld, delayed or conditioned. If, as between the Parties, the Prosecuting Party decides not to prepare, file, prosecute or maintain an AstraZeneca Patent in a country in the Territory, the Prosecuting Party shall provide reasonable prior written notice to the non-Prosecuting Party of such intention, the non-Prosecuting Party shall thereupon have the right, in its sole discretion, to assume the control and direction of the preparation, filing, prosecution and maintenance of such AstraZeneca Patent at its sole cost and expense in such country, whereupon the non-Prosecuting Party shall be deemed the Prosecuting Party with respect to such Patent.

 

5.2.2                      Cooperation . The non-Prosecuting Party shall, and shall cause its Affiliates to, assist and cooperate with the Prosecuting Party, as the Prosecuting Party may reasonably request from time to time, in the preparation, filing, prosecution and maintenance of the AstraZeneca Patents in the Territory under this Agreement, including that the non-Prosecuting Party shall, and shall ensure that its Affiliates, (i) offer its comments, if any, promptly, (ii) provide access to relevant documents and other evidence and make its employees available at reasonable business hours; provided, however , that neither Party shall be required to provide legally privileged information with respect to such intellectual property unless and until procedures reasonably acceptable to such Party are in place to protect such privilege); and provided, further , that the Prosecuting Party shall reimburse the non-Prosecuting Party for its reasonable and verifiable costs and expenses incurred in connection therewith.

 

5.2.3                      Patent Term Extension and Supplementary Protection Certificate . The Parties will jointly discuss any decisions regarding and AstraZeneca shall have the right to apply for, patent term extensions, in the Territory including in the United States with respect to extensions pursuant to 35 U.S.C. §156 et. seq. and in other jurisdictions pursuant to supplementary protection certificates, and in all jurisdictions with respect to any other extensions that are now or become available in the future, wherever applicable, for the AstraZeneca Patents and with respect to the Licensed Compounds and the Licensed Products, in each case including whether or not to do so. Licensee shall provide prompt and reasonable assistance, as requested by AstraZeneca, including by

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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taking such action as patent holder as is required under any Applicable Law to obtain such extension or supplementary protection certificate.

 

5.2.4                      Common Ownership . Notwithstanding anything to the contrary in this Article 5, neither Party shall have the right to make an election under 35 U.S.C. 102(c) when exercising its rights under this Article 5 without the prior written consent of the other Party. With respect to any such permitted election, the Parties shall coordinate their activities with respect to any submissions, filings or other activities in support thereof.

 

5.2.5                      Patent Listings . Licensee shall have the right and responsibility to make all filings with Regulatory Authorities in the Territory with respect to the AstraZeneca Patents, including as required or allowed (i) in the United States, in the FDA’s Orange Book and (ii) in the European Union, under the national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83 or other international equivalents; provided that Licensee shall consult with AstraZeneca to determine the course of action with respect to such filings.

 

5.3                                Enforcement of Patents.

 

5.3.1                      Notice . Each Party shall promptly notify the other Party in writing of (i) any alleged or threatened infringement of the AstraZeneca Patents in any jurisdiction in the Territory or (ii) any certification filed under the Hatch-Waxman Act claiming that any AstraZeneca Patents are invalid or unenforceable or claiming that any AstraZeneca Patents would not be infringed by the making, use, offer for sale, sale or import of a product for which an application under the Hatch-Waxman Act is filed or any equivalent or similar certification or notice in any other jurisdiction , in each case ((i) and (ii)) of which such Party becomes aware (an “ Infringement ”).

 

5.3.2                      Enforcement of Patents . As between the Parties, (i) Licensee shall have the first right, but not the obligation, to prosecute any Infringement with respect to the AstraZeneca Patents, including as a defence or counterclaim in connection with any Third Party Infringement Claim, at Licensee’s sole cost and expense, using counsel of Licensee’s choice. If Licensee declines to prosecute any Infringement with respect to the AstraZeneca Patent, AstraZeneca may prosecute such infringement at its own cost and expense. For purposes of this Section 5.3, the Party prosecuting any Infringement pursuant to the foregoing sentences with respect to a Patent shall be the “ Enforcing Party. ” In the event AstraZeneca prosecutes any such Infringement in the Field in the Territory, Licensee shall have the right to join as a party to such claim, suit or proceeding and participate with its own counsel at its sole cost and expense; provided that AstraZeneca shall retain control of the prosecution of such claim, suit or proceeding, including the response to any defence or defence of any counterclaim raised in connection therewith. In the event Licensee prosecutes any such Infringement in the Field in the Territory, AstraZeneca shall have the right to join as a party to such claim, suit or proceeding and participate with its own counsel at its sole cost and expense; provided that Licensee shall retain control of the prosecution of such claim, suit or proceeding, including the response to any defence or defence of any counterclaim raised in connection therewith.

 

5.3.3                      Cooperation . The Parties agree to cooperate fully in any Infringement action pursuant to this Section 5.3, including by making the inventors, applicable records and documents (including laboratory notebooks) with respect to the relevant Patents available to the Enforcing Party on the Enforcing Party’s request. With respect to an action controlled by the applicable Enforcing Party, the other Party shall, and shall cause its Affiliates to, assist and cooperate with the Enforcing Party, as the Enforcing Party may reasonably request from time to time, in connection with its activities set forth in this Section, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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provided that the Enforcing Party shall reimburse such other Party for its reasonable and verifiable costs and expenses incurred in connection therewith. Unless otherwise set forth herein, the Enforcing Party shall have the right to settle such claim; provided that neither Party shall have the right to settle any Infringement litigation under this Section 5.3 in a manner that has a material adverse effect on the rights or interest of the other Party or in a manner that imposes any costs or liability on or involves any admission by, the other Party, without the express written consent of such other Party (which consent shall not be unreasonably withheld, conditioned or delayed). In connection with any activities with respect to an Infringement action prosecuted by the applicable Enforcing Party pursuant to this Section 5.3 involving Patents Controlled by or licensed under Article 2 to the other Party, the Enforcing Party shall (i) consult with the other Party as to the strategy for the prosecution of such claim, suit or proceeding, (ii) consider in good faith any comments from the other Party with respect thereto and (iii) keep the other Party reasonably informed of any material steps taken and provide copies of all material documents filed, in connection with such action.

 

5.3.4                      Recovery . Except as otherwise agreed by the Parties in connection with a cost sharing arrangement, any recovery realized as a result of such litigation described above in this Section 5.3 (whether by way of settlement or otherwise) shall be first, allocated to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses). Any remainder after such reimbursement is made shall be retained by the Enforcing Party; provided, however , that to the extent that any award or settlement (whether by judgment or otherwise) with respect to an AstraZeneca Patent, is attributable to loss of sales or profits with respect to a Licensed Product, the Parties shall negotiate in good faith an appropriate allocation of such remainder to reflect the economic interests of the Parties under this Agreement with respect to such Licensed Product.

 

5.4                                Infringement Claims by Third Parties . If the Exploitation of a Licensed Product in the Territory pursuant to this Agreement results in, or is reasonably expected to result in, any claim, suit or proceeding by a Third Party alleging infringement by Licensee or any of its Affiliates or its or their Sublicensees, (a “ Third Party Infringement Claim ”), including any defence or counterclaim in connection with an Infringement action initiated pursuant to Section 5.3, the Party first becoming aware of such alleged infringement shall promptly notify the other Party thereof in writing. As between the Parties, Licensee shall be responsible for defending any such claim, suit or proceeding at its sole cost and expense, using counsel of Licensee’s choice. AstraZeneca may participate in any such claim, suit or proceeding with counsel of its choice at its sole cost and expense; provided that Licensee shall retain the right to control such claim, suit or proceeding. AstraZeneca shall, and shall cause its Affiliates to, assist and cooperate with Licensee, as Licensee may reasonably request from time to time, in connection with its activities set forth in this Section, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that Licensee shall reimburse AstraZeneca for its reasonable and verifiable costs and expenses incurred in connection therewith. Licensee shall keep AstraZeneca reasonably informed of all material developments in connection with any such claim, suit or proceeding. Licensee agrees to provide AstraZeneca with copies of all material pleadings filed in such action and to allow AstraZeneca reasonable opportunity to participate in the defence of the claims. Any damages, or awards, including royalties incurred or awarded in connection with any Third Party Infringement Claim defended under this Section 5.4 shall be borne by Licensee.

 

5.5                                Invalidity or Unenforceability Defences or Actions . Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of invalidity or unenforceability of any of the AstraZeneca Patents by a Third Party and of which such Party becomes aware. As between the Parties, (i) Licensee

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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shall have the first right, but not the obligation, to defend and control the defence of the validity and enforceability of the AstraZeneca Patents at its sole cost. If Licensee declines to defend any such invalidity claim with respect to the AstraZeneca Patent, AstraZeneca may defend such invalidity claim at its own cost and expense. For purposes of this Section 5.5, the Party defending any action pursuant to the foregoing sentence with respect to a Patent shall be the “ Controlling Party. ” If the Controlling Party or its designee elects not to defend or control the defence of the applicable Patents in a suit brought in the Territory or otherwise fails to initiate and maintain the defence of any such claim, suit or proceeding, then subject to any rights of Third Parties under any applicable Third Party agreements existing as of the Effective Date, the non-Controlling Party may conduct and control the defence of any such claim, suit or proceeding at its sole cost and expense. The non-Controlling Party in such an action shall, and shall cause its Affiliates to, assist and cooperate with the Controlling Party, as such Controlling Party may reasonably request from time to time in connection with its activities set forth in this Section, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that the Controlling Party shall reimburse the non-Controlling Party for its reasonable and verifiable costs and expenses incurred in connection therewith. In connection with any activities with respect to a defence, claim or counterclaim relating to the AstraZeneca Patents pursuant to this Section 5.5, the Controlling Party shall (x) consult with the non-Controlling Party as to the strategy for such activities, (y) consider in good faith any comments from the non-Controlling Party and (z) keep the non-Controlling Party reasonably informed of any material steps taken and provide copies of all material documents filed, in connection with such defence, claim or counterclaim.

 

5.6                                Third Party Patent Rights . If in the reasonable opinion of Licensee, the Exploitation of the Licensed Compounds or Licensed Product in the Field and in the Territory by Licensee, any of its Affiliates or any of its or their Sublicensees infringes or is reasonably expected to infringe any Patent of a Third Party in any country in the Territory (such right, a “ Third Party Patent Right ”), then, as between the Parties, Licensee shall have the right, but not the obligation, to negotiate and obtain a license from such Third Party to such Third Party Patent Right as necessary or desirable for Licensee or its Affiliates or its or their Sublicensees to Exploit the Licensed Compounds and Licensed Products in the Field in such country; provided that (i) subject to Section 4.4.3(ii), as between the Parties, Licensee shall bear all expenses incurred in connection therewith, including any royalties, milestones or other payments incurred under any such license, (ii) any such license shall be limited to the Field in the Territory and to the extent possible, provide for the unencumbered right, but not the obligation, to transfer such license to AstraZeneca or any of its Affiliates upon termination or expiration of this Agreement with respect to the applicable country(ies) and (iii) Licensee shall obtain the written consent of AstraZeneca prior to entering into any such license (such consent not to be unreasonably withheld, delayed or conditioned).

 

Article 6
CONFIDENTIALITY AND NON-DISCLOSURE

 

6.1                                Confidentiality Obligations . At all times during the Term and for a period of [* * *] years following termination or expiration hereof in its entirety, each Party shall and shall cause its officers, directors, employees and agents to, keep confidential and not publish or otherwise disclose to a Third Party and not use, directly or indirectly, for any purpose, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement. “ Confidential Information ” means any technical, business or other information provided by or on behalf of one Party to the other Party, including information relating to the terms of this Agreement (subject to Section 6.2.4, Section 6.4 and Section 7.6.9), information relating to the Licensed Compound(s) or any Licensed Product(s) (including the Regulatory Documentation), any Development or Commercialization of the Licensed

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Compounds or any Licensed Product(s), any know-how with respect thereto developed by or on behalf of the disclosing Party or its Affiliates (including Licensee Know-How and AstraZeneca Know-How, as applicable) or the scientific, regulatory or business affairs or other activities of either Party. Notwithstanding the foregoing, the terms of this Agreement shall be deemed to be the Confidential Information of both Parties and both Parties shall be deemed to be the receiving Party and the disclosing Party with respect thereto. Notwithstanding the foregoing, the confidentiality and non-use obligations under this Section 6.1 with respect to any Confidential Information shall not include any information that:

 

6.1.1                      is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no breach of this Agreement by the receiving Party;

 

6.1.2                      can be demonstrated by documentation or other competent proof to have been in the receiving Party’s possession prior to disclosure by the disclosing Party without any obligation of confidentiality with respect to such information;

 

6.1.3                      is subsequently received by the receiving Party from a Third Party who is not bound by any obligation of confidentiality with respect to such information;

 

6.1.4                      has been published by a Third Party or otherwise enters the public domain through no fault of the receiving Party in breach of this Agreement; or

 

6.1.5                      can be demonstrated by documentation or other competent evidence to have been independently developed by or for the receiving Party without reference to the disclosing Party’s Confidential Information.

 

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.

 

6.2                                Permitted Disclosures . Each Party may disclose Confidential Information to the extent that such disclosure is:

 

6.2.1                      made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial and local governmental or regulatory body of competent jurisdiction or, if in the reasonable opinion of the receiving Party’s legal counsel, such disclosure is otherwise required by law, including by reason of filing with securities regulators; provided, however , that the receiving Party shall first have given notice to the disclosing Party and given the disclosing Party a reasonable opportunity to quash such order or to obtain a protective order or confidential treatment requiring that the Confidential Information and documents that are the subject of such order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the order was issued; and provided , further , that the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in response to such court or governmental order;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.2.2                      made by or on behalf of the receiving Party to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however , that reasonable measures shall be taken to assure confidential treatment of such information to the extent practicable and consistent with Applicable Law;

 

6.2.3                      made by or on behalf of the receiving Party to a patent authority as may be reasonably necessary or useful for purposes of obtaining or enforcing a Patent; provided, however , that reasonable measures shall be taken to assure confidential treatment of such information, to the extent such protection is available;

 

6.2.4                      made by or on behalf of AstraZeneca as the receiving Party, in connection with its performance or exercise of the Retained Rights; or

 

6.2.5                      made by or on behalf of the receiving Party to potential or actual investors or acquirers as may be necessary in connection with their evaluation of such potential or actual investment or acquisition; provided, however , that such persons shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially similar to the obligations of confidentiality and non-use of the receiving Party pursuant to this Article 6 (with a duration of confidentiality and non-use obligations as appropriate that is no less than [* * *] years from the date of disclosure); provided, further , that if either Party seeks to disclose the terms of this Agreement to potential investors or acquirers, the Party seeking to disclose this Agreement must obtain the other Party’s prior written consent before disclosing this Agreement (such consent not to be unreasonably withheld, delayed or conditioned).

 

6.3                                Use of Name . Except as expressly provided herein, neither Party shall mention or otherwise use the name, logo or Trademark of the other Party or any of its Affiliates or any of its or their (sub)licensees (or Sublicensees) (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section 6.3 shall not prohibit (i) either Party from making any disclosure identifying the other Party to the extent required in connection with its exercise of its rights or obligations under this Agreement and (ii) either Party from making any disclosure identifying the other Party that is required by Applicable Law or the rules of a stock exchange on which the securities of the disclosing Party are listed (or to which an application for listing has been submitted).

 

6.4                                Public Announcements . The Parties have agreed that neither Party shall issue any public announcement, press release or other public disclosure regarding this Agreement or its subject matter without the other Party’s prior written consent, except for any such disclosure that is, in the opinion of the disclosing Party’s counsel, required by Applicable Law or the rules of a stock exchange on which the securities of the disclosing Party are listed (or to which an application for listing has been submitted). In the event a Party is, in the opinion of its counsel, required by Applicable Law or the rules of a stock exchange on which its securities are listed (or to which an application for listing has been submitted) to make such a public disclosure, such Party shall submit the proposed disclosure in writing to the other Party as far in advance as reasonably practicable (and in no event less than [* * *] prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon. Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement or any amendment hereto that has already been publicly disclosed by such Party or by the other Party, in accordance with this Section 6.4; provided that such information remains accurate as of such time and provided the frequency and form of such disclosure are reasonable.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.5                                Publications . The Parties recognize the desirability of publishing and publicly disclosing the results of and information regarding, activities under this Agreement. Accordingly, Licensee shall be free to publicly disclose the results of and information regarding, activities under this Agreement, subject to prior review by AstraZeneca of any disclosure of AstraZeneca’s Confidential Information for issues of patentability and protection of such Confidential Information, in a manner consistent with Applicable Law and industry practices, as provided in this Section 6.5. Accordingly, prior to publishing or disclosing any Confidential Information of AstraZeneca, Licensee shall provide AstraZeneca with drafts of proposed abstracts, manuscripts or summaries of presentations that cover such Confidential Information. AstraZeneca shall respond promptly through its designated representative and in any event no later than [* * *] days after receipt of such proposed publication or presentation or such shorter period as may be required by the publication or presentation. Licensee agrees to allow a reasonable period (not to exceed [* * *] days) to permit filings for patent protection and to otherwise address issues of Confidential Information or related competitive harm to the reasonable satisfaction of AstraZeneca. In addition, Licensee shall give due regard to comments furnished by AstraZeneca and such comments shall not be unreasonably rejected.

 

6.6                                Return of Confidential Information . Upon the effective date of the expiration or termination of this Agreement for any reason, either Party may request in writing and the non-requesting Party shall either, with respect to Confidential Information to which such non-requesting Party does not retain rights under the surviving provisions of this Agreement, at the requesting Party’s election, (i) promptly destroy all copies of such Confidential Information in the possession or control of the non-requesting Party and confirm such destruction in writing to the requesting Party or (ii) promptly deliver to the requesting Party, at the non-requesting Party’s sole cost and expense, all copies of such Confidential Information in the possession or control of the non-requesting Party. Notwithstanding the foregoing, the non-requesting Party shall be permitted to retain such Confidential Information (x) to the extent necessary or useful for purposes of performing any continuing obligations or exercising any ongoing rights hereunder and, in any event, a single copy of such Confidential Information for archival purposes and (y) any computer records or files containing such Confidential Information that have been created solely by such non-requesting Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such non-requesting Party’s standard archiving and back-up procedures, but not for any other uses or purposes. All Confidential Information shall continue to be subject to the terms of this Agreement for the period set forth in Section 6.1.

 

6.7                                Privileged Communications . In furtherance of this Agreement, it is expected that the Parties may, from time to time, disclose to one another privileged communications with counsel, including opinions, memoranda, letters and other written, electronic and verbal communications. Such disclosures are made with the understanding that they shall remain confidential in accordance with this Article 6, that they will not be deemed to waive any applicable attorney-client or attorney work product or other privilege and that they are made in connection with the shared community of legal interests existing between AstraZeneca and Licensee, including the community of legal interests in avoiding infringement of any valid, enforceable patents of Third Parties and maintaining the validity of the AstraZeneca Patents and Licensee Patents . In the event of any litigation (or potential litigation) with a Third Party related to this Agreement or the subject matter hereof, the Parties shall, upon either Party’s request, enter into a reasonable and customary joint defence agreement. In any event, each Party shall consult in a timely manner with the other Party before engaging in any conduct ( e.g. , producing information or documents) in connection with litigation or other proceedings that could conceivably implicate privileges maintained by the other Party. Notwithstanding anything contained in this Section 6.7, nothing in this Agreement shall prejudice a Party’s ability to take discovery of the other Party in disputes between them relating to the Agreement and no information otherwise admissible or discoverable by a Party shall become inadmissible or immune from discovery solely by this Section 6.7.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Article 7
REPRESENTATIONS AND WARRANTIES

 

7.1                                Mutual Representations and Warranties . AstraZeneca and Licensee each represents and warrants to the other, as of the Effective Date, and covenants, that:

 

7.1.1                      It is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority, corporate or otherwise, to execute, deliver and perform this Agreement;

 

7.1.2                      The execution and delivery of this Agreement and the performance by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action and do not violate: (i) such Party’s charter documents, bylaws or other organizational documents; (ii) in any material respect, any agreement, instrument or contractual obligation to which such Party is bound; (iii) any requirement of any Applicable Law; or (iv) any order, writ, judgment, injunction, decree, determination or award of any court or governmental agency presently in effect applicable to such Party;

 

7.1.3                      This Agreement is a legal, valid and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

 

7.1.4                      It is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the diligent and complete fulfilment of its obligations hereunder; and

 

7.1.5                      Neither it nor any of its Affiliates has been debarred or is subject to debarment and neither it nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA or who is the subject of a conviction described in such section. It will inform the other Party in writing promptly if it or any such Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of its or its Affiliates’ Knowledge, is threatened, relating to the debarment or conviction of it or any such Person performing services hereunder.

 

7.2                                Additional Representations and Warranties of AstraZeneca . AstraZeneca further represents and warrants to Licensee, as of the Effective Date, that: (i) AstraZeneca Controls the AstraZeneca Patents set forth in Schedule B (“ Existing Patents ”) and has the right to grant the licenses and sublicenses specified herein; (ii) AstraZeneca has not received any written claim or demand alleging that (a) the Existing Patents are invalid or unenforceable or (b) the Development or Commercialization of the Licensed Products as contemplated herein infringes any Patent owned by any Third Party; and (iii) to AstraZeneca’s Knowledge, no Person is infringing or threatening to infringe the Existing Patents in the Field.

 

7.3                                Additional Representations and Warranties of Licensee . Licensee further represents and warrants to AstraZeneca, as of the Effective Date, that Licensee: (i) has conducted its own investigation and analysis of (a) the Patent as such rights relate to the Exploitation of the Licensed Compounds and Licensed Products

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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as contemplated hereunder; (ii) understands the complexity and uncertainties associated with possible claims of infringement of Patent or other proprietary rights of Third Parties, particularly those relating to pharmaceutical products; and (iii) acknowledges and agrees that it is solely responsible for the risks of such claims.

 

7.4                                DISCLAIMER OF WARRANTIES . EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

7.5                                ADDITIONAL WAIVER . LICENSEE AGREES THAT: (i) THE ASTRAZENECA PATENTS ARE LICENSED “AS IS,” “WITH ALL FAULTS,” AND “WITH ALL DEFECTS,” AND LICENSEE EXPRESSLY WAIVES ALL RIGHTS TO MAKE ANY CLAIM WHATSOEVER AGAINST ASTRAZENECA FOR MISREPRESENTATION OR FOR BREACH OF PROMISE, GUARANTEE OR WARRANTY OF ANY KIND RELATING TO THE ASTRAZENECA PATENTS; (ii) LICENSEE AGREES THAT ASTRAZENECA WILL HAVE NO LIABILITY TO LICENSEE FOR ANY ACT OR OMISSION IN THE PREPARATION, FILING, PROSECUTION, MAINTENANCE, ENFORCEMENT, DEFENCE OR OTHER HANDLING OF THE ASTRAZENECA PATENTS; AND (iii) LICENSEE IS SOLELY RESPONSIBLE FOR DETERMINING WHETHER THE ASTRAZENECA PATENTS HAVE APPLICABILITY OR UTILITY IN LICENSEE’S CONTEMPLATED EXPLOITATION OF THE LICENSED PRODUCTS AND LICENSEE ASSUMES ALL RISK AND LIABILITY IN CONNECTION WITH SUCH DETERMINATION.

 

7.6                                Anti-Bribery and Anti-Corruption Compliance . Licensee agrees, on behalf of itself, its officers, directors and employees and on behalf of its Affiliates, agents, representatives, consultants and subcontractors hired in connection with the subject matter of this Agreement (together with Licensee, the “ Licensee Representatives ”) that for the performance of its obligations hereunder:

 

(i)                                      The Licensee Representatives shall not directly or indirectly pay, offer or promise to pay or authorize the payment of any money or give, offer or promise to give or authorize the giving of

 

anything else of value, to: (a) any Government Official in order to influence official action; (b)any Person (whether or not a Government Official) (1) to influence such Person to act in breach of a duty of good faith, impartiality or trust (“ acting improperly ”), (2) to reward such Person for acting improperly or (3) where such Person would be acting improperly by receiving the money or other thing of value; (c) any Person (whether or not a Government Official) while knowing or having reason to know that all or any portion of the money or other thing of value will be paid, offered, promised or given to or will otherwise benefit, a Government Official in order to influence official action for or against either Party in connection with the matters that are the subject of this Agreement; or (d) any Person (whether or not a Government Official) to reward that Person for acting improperly or to induce that Person to act improperly.

 

(ii)                                   The Licensee Representatives shall not, directly or indirectly, solicit, receive or agree to accept any payment of money or anything else of value in violation of the Anti-Corruption Laws.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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7.6.2                      The Licensee Representatives shall comply with the Anti-Corruption Laws plus AstraZeneca’s Anti-Corruption Rules and Policies and shall not take any action that will, or would reasonably be expected to, cause AstraZeneca or its Affiliates to be in violation of any such laws or policies.

 

7.6.3                      Licensee, on behalf of itself and the other Licensee Representatives, represents and warrants to AstraZeneca that: (i) all information provided by Licensee to AstraZeneca in any anti-bribery and corruption due diligence checklist or similar due diligence process is true, complete and correct at the date it was provided and that any material changes in circumstances relevant to the answers provided in such exercise shall be immediately disclosed to AstraZeneca; and (ii) to the best of Licensee’s and its Affiliates’ Knowledge, no Licensee Representative that will participate or support Licensee’s performance of its obligations hereunder has, directly or indirectly, (a) paid, offered or promised to pay or authorized the payment of any money, (b) given, offered or promised to give or authorized the giving of anything else of value or (c) solicited, received or agreed to accept any payment of money or anything else of value, in each case ((a), (b) and (c)), in violation of the Anti-Corruption Laws during the three (3) years preceding the date of this Agreement.

 

7.6.4                      Licensee shall promptly provide AstraZeneca with written notice of the following events: (i) upon becoming aware of any breach or violation by Licensee or other Licensee Representative of any representation, warranty or undertaking set forth in Sections 7.6.1 through 7.6.3 above; or (ii) upon receiving a formal notification that it is the target of a formal investigation by a governmental authority for a Material Anti-Corruption Law Violation or upon receipt of information from any of the Licensee Representatives connected with this Agreement that any of them is the target of a formal investigation by a governmental authority for a Material Anti-Corruption Law Violation.

 

7.6.5                      For the term of this Agreement and [* * *] years thereafter, Licensee shall for the purpose of auditing and monitoring the performance of its compliance with this Agreement and particularly this Section 7.6 permit AstraZeneca, its Affiliates, any auditors of any of them and any governmental authority to have access to any premises of Licensee or other Licensee Representatives used in connection with this Agreement, together with a right to access personnel and records that relate to this Agreement (“ Audit ”).

 

(i)                                      To the extent that any Audit by AstraZeneca requires access and review of any commercially or strategically sensitive information or agreements of Licensee or any other Licensee Representatives relating to the business of Licensee or any other Licensee Representatives (including information about prices and pricing policies, cost structures and business strategies) such activity shall be carried out by a third party professional advisor appointed by AstraZeneca and such professional advisors shall only report back to AstraZeneca such information as is directly relevant to informing AstraZeneca on Licensee’s compliance with the particular provisions of this Agreement or the agreement being Audited.

 

(ii)                                   Licensee shall, and shall cause the Licensee Representatives to, provide all cooperation and assistance during normal working hours as reasonably requested by AstraZeneca for the purposes of an Audit. AstraZeneca shall cause any such auditor to enter into a confidentiality agreement substantially consistent with the applicable requirements of Article 6 hereof. AstraZeneca shall instruct any Third Party auditor or other Person given access in respect of an Audit to cause the minimum amount of disruption to the business of Licensee and the Licensee Representatives and to comply with relevant building and security regulations.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(iii)                                The costs and fees of any inspection Audit shall be paid by AstraZeneca, except that if an inspection or Audit reveals any breach or violation by Licensee (including through any other Licensee Representative) of any representation, warranty or undertaking set forth in Sections 7.6.1 through 7.6.3 above, the costs of such inspection or Audit shall be paid by Licensee. Licensee shall bear its own costs of rendering assistance to the Audit.

 

7.6.6                      On the occurrence of any of the following events: (A) AstraZeneca becomes aware of, whether or not through an Audit, that Licensee (or any other Licensee Representative) is in breach or violation of any representation, warranty or undertaking in Sections 7.6.1 through 7.6.3 or of the Anti-Corruption Laws; or (B) AstraZeneca receives notice under Section 7.6.4 relating to any suspected or actual Material Anti-Corruption Law Violation by Licensee or any other Licensee Representative, in either case ((A) or (B)), AstraZeneca shall have the right, in addition to any other rights or remedies under this Agreement or to which AstraZeneca may be entitled in law or equity, to immediately terminate any or all of the services provided by Licensee pursuant to this Agreement or this Agreement in its entirety or (x) take such steps, including by requiring Licensee to agree to such additional measures, representations, warranties, undertakings and other provisions, in each case, as AstraZeneca believes in good faith are reasonably necessary in order to avoid a potential violation or continuing violation by AstraZeneca or any of its Affiliates of the Anti-Corruption Laws (“ Provisions ”) and (y) terminate any or all of the services provided by Licensee pursuant to this Agreement or this Agreement in its entirety, immediately in the event that:

 

(i)                                      Licensee refuses to agree to all of the Provisions required by AstraZeneca pursuant to this clause; provided that AstraZeneca has (a) provided Licensee an explanation in reasonable detail as to why AstraZeneca considers such provisions necessary, (b) given Licensee a reasonable opportunity to review and comment on the proposed Provisions and to provide its view as to the necessity or usefulness of these to address the event concerned and (c) considered such comments in good faith; or

 

(ii)                                   AstraZeneca reasonably concludes that there is no Provision available that would enable AstraZeneca or its Affiliates to avoid a potential violation or continuing violation of applicable Anti-Corruption Laws..

 

7.6.7                      Any termination of this Agreement pursuant to Section 7.6.6 shall be treated as a termination by AstraZeneca for Licensee’s breach and the consequences of termination set forth in Section 9.4.1 or 9.4.2, as applicable, shall apply and additionally: subject to the accrued rights of the Parties prior to termination, AstraZeneca shall have no liability to Licensee for any fees, reimbursements or other compensation or for any loss, cost, claim or damage resulting, directly or indirectly, from such termination;

 

7.6.8                      Licensee shall be responsible for any breach of any representation, warranty or undertaking in this Section 7.6 or of the Anti-Corruption Laws by any Licensee Representative.

 

7.6.9                      AstraZeneca may disclose the terms of this Agreement or any action taken under this Section 7.6 to prevent a potential violation or continuing violation of applicable Anti-Corruption Laws, including the identity of Licensee or a Licensee Representative and the payment terms, to any governmental authority if AstraZeneca determines, upon advice of counsel, that such disclosure is necessary.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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7.6.10               Licensee represents and warrants that (i) it has reviewed its internal programs in relation to the Anti-Corruption Laws and the ability of the Licensee Representatives to adhere to AstraZeneca’s Anti-Corruption Rules and Policies in performance of its obligations hereunder in advance of the signing of this Agreement and (ii) it and the other Licensee Representatives can and will continue to comply with such Anti-Corruption Laws and AstraZeneca’s Anti-Corruption Rules and Policies in performance of its obligations hereunder.

 

Article 8
INDEMNITY

 

8.1                                Indemnification of AstraZeneca . Licensee shall indemnify AstraZeneca, its Affiliates, its or their (sub)licensees and its and their respective directors, officers, employees and agents and defend and save each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “ Losses ”) in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, “ Third Party Claims ”) arising from or occurring as a result of: (i) the breach by Licensee of this Agreement, including the enforcement of AstraZeneca’s rights under this Section 8.1; (ii) the gross negligence or wilful misconduct on the part of Licensee or its Affiliates or its or their Sublicensees or its or their distributors or contractors or its or their respective directors, officers, employees or agents in performing its or their obligations under this Agreement; or (iii) the Exploitation by Licensee or any of its Affiliates or its or their Sublicensees or its or their distributors or contractors of any Licensed Product or the Licensed Compounds in or for the Territory, except, in each case ((i), (ii) and (iii)), for those Losses for which AstraZeneca has an obligation to indemnify Licensee pursuant to Section 8.2 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability.

 

8.2                                Indemnification of Licensee . AstraZeneca shall indemnify Licensee, its Affiliates and their respective directors, officers, employees and agents and defend and save each of them harmless, from and against any and all Losses in connection with any and all Third Party Claims arising from or occurring as a result of: (i) the breach by AstraZeneca of this Agreement, including the enforcement of Licensee’s rights under this Section 8.2; (ii) the gross negligence or wilful misconduct on the part of AstraZeneca or its Affiliates or its or their respective directors, officers, employees or agents in performing its obligations under this Agreement; except, in each case (i) and (ii), for those Losses for which Licensee has an obligation to indemnify AstraZeneca pursuant to Section 8.1 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability for the Losses.

 

8.3                                Indemnification Procedures.

 

8.3.1                      Notice of Claim . All indemnification claims in respect of a Party, its Affiliates or its or their (sub)licensees or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “ Indemnified Party ”). The Indemnified Party shall give the indemnifying Party prompt written notice (an “ Indemnification Claim Notice ”) of any Losses or discovery of fact upon which such indemnified Party intends to base a request for indemnification under this Article 8, but in no event shall the indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and Third Party Claims.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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8.3.2                      Control of Defence . The indemnifying Party shall have the right to assume the defence of any Third Party Claim by giving written notice to the Indemnified Party within [* * *] days after the indemnifying Party’s receipt of an Indemnification Claim Notice; provided that the indemnifying Party expressly agrees to defend the claim against the Indemnified Party with respect to such Third Party Claim. The assumption of the defence of a Third Party Claim by the indemnifying Party shall not be construed as an acknowledgment that the indemnifying Party is liable to indemnify the Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the indemnifying Party of any defences it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defence of a Third Party Claim, the indemnifying Party may appoint as lead counsel in the defence of the Third Party Claim any legal counsel selected by the indemnifying Party; provided that it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). In the event the indemnifying Party assumes the defence of a Third Party Claim, the Indemnified Party shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim. Should the indemnifying Party assume the defence of a Third Party Claim, except as provided in Section 8.3.3, the indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defence or settlement of the Third Party Claim unless specifically requested in writing by the indemnifying Party. In the event that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Third Party Claim, the Indemnified Party shall reimburse the indemnifying Party for any and all reasonable and verifiable costs and expenses (including attorneys’ fees and costs of suit) and any Losses incurred by the indemnifying Party in accordance with this Section 8 in its defence of the Third Party Claim.

 

8.3.3                      Right to Participate in Defence . Any Indemnified Party shall be entitled to participate in the defence of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however , that such employment shall be at the Indemnified Party’s sole cost and expense unless (i) the employment thereof has been specifically authorized in writing by the indemnifying Party in writing (in which case, the defence shall be controlled as provided in Section 8.3.2), (ii) the indemnifying Party has failed to assume the defence and employ counsel in accordance with Section 8.3.2 (in which case the Indemnified Party shall control the defence) or (iii) the interests of the indemnitee and the indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under Applicable Law, ethical rules or equitable principles (in which case, the Indemnified Party shall control its defence).

 

8.3.4                      Settlement . With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that shall not result in the applicable indemnitee(s) becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified Party in any manner and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the applicable indemnitee hereunder, the indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defence of the Third Party Claim in accordance with Section 8.3.2, the indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). If the indemnifying Party does not assume and conduct the defence of a Third Party Claim as provided above, the Indemnified Party may defend against such Third Party Claim; provided that the Indemnified Party shall not settle any Third Party Claim without the prior written consent of the indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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8.3.5                      Cooperation . Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall and shall cause each indemnitee to, cooperate in the defence or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the indemnifying Party to and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim and making Indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and the indemnifying Party shall reimburse the Indemnified Party for all its, its Affiliates’ and its and their (sub)licensees’ or their respective directors’, officers’, employees’ and agents’, as applicable, reasonable and verifiable out-of-pocket expenses in connection therewith.

 

8.3.6                      Expenses . Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party and its Affiliates and its and their (sub)licensees and their respective directors, officers, employees and agents, as applicable, in connection with any claim shall be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

 

8.4                                Special, Indirect and Other Losses . EXCEPT (i) IN THE EVENT THE WILLFUL MISCONDUCT OR FRAUD OF A PARTY OR OF A PARTY’S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 6, (ii) AS PROVIDED UNDER SECTION 10.11, (iii) TO THE EXTENT ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS ARTICLE 8, NEITHER PARTY NOR ANY OF ITS AFFILIATES OR (SUB)LICENSEES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL OR PUNITIVE DAMAGES OR FOR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY.

 

8.5                                Insurance . Licensee shall have and maintain such types and amounts of insurance covering its Exploitation of the Licensed Compounds and Licensed Products as is (i) normal and customary in the pharmaceutical industry generally for parties similarly situated and (ii) otherwise required by Applicable Law. Upon request by AstraZeneca, Licensee shall provide to AstraZeneca evidence of its insurance coverage, including copies of applicable insurance policies. The insurance policies shall be under an occurrence form, but if only a claims-made form is available to Licensee, then Licensee shall continue to maintain such insurance after the expiration or termination of this Agreement in its entirety for a period of [* * *] years.

 

Article 9
TERM AND TERMINATION

 

9.1                                Term and Expiration . This Agreement shall commence on the Effective Date and, unless earlier terminated in accordance herewith, shall continue in force and effect until the date of expiration of the last Royalty Term for the last Licensed Product (such period, the “ Term ”). Following the expiration of the Royalty Term for a Licensed Product in a country, the grants in Section 2.1 shall become non-exclusive, fully-paid, royalty-free, and irrevocable for such Licensed Product in such country. For clarity, upon the expiration of the Term, the grants in Section 2.1 shall become non-exclusive, fully-paid, royalty-free, and irrevocable in their entirety.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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9.2                                Termination .

 

9.2.1                      Material Breach . In the event that either Party (the “ Breaching Party ”) shall be in material breach in the performance of any of its obligations under this Agreement, in addition to any other right and remedy the other Party (the “ Non-Breaching Party ”) may have, the Non-Breaching Party may terminate this Agreement by providing [* * *] days (the “ Notice Period ”) prior written notice (the “ Termination Notice ”) to the Breaching Party and specifying the breach and its claim of right to terminate; provided that (i) the termination shall not become effective at the end of the Notice Period if the Breaching Party cures the breach specified in the Termination Notice during the Notice Period (or, if such default cannot be cured within the Notice Period, if the Breaching Party commences actions to cure such breach within the Notice Period and thereafter diligently continues such actions) and (ii) with respect to an uncured material breach consisting of Licensee’s diligence obligations under Section 3.3.1 or Section 3.5.1, as applicable, with respect to any country in the Territory, AstraZeneca shall have the right to terminate this Agreement, in its sole discretion, (a) solely with respect to such country or (b) in its entirety.

 

9.2.2                      Termination by AstraZeneca.

 

(i)                                      In the event that the Licensee does not close the Financing by the end of the Financing Period, then AstraZeneca shall have the right to terminate this Agreement with immediate effect.

 

(ii)                                   In the event that Licensee or any of its Affiliates or Sublicensees, anywhere in the Territory, institutes, prosecutes or otherwise participates in (or in any way aids any Third Party in instituting, prosecuting or participating in), at law or in equity or before any administrative or regulatory body, including the U.S. Patent and Trademark Office or its foreign counterparts, any claim, demand, action or cause of action for declaratory relief, damages or any other remedy or for an enjoinment, injunction or any other equitable remedy, including any interference, re-examination, opposition or any similar proceeding, alleging that any claim in a AstraZeneca Patent is invalid, unenforceable or otherwise not patentable or would not be infringed by Licensee’s activities absent the rights and licenses granted hereunder, AstraZeneca shall have the right to immediately terminate this Agreement in its entirety, including the rights of any Sublicensees, upon written notice to Licensee.

 

9.2.3                      Termination by Licensee.

 

Licensee shall have the right to terminate this Agreement in its entirety or (outside the US only) on a country-by-country basis, without cause, as follows:

 

(i) upon [* * *] prior written notice in the case where Regulatory Approval has not been obtained for a Licensed Product; or

 

(ii) upon [* * *] prior written notice in the case where Regulatory Approval has been obtained for a Licensed Product such termination to be effective at the end of such notice period.

 

9.2.4                      Termination for Insolvency . In the event that either Party (i) files for protection under bankruptcy or insolvency laws, (ii) makes an assignment for the benefit of creditors, (iii) appoints or suffers appointment of a receiver or trustee over substantially all of its property that is not discharged within ninety (90) days after such filing, (iv) proposes a written agreement of composition or extension of its debts, (v) proposes or is a party to any dissolution or liquidation, (vi) files a petition under any bankruptcy or insolvency act or has any such petition filed against that is not discharged within sixty (60) days of the filing thereof or (vii) admits in

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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writing its inability generally to meet its obligations as they fall due in the general course, then the other Party may terminate this Agreement in its entirety effective immediately upon written notice to such Party.

 

9.3                                Rights in Bankruptcy . All rights and licenses granted under or pursuant to this Agreement by Licensee or AstraZeneca are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the Party hereto that is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (i) upon any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under clause (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

 

9.4                                Consequences of Termination.

 

9.4.1                      Termination in its Entirety . In the event of a termination of this Agreement in its entirety for any reason:

 

(i)                                      all rights and licenses granted by AstraZeneca hereunder shall immediately terminate, including, for clarity, any sublicense granted by Licensee pursuant to Section 2.2;

 

(ii)                                   Licensee shall and hereby does, and shall cause its Affiliates and its and their Sublicensees to, when and as requested by AstraZeneca, assign to AstraZeneca all of its right, title and interest in and to (a) all Regulatory Documentation (including any Regulatory Approvals) applicable to any Licensed Compound(s) or Licensed Product(s) then owned or Controlled by Licensee or any of its Affiliates; provided that if any such Regulatory Documentation or Regulatory Approval is not immediately transferable in a country, Licensee shall provide AstraZeneca with all benefit of such Regulatory Documentation or Regulatory Approval, as applicable, and such assistance and cooperation as necessary or reasonably requested by AstraZeneca to timely transfer such Regulatory Documentation or Regulatory Approval, as applicable, to AstraZeneca or its designee or, at AstraZeneca’s option, to enable AstraZeneca to obtain a substitute for such Regulatory Documentation or Regulatory Approval, as applicable, without disruption to AstraZeneca’s Exploitation of the Licensed Compound(s) or applicable Licensed Product(s);

 

(iii)                                unless expressly prohibited by any Regulatory Authority, at AstraZeneca’s written request, Licensee shall and hereby does, and shall cause its Affiliates and its and their Sublicensees to, (a) transfer control to AstraZeneca of any or all clinical studies involving Licensed Products thereto being conducted by or on behalf of Licensee, an Affiliate or a Sublicensee as of the effective date of termination and (b) continue to conduct such clinical studies, at Licensee’s cost, for up to [* * *] months to enable such transfer to be completed without interruption of any such clinical study; provided that (x) AstraZeneca shall not have any

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

37



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

obligation to continue any clinical study unless required by Applicable Law and (y) with respect to each clinical study for which such transfer is expressly prohibited by the applicable Regulatory Authority, if any, Licensee shall continue to conduct such clinical study to completion, at Licensee’s cost and expense;

 

(iv)                               at AstraZeneca’s written request, Licensee shall, and cause its Affiliates and its and their Sublicensees to, assign to AstraZeneca all Licensed Product Agreements, unless, with respect to any such Licensed Product Agreement, such Licensed Product Agreement expressly prohibits such assignment, in which case Licensee (or such Affiliate or Sublicensee, as applicable) shall cooperate with AstraZeneca in all reasonable respects to secure the consent of the applicable Third Party to such assignment and if any such consent cannot be obtained with respect to a Licensed Product Agreement, Licensee shall, and cause its Affiliates and its and their Sublicensees to, obtain for AstraZeneca substantially all of the practical benefit and burden under such Licensed Product Agreement, including by (a) entering into appropriate and reasonable alternative arrangements on terms agreeable to AstraZeneca and (b) subject to the consent and control of AstraZeneca, enforcing, at AstraZeneca’s cost and expense and for the account of AstraZeneca, any and all rights of Licensee (or such Affiliate or Sublicensee, as applicable) against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise; and

 

(v)                                  at AstraZeneca’s written request, Licensee shall supply to AstraZeneca such quantities of the Licensed Compound(s) and Licensed Product(s) as AstraZeneca indicates in written forecasts and orders therefor from time to time at Licensee’s actual cost (excluding costs for general overhead, communications, operating supplies or other equipment) to Manufacture such Licensed Compound(s) and Licensed Product(s) until the later of (a) such time as AstraZeneca has established an alternate, validated source of supply for the Licensed Compound(s) and Licensed Product(s) and AstraZeneca is receiving supply from such alternative source and (b) the [* * *] of the effective date of termination of this Agreement.

 

9.4.2                      Termination in a Terminated Territory . In the event of a termination of this Agreement with respect to a Terminated Territory by AstraZeneca pursuant to Section 9.2.1 or by Licensee pursuant to Section 9.2.3 (but not in the case of any termination of this Agreement in its entirety):

 

(i)                                      all rights and licenses granted by AstraZeneca hereunder, including, for clarity, any sublicense granted by Licensee pursuant to Section 2.2, (a) shall automatically be deemed to be amended to exclude, if applicable, the right to market, promote, detail, distribute, import, sell for commercial use, offer for commercial sale, file any Drug Approval Application for or seek any Regulatory Approval for Licensed Products in such Terminated Territory and (b) shall otherwise survive and continue in effect outside such Terminated Territory solely for the purpose of furthering any Commercialization of the Licensed Products in the Territory or any Development or Manufacturing in support thereof;

 

(ii)                                   Licensee shall and hereby does, and shall cause its Affiliates and its and their Sublicensees to, when and as requested by AstraZeneca, assign to AstraZeneca all of its right, title and interest in and to (a) all Regulatory Documentation (including any Regulatory Approvals) applicable to the Exploitation of the Licensed Compound(s) or Licensed Product(s) solely in the Terminated Territory then owned or Controlled by Licensee or any of its Affiliates or its or their Sublicensees; provided that if any such Regulatory Documentation or Regulatory Approval is not immediately transferable in a country, Licensee shall provide AstraZeneca with all

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

38



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

benefit of such Regulatory Documentation or Regulatory Approval, as applicable, and such assistance and cooperation as necessary or reasonably requested by AstraZeneca to timely transfer such Regulatory Documentation or Regulatory Approval, as applicable, to AstraZeneca or its designee or, at AstraZeneca’s option, to enable AstraZeneca to obtain a substitute for such Regulatory Documentation or Regulatory Approval, as applicable, without disruption to AstraZeneca’s Exploitation of the Licensed Compound(s) or applicable Licensed Product(s) or Improvement(s) thereto;

 

(iii)                                at AstraZeneca’s written request, Licensee shall, and cause its Affiliates and its and their Sublicensees to, assign to AstraZeneca or its designee all Licensed Product Agreements relating to the Terminated Territory, unless, with respect to any such Licensed Product Agreement, such Licensed Product Agreement (a) expressly prohibits such assignment (in which case, Licensee, or its Affiliate or Sublicensee, as applicable, shall cooperate with AstraZeneca in all reasonable respects to secure the consent of the applicable Third Party to such assignment, (b) relates both to (1) the Terminated Territory and the Territory or (2) Licensed Products and products other than Licensed Products (which, in either case ((1) or (2)), at AstraZeneca’s request, Licensee, or its Affiliate or Sublicensee, as applicable, shall cooperate with AstraZeneca in all reasonable respects to secure the written agreement of the applicable Third Party to a partial assignment of the applicable Licensed Product Agreement relating to the Terminated Territory or Licensed Products, as applicable) and, in either case ((a) or (b)) if any such consent or agreement, as applicable, cannot be obtained with respect to a Licensed Product Agreement, Licensee shall, and cause its Affiliates and its and their Sublicensees to, obtain for AstraZeneca substantially all of the practical benefit and burden under such Licensed Product Agreement to the extent applicable to the Terminated Territory and Licensed Products, as applicable, including by (x) entering into appropriate and reasonable alternative arrangements on terms agreeable to AstraZeneca and (y) subject to the consent and control of AstraZeneca, enforcing, at AstraZeneca’s cost and expense and for the account of AstraZeneca, any and all rights of Licensee, or such Affiliate or Sublicense, as applicable, against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise; and

 

(iv)                               unless expressly prohibited by any Regulatory Authority, at AstraZeneca’s written request, Licensee shall, and shall cause its Affiliates and its and their Sublicensees to (a) transfer control to AstraZeneca of any or all clinical studies involving Licensed Products being conducted by or on behalf of Licensee, an Affiliate or a Sublicensee as of the effective date of termination in or for the Terminated Territory and (b) continue to conduct such clinical studies, at Licensee’s cost, for up to [* * *] to enable such transfer to be completed without interruption of any such clinical study; provided that (x) AstraZeneca shall not have any obligation to continue any clinical study unless required by Applicable Law and (y) with respect to each clinical study for which such transfer is expressly prohibited by the applicable Regulatory Authority, if any, Licensee shall continue to conduct such clinical study to completion, at Licensee’s cost and expense; and

 

(v)                                  at AstraZeneca’s written request, Licensee shall supply to AstraZeneca such quantities of the Licensed Compound(s) and Licensed Product(s) as AstraZeneca indicates in written forecasts and orders therefor from time to time at Licensee’s actual cost (excluding costs for general overhead, communications, operating supplies or other equipment) to Manufacture such Licensed Compound(s) and Licensed Product(s) or any Improvement thereto until the later of (a) such time as AstraZeneca has established an alternate, validated source of supply for the Licensed Compound(s) and Licensed Product(s) or any Improvement thereto, and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

39



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

AstraZeneca is receiving supply from such alternative source and (b) the third anniversary of the effective date of termination of this Agreement.

 

9.4.3                      Licence to Arising Intellectual Property.

 

In the event that:

 

(i)                                      Licensee exercises its right to terminate this Agreement in its entirety pursuant to Section 9.2.1 or 9.2.4, AstraZeneca shall have the exclusive option for a period of [* * *] days after such termination to negotiate for an exclusive license for all Confidential Information and Licensee Patents developed under the Agreement by Licensee relating to Licensed Compounds, Licensed Products or the manufacture or use thereof;

 

(ii)                                   Licensee exercises its right to terminate this Agreement in its entirety pursuant to Section 9.2.3, or AstraZeneca exercises its right to terminate this Agreement in its entirety pursuant Sections 9.2.1, 9.2.2 or 9.2.4,

 

1.                                       Licensee shall grant to AstraZeneca for the Exploitation in the Territory of any Licensed Compound(s) or Licensed Product(s):

 

a.                                       an exclusive royalty-free license with the right to grant multiple tiers of sublicenses, in and to all Confidential Information of Licensee specifically relating to the Licensed Compound(s) or any Licensed Product(s); and

 

b.                                       a non-exclusive license with the right to grant multiple tiers of sublicenses, in and to all Confidential Information of Licensee not specifically relating to any Licensed Compound(s) or any Licensed Product(s) but that has been used in the research, development, manufacture and/or sale of any Licensed Compound(s) or any Licensed Product(s). In the interest of clarity, the non-exclusive license would only be for use with Licensed Compounds} or Licensed Product(s); and

 

2.                                       Licensee shall and hereby does, and shall cause its Affiliates and its and their Sublicensees to, effective as of the effective date of termination, grant AstraZeneca for the Exploitation in the Territory of any Licensed Compound(s) or Licensed Product(s):

 

a.                                       an exclusive, royalty-free license with the right to grant multiple tiers of sublicenses, in and to all:

 

i.                                           Licensee Patents; and

 

ii.                                        Licensee Know-How;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

40


 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

specifically relating to any Licensed Compound(s) or any Licensed Product(s); and

 

b.                                       a non-exclusive license with the right to grant multiple tiers of sublicenses, in and to all:

 

i.                                           Licensee Patents; and

 

ii.                                        Licensee Know-How;

 

not specifically relating to any Licensed Compound(s) or any Licensed Product(s) but that has been used in the research, development, manufacture and/or sale of the Licensed Compound(s) or any Licensed Product(s). In the interest of clarity, the non-exclusive license would only be for use with Licensed Compound(s) or Licensed Product(s); and

 

c.                                        an exclusive, royalty-free license with the right to grant multiple tiers of sublicenses in and to all, together with a right of reference, Regulatory Documentation (including any Regulatory Approvals) then owned or Controlled by Licensee or any of its Affiliates or its or their Sublicensees that are not assigned to AstraZeneca pursuant to Section 9.4.2(ii);

 

(iii)                                Licensee exercises its right to terminate this Agreement in one or more countries (but not in its entirety) pursuant to Section 9.2.3, or AstraZeneca exercises its right to terminate this Agreement in one or more countries (but not in its entirety) pursuant to Section 9.2.1,

 

1.                                       Licensee shall grant to AstraZeneca for the Exploitation in the Terminated Territory of any Licensed Compound(s) or Licensed Product(s):

 

a.                                       an exclusive royalty-free license with the right to grant multiple tiers of sublicenses, in and to all Confidential Information of Licensee specifically relating to the Licensed Compound(s) or any Licensed Product(s); and

 

b.                                       a non-exclusive license with the right to grant multiple tiers of sublicenses, in and to all Confidential Information of Licensee not specifically relating to any Licensed Compound(s) or any Licensed Product(s) but that has been used in the research, development, manufacture and/or sale of any Licensed Compound(s) or any Licensed Product(s). In the interest of clarity, the non-exclusive license would only be for use with Licensed Compound(s) or Licensed Product(s); and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

41



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

2.                                       Licensee shall and hereby does, and shall cause its Affiliates and its and their Sublicensees to, effective as of the effective date of termination, grant AstraZeneca for the Exploitation in the Terminated Territory of any Licensed Compound(s) or Licensed Product(s):

 

a.                                       an exclusive, royalty-free license with the right to grant multiple tiers of sublicenses, in and to all:

 

i.                                           Licensee Patents; and

 

ii.                                        Licensee Know-How;

 

specifically relating to any Licensed Compound(s) or any Licensed Product(s); and

 

b.                                       a non-exclusive license with the right to grant multiple tiers of sublicenses, in and to all:

 

i.                                           Licensee Patents; and

 

ii.                                        Licensee Know-How;

 

not specifically relating to any Licensed Compound(s) or any Licensed Product(s) but that has been used in the research, development, manufacture and/or sale of the Licensed Compound(s) or any Licensed Product(s). In the interest of clarity, the non-exclusive license would only be for use with Licensed Compounds) or Licensed Product(s); and

 

c.                                        an exclusive, royalty-free license with the right to grant multiple tiers of sublicenses, in and to all, together with a right of reference, Regulatory Documentation (including any Regulatory Approvals) then owned or Controlled by Licensee or any of its Affiliates or its or their Sublicensees that are not assigned to AstraZeneca pursuant to Section 9.4.2(ii).

 

9.5                                Remedies . Except as otherwise expressly provided herein, termination of this Agreement (either in its entirety or with respect to one (1) or more country(ies)) in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.

 

9.6                                Accrued Rights; Surviving Obligations . Termination or expiration of this Agreement (either in its entirety or with respect to one (1) or more country(ies)) for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. Without limiting the foregoing, Sections 2.4 and 3.3.3 and Articles 1, 4, 5, 6, 7, 8, 9 and 10 of this Agreement shall survive the termination or expiration of this Agreement for any reason. If this

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

42



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Agreement is terminated with respect to the Terminated Territory but not in its entirety, then following such termination the foregoing provisions of this Agreement shall remain in effect with respect to the Terminated Territory (to the extent they would survive and apply in the event the Agreement expires or is terminated in its entirety or as otherwise necessary for any of AstraZeneca and its Affiliates and its and their (sub)licensees to exercise their rights in the Terminated Territory) and all provisions not surviving in accordance with the foregoing shall terminate upon termination of this Agreement with respect to the Terminated Territory and be of no further force and effect (and for the avoidance of doubt all provisions of this Agreement shall remain in effect with respect to all countries in the Territory other than the Terminated Territory).

 

Article 10
MISCELLANEOUS

 

10.1                         Force Majeure . Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than an obligation to make payments) when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labour disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority (except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement). The non-performing Party shall notify the other Party of such force majeure within [* * *] days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use commercially reasonable efforts to remedy its inability to perform. Without limitation to the foregoing, in the event that the suspension of performance continues for [* * *] days after the date of the occurrence and such suspension of performance would constitute a material breach of this Agreement in the absence of this Section 10.1, AstraZeneca shall have the right to terminate this Agreement pursuant to Section 9.2.1 without regard to this Section 10.1, except that in such event no cure period shall apply and AstraZeneca shall have the right to effect such termination upon written notice to Licensee, in its sole discretion, (i) solely with respect to the country affected by such non-performance or (ii) in its entirety.

 

10.2                         Export Control . This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.

 

10.3                         Assignment . Neither Party may assign its rights or delegate its obligations under this Agreement, whether by operation of law or otherwise, in whole or in part without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed, except that AstraZeneca shall have the right, without such consent, (i) to perform any or all of its obligations and exercise any or all of its rights under this Agreement through any of its Affiliates or its or their (sub)licensees, and (ii) assign any or all of its rights and delegate any or all of its obligations hereunder to any of its Affiliates or its or their (sub)licensees or to any successor in interest (whether by merger, acquisition, asset purchase or otherwise) to all or substantially all of

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

43



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

the business to which this Agreement relates; provided that AstraZeneca shall provide written notice to Licensee within thirty (30) days after such assignment or delegation. Licensee shall have the right, without such consent, (i) to perform any or all of its obligations and exercise any or all of its rights under this Agreement through a wholly owned subsidiary of Licensee, and (ii) assign any or all of its rights and delegate any or all of its obligations hereunder to a wholly owned subsidiary of Licensee; provided that Licensee shall provide written notice to AstraZeneca within thirty (30) days after such assignment or delegation and provided that such assignment or delegation shall terminate automatically in the event that such subsidiary ceases to be a subsidiary of Licensee. Any permitted successor of a Party or any permitted assignee of all of a Party’s rights under this Agreement that has also assumed all of such Party’s obligations hereunder in writing shall, upon any such succession or assignment and assumption, be deemed to be a party to this Agreement as though named herein in substitution for the assigning Party, whereupon the assigning Party shall cease to be a party to this Agreement and shall cease to have any rights or obligations under this Agreement. All validly assigned rights of a Party shall inure to the benefit of and be enforceable by, and all validly delegated obligations of such Party shall be binding on and be enforceable against, the permitted successors and assigns of such Party; provided that such Party, if it survives, shall remain jointly and severally liable for the performance of such delegated obligations under this Agreement. Any attempted assignment or delegation in violation of this Section 10.3 shall be void and of no effect.

 

10.4                         Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (i) such provision shall be fully severable, (ii) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by Applicable Law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.

 

10.5                         Dispute Resolution .

 

10.5.1               Except as provided in Section 10.11, if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (collectively, (i) and (ii), a “ Dispute ”), then either Party shall have the right to refer such Dispute to the Senior Officers for attempted resolution by good faith negotiations during a period of ten (10) business days. Any final decision mutually agreed to by the Executive Officers shall be conclusive and binding on the Parties.

 

10.5.2               If such Senior Officers are unable to resolve any such Dispute within such ten (10)-Business Day period, either Party shall be free to institute binding arbitration in accordance with this Section 10.5.2 upon written notice to the other Party (an “ Arbitration Notice ”) and seek such remedies as may be available. Upon receipt of an Arbitration Notice by a Party, the applicable Dispute shall be resolved by final and binding arbitration before a panel of three (3) experts with relevant industry experience (the “ Arbitrators ”). Each of Licensee and AstraZeneca shall promptly select one (1) Arbitrator, which selections shall in no event be made later than thirty (30) days after the notice of initiation of arbitration. The third Arbitrator shall be chosen promptly by mutual agreement of the Arbitrator chosen by Licensee and the Arbitrator chosen by AstraZeneca, but in no event later than thirty (30) days after the date that the last of such Arbitrators was appointed. The Arbitrators shall determine what discovery will be permitted, consistent with the goal of reasonably controlling the cost and time that

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

44



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

the Parties must expend for discovery; provided that the Arbitrators shall permit such discovery as they deem necessary to permit an equitable resolution of the dispute. The arbitration shall be administered by the AAA (or its successor entity) in accordance with the then current Commercial Rules of the American Arbitration Association including the Procedures for Large, Complex Commercial Disputes (including the Optional Rules for Emergency Measures of Protection), except as modified in this Agreement. The arbitration shall be held in New York, and the Parties shall use reasonable efforts to expedite the arbitration if requested by either Party. The Arbitrators shall, within fifteen (15) days after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The decision or award rendered by the Arbitrators shall be final and non-appealable, and judgment may be entered upon it in accordance with Applicable Law in the State of Delaware or any other court of competent jurisdiction. The Arbitrators shall be authorized to award compensatory damages, but shall not be authorized to reform, modify or materially change this Agreement or any other agreements contemplated hereunder.

 

10.5.3               Each Party shall bear its own counsel fees, costs, and disbursements arising out of the dispute resolution procedures described in this Section 10.5, and shall pay an equal share of the fees and costs of the Expert or Arbitrators, as applicable, and all other general fees related to any arbitration described in Section 10.5.2; provided, however , the Arbitrators shall be authorized to determine whether a Party is the prevailing Party, and if so, to award to that prevailing Party reimbursement for its reasonable counsel fees, costs and disbursements (including expert witness fees and expenses, photocopy charges, or travel expenses), or the fees and costs of the Expert or Arbitrators, as applicable. Unless the Parties otherwise agree in writing, during the period of time that any arbitration proceeding described in Section 10.5.2 or 10.5.3, as applicable, is pending under this Agreement, the Parties shall continue to comply with all those terms and provisions of this Agreement that are not the subject of such pending arbitration proceeding. Nothing contained in this Agreement shall deny any Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing arbitration proceeding. All arbitration proceedings and decisions of the Arbitrators, as applicable, under Section 10.5.2, shall be deemed Confidential Information of both Parties under Article 6.

 

10.6                         Governing Law, Jurisdiction and Service .

 

10.6.1               Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

 

10.6.2               Jurisdiction . Subject to Section 10.5 and Section 10.10, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of Delaware for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts. The Parties irrevocably and unconditionally waive their right to a jury trial.

 

10.6.3               Venue . The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of Delaware and hereby further irrevocably and unconditionally waive and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

10.6.4               Service . Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 10.7.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

 

10.7                         Notices .

 

10.7.1               Notice Requirements . Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 10.7.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 10.7.1. Such Notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery service. Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter. This Section 10.7.1 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

 

10.7.2               Address for Notice .

 

If to Licensee, to:

 

Biohaven Pharmaceutical Holding Company Ltd.
P.O. Box 173
Kingston Chambers

Road Town, Tortolo, British Virgin Islands
Attention: Dr. Vladimir Coric, CEO
Email: [* * *]

 

with a copy (which shall not constitute notice) to:

 

Locke Lord LLP
2800 Financial Plaza
Providence, Rhode Island 02903, USA
Attention: Douglas G. Gray, Esq.
Email: [* * *]
Facsimile: 888.325.9018

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

If to AstraZeneca, to:

 

Milstein Building, Granta Park
Cambridge, CB21 6GH, UK
Attention: Chief Counsel, Neuroscience IMED

 

with a copy (which shall not constitute notice) to:

 

35 Gatehouse Drive
Waltham, MA 02451, USA
Attention: VP, SP&A

 

10.8                         HSR Act Filings . No later than five (5) business days following the Effective Date or such later date as the Parties may agree, the Parties shall jointly determine whether a filing under the Hart-Scott-Rodino Antitrust Improvements Act (“ HSR Act ”) or any equivalent competition law statute or regulation (a “ Competition Law Filing ”) is required for the performance of this Agreement. Upon a joint determination that one or more Competition Law Filings are required, the Parties shall prepare and submit the required notification forms as soon as reasonably practicable (and for any filing under the HSR Act within ten (10) business days after such determination) and use reasonable efforts to obtain clearance for the transactions contemplated hereunder as soon as practicable. Subject to Applicable Law relating to the exchange of information, AstraZeneca shall have the right to direct all matters with respect to Competition Law Filings hereunder, consistent with its obligations hereunder after consulting with Licensee. Each Party will consult with the other on, and consider in good faith the views of the other Party in connection with, all of the information relating to such other Party that appears in any Competition Law Filing. Each Party shall bear their respective attorneys’ fees and shall share equally and filing fees in connection therewith. This Agreement shall bind the Parties upon execution and continue in full force and effect unless and until the termination or expiration of the Agreement by its terms, provided, however, that each Party’s grant of license rights hereunder, Licensee’s obligation to make the payments hereunder, and the Parties’ other rights and obligations hereunder in connection with the Development and Commercialization of the Licensed Products shall not become effective unless and until the date of either: 1) the receipt of all Competition Law Clearances or 2) the conclusion by the Parties pursuant to this Section 10.8 that no Competition Law Clearance is necessary for the implementation of this Agreement. Nothing in this Agreement shall require or be deemed to require either Party (or their Affiliates) to commit to any divestitures or licenses or agree to hold separate any assets or agree to any similar arrangements or commit to conduct its business in a specified manner, or to submit and respond to a formal discovery procedure initiated by the FTC or DOJ (i.e., a “Request for Additional Information and Documentary Materials” also known as a “second request”, or Civil Investigative Demand if a filing is not required under the HSR Act), in each case as a condition to obtaining antitrust clearance for the transactions contemplated hereunder. If Competition Law Clearance is not received in relation to both this Agreement on or before ninety (90) days after the date on which both Parties have submitted to the FTC and DOJ or other equivalent authority their respective initial filings to request Competition Law Clearance of the transactions hereunder, then either Party shall have the right to terminate this Agreement without liability therefor at any time thereafter, but prior to receipt of Competition Law Clearance of the transactions contemplated hereunder, by written notice to the other Party.

 

10.9                         Entire Agreement; Amendments . This Agreement, together with the Schedules attached hereto, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises and representations, whether written or oral, with respect thereto are superseded hereby. Each Party confirms that it is not relying on any representations or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

warranties of the other Party except as specifically set forth in this Agreement. No amendment, modification, release or discharge shall be binding on the Parties unless in writing and duly executed by authorized representatives of both Parties. In the event of any inconsistencies between this Agreement and any schedules or other attachments hereto, the terms of this Agreement shall control.

 

10.10                  English Language . This Agreement shall be written and executed in and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

 

10.11                  Equitable Relief . Each Party acknowledges and agrees that the restrictions set forth in Articles 6 and 7 are reasonable and necessary to protect the legitimate interests of the other Party and that such other Party would not have entered into this Agreement in the absence of such restrictions and that any breach or threatened breach of any provision of such Articles may result in irreparable injury to such other Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach of any provision of such Articles, the non-breaching Party shall be authorized and entitled to seek from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such non-breaching Party may be entitled in law or equity. Both Parties agree to waive any requirement that the other (i) post a bond or other security as a condition for obtaining any such relief and (ii) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy. Nothing in this Section 10.11 is intended or should be construed, to limit either Party’s right to equitable relief or any other remedy for a breach of any other provision of this Agreement.

 

10.12                  Waiver and Non-Exclusion of Remedies . Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.

 

10.13                  No Benefit to Third Parties . Except as provided in Article 8, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns and they shall not be construed as conferring any rights on any other Persons.

 

10.14                  Further Assurance . Each Party shall duly execute and deliver or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

 

10.15                  Relationship of the Parties . It is expressly agreed that AstraZeneca, on the one hand and Licensee, on the other hand, shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither AstraZeneca, on the one hand, nor Licensee, on the other hand, shall have the authority to make any statements, representations or commitments of any kind or to take

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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any action, that will be binding on the other, without the prior written consent of the other Party to do so. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such first Party.

 

10.16                  References . Unless otherwise specified, (1) references in this Agreement to any Article, Section or Schedule shall mean references to such Article, Section or Schedule of this Agreement, (ii) references in any Section to any clause are references to such clause of such Section and (iii) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto.

 

10.17                  Construction . Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “ or ” is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including,” “include,” or “includes” as used herein shall mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

 

10.18                  Counterparts . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile, PDF format via email or other electronically transmitted signatures and such signatures shall be deemed to bind each Party hereto as if they were original signatures.

 

[SIGNATURE PAGE FOLLOWS]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

THIS AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the date first written above.

 

 

ASTRAZENECA AB

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

 

By:

/s/ M.C. Kraan

 

By:

/s/Vlad Coric, M.D.

 

 

 

 

 

Name:

M.C. Kraan

 

Name:

Vlad Coric, M.D.

 

 

 

 

 

Title:

RIA iMed

 

Title:

CEO

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

SCHEDULE A

 

Inventory

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

SCHEDULE B

 

AstraZeneca Patents

 

1.

 

Country

 

Grant number

[* * *]

 

[* * *]

 

2.

 

Country

 

Filing number

 

Publication number

[* * *]

 

[* * *]

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

SCHEDULE C

 

Transition Plan

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 




EXHIBIT 10.4

 

***Text Omitted and Filed Separately

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Table of Contents

 

 

 

Page

 

 

 

1.

BACKGROUND

1

 

 

 

2.

DEFINITIONS

1

 

 

 

3.

LICENSE GRANT AND TERM

6

 

 

 

4.

DUE DILIGENCE

7

 

 

 

5.

EQUITY, REIMBURSEMENT OF PATENT EXPENSES; LICENSE MAINTENANCE ROYALTY; MILESTONE ROYALTIES

10

 

 

 

6.

EARNED ROYALTIES; MINIMUM ROYALTY PAYMENTS

11

 

 

 

7.

SUBLICENSES

14

 

 

 

8.

CONFIDENTIALITY AND PUBLICITY

15

 

 

 

9.

REPORTS, RECORDS AND INSPECTIONS

16

 

 

 

10.

PATENT PROTECTION

17

 

 

 

11.

INFRINGEMENT AND LITIGATION

19

 

 

 

12.

USE OF YALE’S NAME

20

 

 

 

13.

TERMINATION

20

 

 

 

14.

INDEMNIFICATION; INSURANCE; NO WARRANTIES

22

 

 

 

15.

NOTICES

24

 

 

 

16.

INVENTOR AGREEMENTS

25

 

 

 

17.

LAWS, FORUM AND REGULATIONS

25

 

 

 

18.

MISCELLANEOUS

25

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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THIS AGREEMENT (the “Agreement”) by and between YALE UNIVERSITY, a corporation organized and existing under and by virtue of a charter granted by the general assembly of the Colony and State of Connecticut and located in New Haven, Connecticut (“YALE”), and BioHaven Pharmaceutical Holding Company, Ltd a British Virgin Island company with principal offices located in [Stonington, Connecticut] (“LICENSEE”) is effective as of the date of final execution (“EFFECTIVE DATE”).

 

1.   BACKGROUND

 

1.1                                In the course of research conducted under YALE auspices, Drs. Vladimir Conic, Gerard Sanacora, and John H. Krystal, in the Department of Psychiatry at YALE (the “INVENTORS”), have produced inventions described by the LICENSED PATENTS and also known as [* * *] (the “INVENTION”).

 

1.2                                INVENTORS have assigned to YALE all of INVENTORS’ right, title and interest in and to the INVENTION and any resulting patents.

 

1.3                                YALE wishes to have the INVENTION and any resulting patents commercialized to benefit the public good.

 

1.4                                LICENSEE has represented to YALE that it shall act diligently to develop and commercialize the LICENSED PRODUCTS.

 

1.5                                YALE is willing to grant a license to LICENSEE, subject to the terms and conditions of this Agreement.

 

1.6                                In consideration of these statements and mutual promises, YALE and LICENSEE agree to the terms of this Agreement.

 

2.   DEFINITIONS

 

The following terms used in this Agreement shall be defined as set forth below:

 

2.1                                “AFFILIATE” shall mean any entity or person that directly or indirectly controls, is controlled by or is under common control with LICENSEE. For purposes of this definition, “control” means possession of the power to direct the management of such entity or person, whether through ownership of more than fifty percent (50%) of voting securities, by contract or otherwise.

 

2.2                                “CHANGE OF CONTROL” shall mean:

 

(a)                                  any consolidation, merger, combination, reorganization or other transaction in which LICENSEE is not the surviving entity, irrespective of whether LICENSEE is maintained as an AFFILIATE or subsidiary of the new controlling entity, or dissolved and absorbed into the new controlling entity; or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

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(b)                                  any transaction or series of related transactions in which the shares of stock or other issued equity interests of LICENSEE constituting in excess of fifty percent (50%) of the then actual voting power of LICENSEE are exchanged for or converted into other stock or securities, cash, and/or any other property thereby giving a third party control of LICENSEE; provided, however, that the sale of equity, warrants and/or option securities for financing purposes (even if more than fifty percent (50%) of the voting securities of LICENSEE are sold in such a transaction), shall not be deemed a CHANGE OF CONTROL hereunder; or

 

(c)                                   an initial public offering as that term is defined in the Securities Exchange Act of 1934, as amended; or

 

(d)                                  a sale or other disposition of all or substantially all of the assets of the LICENSEE;

 

(e)                                   an assignment of this Agreement to a QUALIFIED ASSIGNEE.

 

2.3                                “CLINICAL TRIAL” shall mean either a PHASE I CLINICAL TRIAL, PHASE II CLINICAL TRIAL, PHASE III CLINICAL TRIAL, or a PIVOTAL TRIAL.

 

2.4                                “CONFIDENTIAL INFORMATION” shall mean all information disclosed by one party to the other during the negotiation of or under this Agreement in any manner, whether orally, visually or in tangible form, that relates to LICENSED PATENTS or the Agreement itself, unless such information is subject to an exception described in Article 8.2; provided, however , that CONFIDENTIAL INFORMATION that is disclosed in tangible form shall be marked “Confidential” at the time of disclosure and CONFIDENTIAL INFORMATION that is disclosed orally or visually shall be identified as confidential at the time of disclosure and subsequently reduced to writing, marked confidential and delivered to the other party within [* * *] days of such disclosure. CONFIDENTIAL INFORMATION shall include, without limitation, materials, know-how and data, technical or non-technical, trade secrets, inventions, methods and processes, whether or not patentable. Notwithstanding any other provisions of this Article 2.2, CONFIDENTIAL INFORMATION of LICENSEE that is subject to Article 8 of this Agreement is limited to information that LICENSEE supplies pursuant to LICENSEE’s obligations under Articles 7 and 9 of this Agreement, unless otherwise mutually agreed to in writing by the parties.

 

2.5                                “DEVELOPING ECONOMIES” shall mean those countries that are designated by The World Bank or its successor organization as having economies that are low- and middle-income economies (excluding The People’s Republic of China and India, which shall not be considered countries with developing economies).

 

2.6                                “EARNED ROYALTY” is defined in Article 6.1.

 

2.7                                “EFFECTIVE DATE” is defined in the introductory paragraph of this Agreement.

 

2.8                                Intentionally Omitted.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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2.9                                “FDA” shall mean the U.S. Food and Drug Administration to obtain marketing approval for a LICENSED PRODUCT in the United States, or any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States

 

2.10                         “FIELD” shall mean therapeutics for any INDICATION of the central nervous system in humans.

 

2.11                         “FIRST SALE” shall mean the first sale, lease or other transfer, practice or disposition to a third party of any LICENSED PRODUCT in any country.

 

2.12                         “IND” shall mean an investigational new drug application filed with the United States Food and Drug Administration prior to beginning clinical trials in humans in the United States or any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States.

 

2.13                         “INDICATION(S)” shall mean any indication bearing a distinct reference number under the list of diseases officially published by the World Health Organization (WHO) or list of disorders published in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM 5, or above) or such successor organizations that are in effect at the relevant time during the term of this Agreement.

 

2.14                         “INITIATE” or “INITIATION” or “INITIATES” or any variant thereof shall mean, with respect to a CLINICAL TRIAL, the first dose of a LICENSED PRODUCT administered to a human subject by or on behalf of LICENSEE, SUBLICENSEE, or AFFILIATE.

 

2.15                         “INVENTION” and “INVENTORS” are defined in Article 1.1.

 

2.16                         “INVENTOR AGREEMENT” shall mean a consulting or other agreement directly between LICENSEE and an INVENTOR.

 

2.17                         “INSOLVENT” shall mean that LICENSEE (i) as defined by the United States Federal Bankruptcy Law, as amended from time to time, or (ii) has commenced bankruptcy, reorganization, receivership or insolvency proceedings, or any other proceeding under any Federal, state or other law for the relief of debtors.

 

2.18                         “LICENSE” refers to the license granted under Article 3.1.

 

2.19                         “LICENSED METHOD” shall mean any method, procedure, service or process the practice of which is claimed by a VALID CLAIM of a LICENSED PATENT, or which uses a LICENSED PRODUCT of the type defined in subsection (a) of the definition of LICENSED PRODUCT.

 

2.20                         “LICENSED PATENTS” shall mean the United States or foreign patent application(s) and patents(s) listed in Appendix A and owned by YALE during the term of this Agreement, together with any continuations, divisionals, and continuations-in-part, to the extent the claims of any such patent or patent application are directed to subject matter

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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specifically described in the patent applications listed on Appendix A; any reissues, re-examinations, or extensions thereof, or substitutes therefor; and the relevant international equivalents of any of the foregoing. Appendix A is incorporated into this Agreement.30.

 

2.21                         “LICENSED PRODUCT” shall mean

 

(a)                                  any product (including any apparatus or kit) or component part thereof, if the manufacture, use, sale, import, export or practice thereof is claimed by a VALID CLAIM of a LICENSED PATENT.

 

(b)                                  any LICENSED METHOD.

 

2.22                         “LICENSED TERRITORY” shall mean worldwide. 2.23.

 

2.23                         “NDA” shall mean New Drug Application filed with the.

 

2.24                         “NET SALES” shall mean:

 

(a)                                  gross invoice price from the sale, lease or other transfer, practice or disposition of the LICENSED PRODUCTS, or from services performed using or constituting LICENSED PRODUCTS by LICENSEE, SUBLICENSEES or AFFILIATES to third parties, except as set forth in Article 2.24(b), less the following deductions, provided they actually pertain to the disposition of the LICENSED PRODUCTS and are separately invoiced:

 

i.                                           [* * *];

 

ii.                                        [* * *];

 

iii.                                     [* * *]; and

 

iv.                                    [* * *].

 

No deductions shall be made for any other costs or expenses, including but not limited to commissions to independents, agents or those on LICENSEE’s, SUBLICENSEE’s or an AFFILIATE’s payroll or for the cost of collection.

 

(b)                                  “NET SALES” shall not include the gross invoice price [* * *].

 

(c)                                   There shall be no deductions, except as specified in this Article 2.24, made to NET SALES for the purpose of calculating EARNED ROYALTIES owed to YALE as a result of royalties or other payments made to third parties.

 

(d)                                  There shall be no deductions made to NET SALES for the purpose of calculating EARNED ROYALTIES owed to YALE as a result of combination products.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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2.25                         “PATENT CHALLENGE” shall mean a challenge or opposition to the validity, patentability, enforceability and/or non-infringement of any of the LICENSED PATENTS or otherwise opposing any of the LICENSED PATENTS.

 

2.26                         “PHASE I CLINICAL TRIAL” shall mean a human clinical trial constituting the initial introduction of an investigational new drug into humans, as defined in 21 C.F.R §312.21(a) and as practiced according to the standards of the pharmaceutical industry.

 

2.27                         “PHASE II CLINICAL TRIAL” shall mean a human clinical trial conducted to evaluate the effectiveness of a drug for a particular indication in patients with a disease and to determine the common short-term side effects and risks associated with the drug as defined in 21 C.F.R §312,21(b) and as practiced according to the standards of the pharmaceutical industry.

 

2.28                         “PHASE III CLINICAL TRIAL” shall mean expanded controlled and uncontrolled human clinical trials performed after PHASE II CLINICAL TR1AL(S) evidence suggesting effectiveness of an investigational new drug, as defined by 21 C.F.R §312.21(c), and as practiced according to the standards of the pharmaceutical industry for a Phase III clinical trial and prior to the filing of an NDA or comparable request for marketing approval.

 

2.29                         “PIVOTAL TRIAL” shall mean a controlled human clinical trial to evaluate the safety and efficacy of a LICENSED PRODUCT in which data are sufficient to form the basis for the filing of an NDA. A PIVOTAL TRIAL may not necessarily be a PHASE III CLINICAL TRIAL,

 

2.30                         “PRECLINICAL” shall mean prior to the INITIATION of a first CLINICAL TRIAL by or on behalf of a LICENSEE, SUBLICENSEE, or AFFILIATE.

 

2.31                         “QUALIFIED SUBLICENSEE” and “QUALIFIED ASSIGNEE” shall mean a pharmaceutical or biopharmaceutical that is a top [* * *] global company based upon annual sales of pharmaceutical or biopharmaceutical products.

 

2.32                         “REASONABLE COMMERCIAL EFFORTS” shall mean documented efforts that are consistent with those utilized by companies of similar size and type that have successfully developed products and services similar to LICENSED PRODUCTS.

 

2.33                         “SUBLICENSE INCOME” shall mean consideration in any form received by LICENSEE or an AFFILIATE in connection with a grant to any third party or parties of a sublicense, cross-license, option, or other right, license, privilege or immunity to make, have made, use, sell, have sold, distribute, practice, import or export LICENSED PRODUCTS, but excluding consideration included within EARNED ROYALTIES. SUBLICENSE INCOME shall include without limitation any license signing fee, license maintenance fee, option fee or other payment pursuant to an option, unearned portion of any minimum royalty payment received by LICENSEE, equity, distribution or joint marketing fee, research and development funding in excess of LICENSEE’s cost of performing such research and development, and any consideration received for an equity

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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interest in, extension of credit by or other investment in LICENSEE to the extent such consideration exceeds the fair market value of the equity or other interest as determined by an independent appraiser mutually agreeable to the parties. SUBLICENSE INCOME shall also include any sale or extension of credit to LICENSEE for less than fair market value, as determined by an independent appraiser. In case an extension of credit or loan to LICENSEE by a third party is forgiven in whole or in part by the third party, such amount shall constitute SUBLICENSE INCOME

 

2.34                         “SUBLICENSEE” shall mean any third party sublicensed by LICENSEE to make, have made, use, sell, have sold, import, export or practice any LICENSED PRODUCT.

 

2.35                         “SUCCESSFUL FINANCING” is defined in Article5.1.

 

2.36                         “TERM” is defined in Article 3.4.

 

2.37                         “VALID CLAIM” shall mean a pending, issued or unexpired claim of a LICENSED PATENT that has not been pending more than (i) [* * *] years from the EFFECTIVE DATE or (ii) [* * *] years from the date of filing of an application claiming priority to the earliest priority application, so long as such claim shall not have been irrevocably abandoned or declared to be invalid in an unappealable decision of a court or other authority or competent jurisdiction through no fault or cause of LICENSEE; provided, however, that if a pending claim results in an issued patent after the periods indicated in (i) and/or (ii) in this Article 2.37, it shall thereafter again be a VALID CLAIM.

 

2.38                         “GENERIC(S)” shall mean shall mean third party products sold in the FIELD, but not products sold by LICENSEE, AFFILIATES, or SUBLICENSEE, for an INDICATION that was previously exclusive due to a VALID CLAIM of a LICENSED PATENT and is a pharmaceutical product containing as an active pharmaceutical ingredient an agent that is the same as a LICENSED PRODUCT with respect to pharmacokinetic and pharmacodynamics properties, dose, strength route of administration, safety, efficacy, and intended use (or any salt, pro-drug, free acid or base, solvate, hydrate, stereoisomer, enantiomer, noncrystalline form, isotopic (including but not limited deuterated) form, and/or polymorphic form, crystalline or noncrystalline form of such LICENSED PRODUCT) whether filed under an NDA, abbreviated NDA (such as an ANDA) or otherwise (such as, without limitation, an application under 505(b)(2)). A GENERIC product sold by LICENSEE, SUBLICENSEE, or AFFILIATE shall not be a GENERIC.

 

2.39                         “GENERIC COMPETITION” is defined in Article 6.8.

 

3.   LICENSE GRANT AND TERM

 

3.1                                Subject to all the terms and conditions of this Agreement, and upon payment to YALE of the consideration described in Article 5, YALE hereby grants to LICENSEE:

 

(a)                                  an exclusive license, subject to the reservation of rights by YALE under Article 3.3, under the LICENSED PATENTS to make, have made, use, sell, have sold,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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import, export, or practice LICENSED PRODUCTS within the FIELD in the LICENSED TERRITORY; and

 

(b)                                  The right to sublicense the rights granted under Article 3.1(a);

 

(c)                                   together, the rights granted under Article 3.1 (a), and (b) shall be the license granted hereunder (the “LICENSE”).

 

3.2                                To the extent that any invention included within the LICENSED PATENTS has been funded in whole or in part by the United States government, the United States government retains certain rights in such invention as set forth in 35 U.S.C. §200-212 and all regulations promulgated thereunder, as amended, and any successor statutes and regulations (the “Federal Patent Policy”). As a condition of the license granted hereby, LICENSEE acknowledges and shall comply with all aspects of the Federal Patent Policy applicable to the LICENSED PATENTS, including the obligation that LICENSED PRODUCTS used or sold in the United States be manufactured substantially in the United States. Nothing contained in this Agreement obligates or shall obligate YALE to take any action that would conflict in any respect with its past, current or future obligations to the United States Government under the Federal Patent Policy with respect to the LICENSED PATENTS.

 

3.3                                The LICENSE is expressly made subject to YALE’s reservation of the right, on behalf of itself and all other non-profit academic and/or research institutions, to make, use and practice the LICENSED PATENTS and LICENSED PRODUCTS for research, clinical research by YALE and its bone fide research partners, teaching or other non-commercial purposes, and not for purposes of commercial development, use, manufacture or distribution.

 

3.4                                Unless terminated earlier as provided in Article 13, the term of this Agreement (the “TERM”) shall commence on the EFFECTIVE DATE and shall expire on the later of (i) on a country-by-country basis, on the date on which the last of the VALID CLAIMS of the patents described in the LICENSED PATENTS in such country expires, lapses or is declared to be invalid by a non-appealable decision of a court or other authority of competent jurisdiction through no fault or cause of LICENSEE; or (ii) ten (10) years from the date of FIRST SALE.

 

3.5                                Nothing in this Agreement shall be construed to grant by implication, estoppel or otherwise any licenses under patents of YALE other than the LICENSED PATENTS. Except as expressly provided in this Agreement, under no circumstances will LICENSEE, as a result of this Agreement, obtain any interest in or any other right to any technology, know-how, patents, patent applications, materials or other intellectual or proprietary property of YALE.

 

4.   DUE DILIGENCE

 

4.1                                LICENSEE has designed a plan for developing and commercializing the LICENSED PATENTS that includes a description of research and development, testing, government

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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approval, manufacturing, marketing and sale or lease of LICENSED PRODUCTS (“PLAN”). A copy of the PLAN is attached to this Agreement as Appendix B and incorporated herein by reference.

 

4.2                                LICENSEE shall use all REASONABLE COMMERCIAL EFFORTS, within [* * *] days after the EFFECTIVE DATE of this Agreement, to begin to implement the PLAN at its sole expense and thereafter to fully implement the PLAN and to diligently commercialize and develop markets for the LICENSED PRODUCTS.

 

4.3                                Annually after the EFFECTIVE DATE of this Agreement, and on each anniversary of the EFFECTIVE DATE, LICENSEE shall provide YALE with an updated and revised copy of the PLAN which shall:

 

(a)                                  indicate LICENSEE’s progress and problems to date in development and commercialization of LICENSED PRODUCTS;

 

(b)                                  include a forecast and schedule of major events required to market the LICENSED PRODUCTS; and

 

(c)                                   include a statement clearly indicating which of LICENSEE’S products or services are a LICENSED PRODUCT and which LICENSED PATENTS claim each such LICENSED PRODUCT utilized (e.g., see Exhibit 4.3).

 

4.4                                At least [* * *] days prior to assignment by LICENSEE pursuant to Article 18.7, the assignee shall provide YALE with an updated and revised copy of the PLAN. [* * *].

 

4.5                                LICENSEE shall immediately send YALE a notice of abandonment if at any time LICENSEE (a) abandons or suspends its research, development or marketing of the LICENSED PRODUCTS, or its intent to research, develop and market LICENSED PRODUCTS, or (b) fails to comply with its obligations under this Article for a period exceeding [* * *] days. Such notices shall be deemed by YALE to be a breach that is incapable of being cured and YALE may, at its sole discretion, immediately terminate this Agreement by written notice at any time after such notice of abandonment.

 

4.6                                LICENSEE agrees that YALE shall be entitled to terminate this Agreement pursuant to Article 13.1(b) upon the occurrence of any of the following in the event that LICENSEE fails to cure in a timely manner as provided in ARTICLE 13:

 

(a)                                  LICENSEE shall fail to provide the written reports as provided in Article 4.3; or

 

(b)                                  LICENSEE shall fail to receive written approval of the PLAN as defined in Article 4.1 or Article 4.2; or

 

(c)                                   LICENSEE shall fail to implement the PLAN in accordance with this Article or otherwise fails to fulfill any of its obligations under this Article 4; or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(d)                                  LICENSEE gives notice pursuant to Article 4.5 (which shall be deemed a material breach not capable of being cured); or

 

(e)                                   Upon the occurrence of any of the events set forth in Section 4.5; or

 

(f)                                    LICENSEE has failed to achieve any of the following:

 

(1)                                  raise funds towards the payment of incurred direct expenses expressly for the implementation of the PLAN in amounts set forth below (“CUMULATIVE RAISE”) and indicated in the following schedule:

 

By the end of License
Year

 

CUMULATIVE
RAISE

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

 

; or

 

(2)                                  INITIATE a PHASE I CLINICAL TRIAL within [* * *] of the EFFECTIVE DATE; or

 

(3)                                  INITIATE a PHASE II CLINICAL TRIAL within [* * *] of the EFFECTIVE DATE; or

 

(4)                                  INITIATE a PHASE III CLINICAL TRIAL or designate a CLINICAL TRIAL a PIVOTAL TRIAL and file an NDA within [* * *] of the EFFECTIVE DATE.

 

provided, however, that LICENSEE may elect to extend any of the diligence milestones in this Article 4.6(f) by a total of One (1) Year upon payment to YALE of

 

(i).                                   [* * *]; or

 

(ii).                                [* * *]; or

 

(iii).                             [* * *];

 

(iv).                            each such extension shall be a “DILIGENCE EXTENSION.”

 

A DILIGENCE EXTENSION shall apply to the elected diligence milestone and all subsequent diligence milestones in this Article 4.6(f). LICENSEE may elect no more than [* * *] DILIGENCE EXTENSIONS total for the diligence milestones in this Article 4.6(f);

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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and provided further that any DILIGENCE EXTENSION must be requested at least [* * *] days prior to the date of the specific diligence obligation under Article 4.6(f) for which a DILIGENCE EXTENSION is being requested by LICENSEE. The DILIGENCE EXTENSION shall take effect only if payment is made to YALE by the date of the specific diligence obligation for which a DILIGENCE EXTENSION has been requested.

 

Notwithstanding the foregoing in this Article 4.6, if LICENSEE has not employed REASONABLE COMMERCIAL EFFORTS in developing and selling LICENSED PRODUCTS on a country-by-country basis within the LICENSED TERRITORY for any reason or no reason, then YALE may, upon [* * *] days prior written notice, at its sole discretion, terminate this LICENSE pursuant to Article 13 herein in the applicable jurisdiction.

 

4.7                                During the Term of this Agreement, LICENSEE hereby grants YALE observer rights for one (1) person at all of LICENSEE’s Board of Director meetings. YALE shall be permitted to attend and participate in meetings of the board of directors and to receive all information provided to members of the board (including minutes of board meetings), but shall not permitted to formally vote on matters submitted for a vote. YALE shall be responsible for paying costs and expenses such observer to attend the meetings. LICENSEE will make commercially reasonable efforts to provide call-in access to such meetings.

 

5.  EQUITY, REIMBURSEMENT OF PATENT EXPENSES; LICENSE MAINTENANCE ROYALTY; MILESTONE ROYALTIES

 

5.1                                Equity Issuance and Unreimbursed Patent Expenses .

 

(a)                                  Equity issuance . Within [* * *] days of the EFFECTIVE DATE, LICENSEE shall issue to YALE an equity ownership of LICENSEE in an amount equivalent to Five Percent (5%) of the fully diluted common stock equity of LICENSEE. Such five percent (5%) equity interest shall take into account issued, reserved or presently planned management restricted stock, options and warrants but shall exclude subsequently issued, reserved or planned equity, common stock, Preferred Shares, options and Warrants issued to investors pursuant to the initial SUCCESSFUL FINANCING. In the event that YALE’s resulting fully diluted ownership position as a result of the closing of the first two SUCCESSFUL FINANCINGS goes below One Percent (1%), then LICENSEE shall issue to YALE an additional number of shares of common stock such that YALE’s ownership position is restored to no less than One Percent (1%).

 

“SUCCESSFUL FINANCING” means a bona fide investment in LICENSEE from a single or group of institutional investors of at least Three Million Five Hundred Thousand Dollars ($3,500,000);

 

and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(b)                                  Unreimbursed Patent Expenses . LICENSEE shall pay YALE for its unreimbursed patent expenses directly and solely related to the LICENSED PATENTS, which as of the EFFECTIVE DATE is not less than Eighteen Thousand Six Hundred Ninety-Eight Dollars ($18,698.00). [* * *].

 

[* * *].

 

5.2                                LICENSEE shall pay to YALE for the first LICENSED PRODUCT developed by LICENSEE, SUBLICENSEE, or AFFILIATE a non-refundable milestone royalty of [* * *] ($[* * *]) within 6 months of when LICENSEE, SUBLICENSEE, or AFFILIATE receives approval of an NDA for such a LICENSED PRODUCT.

 

5.3                                Neither the consideration set forth in Article 5.1 nor the milestone royalty of Article 5.2 shall be credited against EARNED ROYALTIES payable under Article 6.1.

 

5.4                                Participation in Future Private Equity Offerings If LICENSEE proposes to sell any equity securities or securities that are convertible into equity securities of LICENSEE, then YALE and/or its Assignee (as defined below) will have the right to purchase up to 10% of the securities issued in each offering on the same terms and conditions as are offered to the other purchasers in each such financing. The term “Assignee” means (a) any entity to which YALE’s participation rights under this section have been assigned either by YALE or another entity, or (b) any entity that is controlled by YALE.

 

5.5                                Change of Control

 

Within Five (5) Days after the first CHANGE OF CONTROL, LICENSEE shall pay to YALE a fee of the lesser of (a) Five Percent (5%) of the dollar value of all initial and future potential consideration paid or payable by acquirer to LICENSEE shareholders, or (b) One and One Half Million Dollars ($1,500,000.00) (the “CHANGE OF CONTROL FEE”). If the CHANGE OF CONTROL is an initial public offering as described in Article 2.2(c), then the CHANGE OF CONTROL FEE shall be reduced by the dollar value of YALE’s equity interest, if any, in LICENSEE as set forth in Article 5.1 on the first day when YALE is free to sell its equity interest, such reduction to be limited to One and One Half Million Dollar ($1,500,000.00). If, however, LICENSEE has paid the CHANGE OF CONTROL FEE in full prior to YALE crediting the value of the equity interest to the LICENSEE, then YALE shall refund to LICENSEE the value of YALE’s equity interest within Sixty (60) days from the first day when YALE is free to sell its equity interest, such refund to be limited to no more than One and One Half Million Dollar ($1,500,000.00).

 

6.  EARNED ROYALTIES; MINIMUM ROYALTY PAYMENTS

 

6.1                                During the TERM of this Agreement, as partial consideration for the LICENSE, LICENSEE shall pay to YALE an earned royalty on worldwide annual cumulative NET SALES of LICENSED PRODUCTS according to the following schedules (a) in this Article 6.1 (“EARNED ROYALTIES”).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(a)                                  EARNED ROYALTIES from NET SALES by LICENSEE, SUBLICENSEE, or AFFILIATES . LICENSEE shall pay to YALE an EARNED ROYALTY on worldwide annual NET SALES of LICENSED PRODUCTS by LICENSEE, SUBLICENSEE, or AFFILIATES according to the following schedule:

 

[* * *]

[* * *]%

 

6.2                                In the event that (i) LICENSEE or any of its AFFILIATES or SUBLICENSEES brings a PATENT CHALLENGE anywhere in the world, or (ii) LICENSEE or any of its AFFILIATES or SUBLICENSEES assists another party in bringing a PATENT CHALLENGE anywhere in the world (except as required under a court order or subpoena), and (iii) YALE does not choose to exercise its rights to terminate this Agreement pursuant to Article 13, then the following provisions shall apply.

 

(a)                                  All payments due to YALE under this Agreement other than patent costs shall be tripled during the pendency of the PATENT CHALLENGE and shall remain payable to YALE when due.

 

(b)                                  If the PATENT CHALLENGE is inconclusive or results in a determination that at least one challenged claim is both valid and infringed,

 

(1)                                  all payments due to YALE under this Agreement other than patent costs shall be tripled for the remainder of the TERM of the Agreement.

 

(2)                                  LICENSEE shall promptly reimburse YALE for all legal fees and expenses incurred in YALE’s defense against the PATENT CHALLENGE.

 

(c)                                   In the event that such a PATENT CHALLENGE is successful, LICENSEE will have no right to recoup any payments made prior to the final, non-appealable determination of a court of competent jurisdiction.

 

6.3                                Neither LICENSEE nor any of its AFFILIATES or SUBLICENSEES shall bring a PATENT CHALLENGE without first providing YALE [* * *] months written notice setting forth (a) precisely which claims and patents are being challenged or claimed not to be infringed, (b) a clear statement of the factual and legal basis for the challenge, and (c) an identification of all prior art and other matter believed to invalidate any claim of the LICENSED PATENT or which supports the claim that the LICENSED PATENT is not infringed.

 

6.4                                LICENSEE shall pay all EARNED ROYALTIES accruing to YALE within [* * *] days from the end of each calendar quarter (March 31, June 30, September 30 and December 31), beginning in the first calendar quarter in which NET SALES occur. Unless YALE requests otherwise, LICENSEE shall report all EARNED ROYALTIES and other payments accruing to YALE on a quarterly basis, but shall defer payments accruing to YALE that do not, in total, exceed [* * *] ($[* * *]) in any given quarter until the earlier

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

12



 

of (1) the end of the calendar year, or (2) the quarter upon which the cumulative accrued royalties and other payments exceed [* * *] ($[* * *])

 

6.5                                Minimum Royalty Payments . During the term of this Agreement, LICENSEE agrees to pay YALE annual Minimum Royalty Payments (“MRP”), commencing on the first January 1 to occur after the date of the first sale that results in NET SALES. The MRP shall be payable to YALE in the amounts indicated in the following schedule:

 

Years after FIRST SALE

 

MRP

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

 

6.6                                LICENSEE shall continue to pay the MRP until the end of the TERM. YALE shall fully credit each MRP made against any EARNED ROYALTIES payable by LICENSEE in the same calendar year.

 

All EARNED ROYALTIES and other payments due under this Agreement shall be paid to YALE in United States Dollars. In the event that conversion from foreign currency is required in calculating a payment under this Agreement, the exchange rate used shall be the Interbank rate quoted by Citibank at the time the payment is due. If overdue, the royalties and any other payments due under this Agreement shall bear interest until payment at a per annum rate [* * *] above the prime rate in effect at Citibank on the due date and YALE shall be entitled to recover reasonable attorneys’ fees and costs related to the administration or enforcement of this Agreement, including collection of royalties or other payments, following such failure to pay. The payment of such interest shall not foreclose YALE from exercising any other right it may have as a consequence of the failure of LICENSEE to make any payment when due.

 

6.7                                If, during the TERM on a country-by-country basis and on a LICENSED PRODUCT-by LICENSED PRODUCT basis, there are sales of one or more GENERICS by one or more third parties in such country in a calendar quarter, the EARNED ROYALTIES payable to YALE with respect to NET SALES of such a LICENSED PRODUCT by LICENSEE, a SUBLICENSEE, or AFFILIATE in such country will be reduced as follows on a quarterly basis:

 

(a)                                  [* * *];

 

(b)                                  [* * *];

 

(c)                                   [* * *];

 

(d)                                  [* * *];

 

(e)                                   [* * *];

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

13



 

(f)                                    [* * *]; and

 

(g)                                   [* * *].

 

“MARKET SHARE” means the aggregate of the unit volume of all GENERICS and the LICENSED PRODUCT in a country as reported by an independent third party source of market share of GENERICS (for example, Synovate, Verispan or Walters Kluwer, or the like), such source, if not Synovate, Verispan or Walters Kluwer, to be identified in the report to be provided by LICENSEE under Section 9.1. In the event that the available third party source provides data on the percentage of MARKET SHARE achieved by GENERICS based on an indicator other than by unit volume (for example, patient share or number of prescriptions written or filled), then such alternate indicator shall be used to determine the percentage of “MARKET SHARE” achieved by GENERICS.

 

In the event MARKET SHARE of GENERICS is not measured and reported by a THIRD PARTY source in a given country, the EARNED ROYALTIES payable to YALE with respect to NET SALES by LICENSEE or a SUBLICENSEE in such country will be reduced as follows, when calculated on a quarterly basis:

 

(i)                                [* * *]; and

 

(ii)                             [* * *]

 

(h)                                  No reductions due to GENERIC(S) under this Article 6.8 shall be permitted without reporting on a country-by-country basis of the actual determination of the amount of GENERIC sales of a given LICFNED PRODUCT. Such a report shall be provided pursuant to Section 9.1.

 

6.8                                [* * *].

 

7.  SUBLICENSES

 

7.1                                LICENSEE shall not sublicense the rights granted to it under this Agreement without the prior written consent of YALE, unless such a sublicense is to a QUALIFIED SUBLICENSEE. In the event YALE consents to a sublicense under this Article 7.1, in addition to any other terms and conditions YALE may require, the provisions of Articles 7.2, 7.3 and 7.4 shall apply.

 

7.2                                Any sublicense granted.by LICENSEE shall include substantially the same definitions and provisions, and such other provisions as are needed to enable LICENSEE to provide Yale the protections and benefits contemplated herein. LICENSEE will provide YALE with a copy of each sublicense agreement (and all amendments thereof) promptly after execution, LICENSEE shall also include provisions in all sublicenses to provide that in the event that SUBLICENSEE brings a PATENT CHALLENGE anywhere in the world or assists another party in bringing a PATENT CHALLENGE anywhere in the world (except as required under a court order or subpoena) then LICENSEE shall immediately terminate the sublicense. LICENSEE shall remain responsible for the performance of all

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

14



 

SUBLICENSEES under any such sublicense as if such performance were carried out by LICENSEE itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts to be paid by the SUBLICENSEE directly to YALE. A breach of this provision shall constitute a material breach that is subject to Article 13.1(b).

 

7.3                                LICENSEE shall pay royalties to YALE on NET SALES of SUBLICENSEES based on the same royalty rate as apply to NET SALES by LICENSEE and its AFFILIATES, regardless of the royalty rates payable by SUBLICENSEES to LICENSEE under a sublicense agreement. In addition, LICENSEE shall pay to YALE [* * *] of any SUBLICENSE INCOME.

 

7.4                                LICENSEE agrees that it has sole responsibility to promptly:

 

(a)                                  provide YALE with a copy of any amendments to sublicenses granted by LICENSEE under this Agreement and to notify YALE of termination of any sublicense; and

 

(b)                                  deliver copies of all reports provided to LICENSEE by SUBLICENSEES. Such reports from SUBLICENSEE shall include the information required to be provided by LICENSEE and at the intervals required under Article 4.3; and

 

(c)                                   provide YALE with notice of the existence of any INVENTOR AGREEMENT(S) and notify YALE when such INVENTOR AGREEMENTS are no longer in effect, in any event, no less than once per year during the TERM.

 

8.  CONFIDENTIALITY AND PUBLICITY

 

8.1                                Subject to the parties’ rights and obligations pursuant to this Agreement, YALE and LICENSEE agree that during the term of this Agreement and for [* * *] years thereafter, each of them:

 

(a)                                  will keep confidential and will cause their AFFILIATES and, in the case of LICENSEE, its SUBLICENSEES, to keep confidential, CONFIDENTIAL INFORMATION disclosed to it by the other party, by taking whatever action the party receiving the CONFIDENTIAL INFORMATION would take to preserve the confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be less than reasonable care; and

 

(b)                                  will only disclose that part of the other’s CONFIDENTIAL INFORMATION to its officers, employees or agents, under requirements of confidentiality, for purposes of carrying out its rights and responsibilities under this Agreement; and

 

(c)                                   will not use the other party’s CONFIDENTIAL INFORMATION other than as expressly permitted by this Agreement or disclose the other’s CONFIDENTIAL INFORMATION to any third parties (other than to agents under requirements of

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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confidentiality) under any circumstance without advance written permission from the other party; and

 

(d)                                  will, within [* * *] of termination of this Agreement, return all the CONFIDENTIAL INFORMATION disclosed to it by the other party pursuant to this Agreement except for one copy which may be retained by the recipient for monitoring compliance with this Article 8 and any surviving clauses.

 

8.2                                The obligations of confidentiality described above shall not pertain to that part of the CONFIDENTIAL INFORMATION that:

 

(a)                                  is shown to have been known to or developed by the recipient prior to the disclosure by the disclosing party; or

 

(b)                                  is at the time of disclosure or has become thereafter publicly known through no fault or omission attributable to the recipient; or

 

(c)                                   is rightfully given to the recipient from sources independent of the disclosing party; or

 

(d)                                  is independently developed by the receiving party without use of or reference to the CONFIDENTIAL INFORMATION of the other party; or

 

(e)                                   is required to be disclosed by law in the opinion of recipient’s attorney, but only after the disclosing party is given prompt written notice and an opportunity to seek a protective order.

 

8.3                                The financial terms of this Agreement constitute CONFIDENTIAL INFORMATION of each party.

 

9.   REPORTS, RECORDS AND INSPECTIONS

 

9.1                                LICENSEE shall, within [* * *] days after the calendar year in which NET SALES first occur, and within [* * *] days after each calendar quarter (March 31, June 30, September 30 and December 31) thereafter, provide YALE with a written report detailing the NET SALES and uses, if any, made by LICENSEE, its SUBLICENSEES and AFFILIATES of LICENSED PRODUCTS during the preceding calendar quarter and calculating the payments due pursuant to Article 6. NET SALES of LICENSED PRODUCTS shall be deemed to have occurred on the date of invoice for such LICENSED PRODUCTS. Each such report shall be signed by an officer of LICENSEE (or the officer’s designee), and must include:

 

(a)                                  the number or amount, as appropriate, of LICENSED PRODUCTS manufactured, sold, practiced, leased or otherwise transferred or disposed of by LICENSEE, SUBLICENSEES and AFFILIATES;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(b)                                  a calculation of NET SALES for the applicable reporting period in each country, including the gross invoice prices charged for the LICENSED PRODUCTS and any permitted deductions made pursuant to Article 2,24, Article 6.8, and/or Article 6.9;

 

(c)                                   a calculation of total royalties or other payment due, including any exchange rates used for conversion; and

 

(d)                                  names and addresses of all SUBLICENSEES and the type and amount of any SUBLICENSE INCOME received from each SUBLICENSEE.

 

9.2                                LICENSEE, AFFILIATES and its SUBLICENSEES shall keep and maintain complete and accurate records and books containing an accurate accounting of all data in sufficient detail to enable verification of EARNED ROYALTIES and other payments under this Agreement. LICENSEE shall preserve such books and records for [* * *] years after the calendar year to which they pertain. Such books and records shall be open to inspection by YALE or an independent certified public accountant selected by YALE, at YALE’ s expense, no more frequently than once per year, during normal business hours upon [* * *] days’ prior written notice, for the purpose of verifying the accuracy of the reports and computations rendered by LICENSEE. In the event LICENSEE underpaid the amounts due to YALE with respect to the audited period by more than [* * *] ([* * *]%), LICENSEE shall pay the reasonable cost of such examination, together with the deficiency not previously paid and interest from the due date of such payment, calculated at the rate set forth in Article 6.8, within [* * *] days of receiving notice thereof from YALE.

 

9.3                                On or before the [* * *] day following the close of LICENSEE’s fiscal year, LICENSEE shall provide YALE with LICENSEE’s financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement with a certificate from an authorized officer of LICENSEE

 

10.  PATENT PROTECTION

 

10.1                         LICENSEE shall be responsible for past United States patent expenses for which Yale has not received consideration associated with LICENSED PATENTS pursuant to Article 5.1(b), and present and future on-going costs of filing, prosecution and maintenance of all United States patent applications contained in the LICENSED PATENTS. Any and all such United States patent applications, and resulting issued patents, shall remain the property of YALE.

 

10.2                         LICENSEE shall be responsible for past foreign patent expenses for which Yale has not received consideration associated with LICENSED PATENTS pursuant to Article 5.1(b), and present and future on-going costs of filing, prosecution and maintenance of all foreign patent applications, and patents contained in the LICENSED PATENTS in the countries outside the United States in the LICENSED TERRITORY selected by YALE and agreed to by LICENSEE. All such applications or patents shall remain the property of YALE. LICENSEE acknowledges that YALE shall not be required to file any such

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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applications in low or lower-middle income countries, as designated by the World Bank (www.worldbank.org). Furthermore, LICENSEE agrees not to file any patent rights that are owned by LICENSEE and that claim LICENSED PRODUCTS in any such low-income or lower-middle income countries.

 

10.3                         If, upon the request of YALE, LICENSEE does not agree in writing to pay the expenses of filing, prosecuting or maintaining a given patent application or a given patent in any country outside the United States, or fails to pay the expenses of filing, prosecuting or maintaining a given patent application or patent in the United. States, then LICENSEE’s rights under this Agreement shall terminate automatically with respect to that given patent in that country.

 

10.4                         The costs mentioned in Articles 10.2 and 10.3 shall include, but are not limited to, any past, present and future taxes, annuities, working fees, maintenance fees, renewal and extension charges. Payment of such costs shall be made, at YALE’S option, either directly to patent counsel or by reimbursement to YALE. In either case, LICENSEE shall make payment directly to the appropriate party within [* * *] days of receiving its invoice. YALE shall provide LICENSEE with a schedule of proposed patent filings, including jurisdictions and instruct patent counsel to provide fee estimates for review by LICENSEE. If LICENSEE elects in advance not to pay for such filings, or subsequently fails to make payment to YALE or patent counsel of such fees, as the case may be, within the [* * *] day period from receipt by LICENSEE of the applicable invoice, LICENSEE shall be charged a [* * *] ([* * *]%) surcharge on the invoiced amount plus interest at the rate of [* * *]% per month or fraction thereof or such higher amount as may be charged by patent counsel. Failure of LICENSEE to pay the costs of patent prosecution in a given territory within [* * *] days of invoice by YALE shall be grounds for termination by YALE of LICENSE under Article 13 in that territory for which such patent expenses have not been paid..

 

10.5                         All patent applications under the LICENSED PATENTS shall be prepared, prosecuted, filed and maintained by independent patent counsel chosen by YALE and reasonably acceptable to LICENSEE. Said independent patent counsel shall be ultimately responsible to YALE. YALE shall instruct patent counsel to keep both YALE and LICENSEE fully informed of the progress of all patent applications and patents, and to give both YALE and LICENSEE reasonable opportunity to comment on the type and scope of useful claims and the nature of supporting disclosures. YALE will not finally abandon any patent application for which LICENSEE is bearing expenses without LICENSEE’s consent. YALE shall have no liability to LICENSEE for damages, whether direct, indirect or incidental, consequential or otherwise, allegedly arising from its good faith decisions, actions and omissions in connection with such prosecution.

 

10.6                         LICENSEE shall mark, and shall require AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS, that are tangible products, with the numbers of all patents included in LICENSED PATENTS that cover the LICENSED PRODUCTS. Without limiting the foregoing, all LICENSED PRODUCTS shall be marked in such a manner as to conform with the patent marking notices required by the law of any country where

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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such LICENSED PRODUCTS are made, sold, used or shipped, including, but not limited to, the applicable patent laws of that country.

 

11.  INFRINGEMENT AND LITIGATION

 

11.1                         Each party shall promptly notify the other in writing in the event that it obtains knowledge of infringing activity by third parties, or is sued or threatened with an infringement suit, in any country in the LICENSED TERRITORY as a result of activities that concern the LICENSED PATENTS, and shall supply the other party with documentation of the infringing activities that it possesses.

 

11.2                         During the TERM of this Agreement:

 

(a)                                  LICENSEE shall have the first right to defend the LICENSED PATENTS against infringement or interference in the FIELD and in the LICENSED TERRITORY by third parties. This right includes bringing any legal action for infringement and defending any counter claim of invalidity or action of a third party for declaratory judgment for non-infringement or non-interference. If, in the reasonable opinion of both LICENSEE’s and YALE’s respective counsel, YALE is required to be a named party to any such suit for standing purposes, LICENSEE may join YALE as a party; provided, however, that (i) YALE shall not be the first named party in any such action, (ii) the pleadings and any public statements about the action shall state that the action is being pursued by LICENSEE and that LICENSEE has joined YALE as a party; and (iii) LICENSEE shall keep YALE reasonably apprised of all developments in any such action. LICENSEE may settle such suits solely in its own name and solely at its own expense and through counsel of its own selection; provided, however, that no settlement shall be entered without YALE’s prior written consent, such consent not to be unreasonably withheld or delayed. Without limiting the foregoing YALE may withhold its consent to any settlement that would in any manner constitute or incorporate an admission by YALE or require YALE to take or refrain from taking any action. LICENSEE shall bear the expense of such legal actions. Except for providing reasonable assistance, at the request and expense of LICENSEE, YALE shall have no obligation regarding the legal actions described in Article 11.2 unless required to participate by law. However, YALE shall have the right to participate in any such action through its own counsel and at its own expense. Any recovery shall first be applied to LICENSEE’s out of pocket expenses and second shall be applied to YALE’s out of pocket expenses, including legal fees. YALE shall recover [* * *]% of any excess recovery over those expenses.

 

(b)                                  Except as provided in Article 11(a) above, in the event LICENSEE fails to initiate and pursue or participate in the actions described in Article (a) within [* * *] days of (a) notification of infringement from YALE or (b) the date LICENSEE otherwise first becomes aware of an infringement, whichever is earlier, YALE may, in its sole discretion, convert the LICENSE granted in Article 3 only in the jurisdiction subject to such alleged infringement to a nonexclusive license, and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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issue licenses to third parties under the LICENSED PATENTS to make, have made, use, sell, have sold, import, or practice LICENSED PRODUCTS within the FIELD in the applicable jurisdiction within the LICENSED TERRITORY. Additionally, YALE shall have the right to initiate legal action such as that described in Article 11.2(a) at its own expense and YALE may use the name of LICENSEE as party plaintiff to uphold the LICENSED PATENTS in such jurisdiction. In such case, LICENSEE shall provide reasonable assistance to YALE if requested to do so. YALE may settle such actions solely through its own counsel. Any recovery shall be retained by YALE. .

 

(c)                                   In the event LICENSEE is permanently enjoined from exercising its LICENSE under this Agreement pursuant to an infringement action brought by a third party, or if both LICENSEE and YALE elect not to undertake the defense or settlement of a suit alleging infringement for a period of [* * *] months from notice of such suit, then either party shall have the right to terminate this Agreement in the country where the suit was filed with respect to the licensed patent following [* * *] days’ written notice to the other party in accordance with the terms of Article 15.

 

(d)                                  Notwithstanding the foregoing, neither LICENSEE nor YALE shall take any action to enforce the LICENSED PATENTS, or patent rights owned by LICENSEE and which claim the LICENSED PRODUCTS, in DEVELOPING ECONOMIES, where such action is intended to prevent the sale of LICENSED PRODUCTS solely in any such countries. However, LICENSEE and/or YALE may take such action in any such country, provided that such action is intended to prevent the manufacturing of LICENSED PRODUCTS for export to countries that DEVELOPING ECONOMIES.

 

12.  USE OF YALE’S NAME

 

12.1                         LICENSEE shall not use the name “Yale” or “Yale University,” nor any variation or adaptation thereof, nor any trademark, tradename or other designation owned by YALE, nor the names of any of its trustees, officers, faculty, students, employees or agents, for any purpose without the prior written consent of YALE in each instance, such consent to be granted or withheld by YALE in its sole discretion, except that LICENSEE may state that it has licensed from YALE one or more of the patents and/or applications comprising the LICENSED PATENTS.

 

13.  TERMINATION

 

13.1                         YALE shall have the right to terminate this Agreement upon [* * *] day’s prior written notice to LICENSEE in the event LICENSEE:

 

(a)                                  fails to make any payment whatsoever due and payable pursuant to this Agreement unless LICENSEE shall make all such payments (and all interest due on such payments under Article 6.4) within the [* * *] day period after receipt of written notice from YALE; or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(b)                                  commits a material breach of any other material provision of this Agreement which is not cured (if capable of being cured) within the [* * *] day period after receipt of written notice thereof from YALE, or upon receipt of such notice if such breach is not capable of being cured; or

 

(c)                                   fails to obtain or maintain adequate insurance as described in Article 14.2, whereupon YALE may terminate this Agreement immediately upon written notice to LICENSEE.

 

(d)                                  If LICENSEE or any of its AFFILIATES brings a PATENT CHALLENGE against YALE, or assists others in bringing a PATENT CHALLENGE against YALE (except as required under a court order or subpoena), whereupon YALE may terminate this Agreement immediately, unless YALE raises the royalty rate pursuant to Article 6.2.

 

(e)                                   If a SUBLICENSEE brings a PATENT CHALLENGE or assists another party in bringing a PATENT CHALLENGE (except as required under a court order or subpoena), then YALE may send a written demand to LICENSEE to terminate such sublicense. If LICENSEE fails to so terminate such sublicense within [* * *] days after YALE’s demand, YALE may immediately terminate this Agreement unless YALE raises the royalty rate pursuant to Article 6.2.

 

13.2                         This Agreement shall terminate automatically without any notice to LICENSEE in the event LICENSEE shall cease to carry on its business or becomes INSOLVENT, or a petition in bankruptcy is filed against LICENSEE and is consented to, acquiesced in or remains undismissed for [* * *] days, or LICENSEE makes a general assignment for the benefit of creditors, or a receiver is appointed for LICENSEE.

 

13.3                         LICENSEE shall have the right to terminate this Agreement upon written notice to YALE:

 

(a)                                  at any time on [* * *] months’ notice to YALE, provided LICENSEE is not in breach and upon payment of all amounts due YALE throughout the effective date of termination; or

 

(b)                                  in the event YALE commits a material breach of any of the provisions of this Agreement and such breach is not cured (if capable of being cured) within the [* * *] day period after receipt of written notice thereof from LICENSEE, or upon receipt of such notice if such breach is not capable of being cured; or

 

(c)                                   as to a specific country if no VALID CLAIMS exist in such country pursuant to (i) or (ii) in Article 2.37 or as provided in ARTICLE 11.2(c).

 

13.4                         Upon termination of this Agreement, for any reason, all rights and licenses granted to LICENSEE under the terms of this Agreement are terminated and YALE has the option, in its discretion, to terminate any sublicense granted by LICENSEE. Upon such termination, LICENSEE shall cease to make, have made, use, sell, have sold, distribute,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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practice, import or export LICENSED PRODUCTS. Within [* * *] days of the effective date of termination LICENSEE shall return to YALE:

 

(a)                                  All materials relating to or containing the LICENSED PATENTS, LICENSED PRODUCTS or CONFIDENTIAL INFORMATION disclosed by YALE;

 

(b)                                  the last report required under Article 4 or Article 9; and

 

(c)                                   all payments incurred up to the effective date of termination.

 

13.5                         Termination of this Agreement shall not affect any rights or obligations accrued prior to the effective date of such termination and specifically LICENSEE’s obligation to pay all royalties and other payments specified by Article 4 and Article 6. In particular, but without limitation, the following provisions shall survive any termination: Article 8, the preservation and inspection obligations of Article 9, Article 12, this Article 13.5, Article 13.6, Article 13.8, Article 14, Article 15, Article 17.1, and Article 18. The parties agree that claims giving rise to indemnification may arise after the TERM or termination of the LICENSE granted herein.

 

13.6                         The rights provided in this Article 13 shall be in addition and without prejudice to any other rights, whether at law or in equity, which the parties may have with respect to any default or breach of the provisions of this Agreement.

 

13.7                         Waiver by either party of one or more defaults or breaches shall not deprive such party of the right to terminate because of any subsequent default or breach.

 

13.8                         Upon termination of this Agreement for any reason other than breach by YALE, LICENSEE shall permit YALE and its future licensees to utilize, reference and otherwise have the benefit of all regulatory approvals of, or clinical trials or other studies conducted on, and all filings made with regulatory agencies with respect to, the LICENSED PRODUCTS. In addition, at YALE’s request, LICENSEE shall deliver to YALE within six months of such request all records required by regulatory authorities to be maintained with respect to the sale, storage, handling, shipping and use of the LICENSED PRODUCTS, all reimbursement approval files, all documents, data and information related to clinical trials and other studies of LICENSED PRODUCTS, any other data, techniques, know-how and other information developed or generated that relate to the LICENSED PATENTS or LICENSED PRODUCTS, and all copies and facsimiles of such materials, documents, information and files. YALE agrees that, subject to the provisions of Article 8, LICENSEE may retain one copy thereof to the extent LICENSEE is required by law to maintain such copy.

 

14.  INDEMNIFICATION; INSURANCE; NO WARRANTIES

 

14.1                         LICENSEE shall indemnify, defend by counsel acceptable to YALE, and hold harmless YALE and its trustees, officers, employees, and agents (collectively, “YALE Indemnitees”), from and against any claim, liability, cost, expense, damage, deficiency, loss, or obligation, of any kind or nature (including, without limitation, reasonable

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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attorneys’ fees and other costs and expenses of defense) (collectively, “CLAIMS”), based upon, arising out of or otherwise relating to this LICENSE, including without limitation any cause of action relating to product liability, or any theory of liability (including without limitation tort, warranty, or strict liability) or the death, persona! injury, or illness of any person or out of damage to any property related in any way to the rights granted under this Agreement; or resulting from the production, manufacture, sale, use, lease, or other disposition or consumption or advertisement of the LICENSED PRODUCTS by LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees; or in connection with any statement, representation or warranty of LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees with respect to the LICENSED PRODUCTS. LICENSEE shall not settle or compromise the CLAIM without the prior written consent of YALE, such consent not to be unreasonably withheld or delayed. Without limiting the foregoing, YALE may withhold its consent to any settlement or compromise that would in any manner constitute or incorporate an admission by YALE or require YALE to take or refrain from taking any action.

 

14.2                         Subject to the timing requirements set forth in ARTICLE 14.3,LICENSEE shall purchase and maintain in effect and shall require its SUBLICENSEES to purchase and maintain in effect a policy of commercial, general liability insurance to protect YALE with respect to events described in Article 14.1. Such insurance shall:

 

(a)                                  list “YALE, its trustees, directors, officers, employees and agents” as additional insured parties under the policy;

 

(b)                                  provide that such policy is primary and not excess or contributory with regard to other insurance YALE may have;

 

(c)                                   be endorsed to include product liability coverage in amounts no less[* * *] Dollars ($[* * *]) per incident and [* * *] Dollars ($[* * *]) annual aggregate; and

 

(d)                                  be endorsed to include contractual liability coverage for LICENSEE’s indemnification under Article 14.1; and

 

(e)                                   by virtue of the minimum amount of insurance coverage required under Article 14.2(c), not be construed to create a limit of LICENSEE’s liability with respect to its indemnification under Article 14.1.

 

14.3                         By signing this Agreement, LICENSEE certifies that the requirements of Article 14.2 will be met on or before the earlier of (a) the date of FIRST SALE of any LICENSED PRODUCT or (b) the date any LICENSED PRODUCT is tested or used on humans, and will continue to be met thereafter. Upon YALE’s request, LICENSEE shall furnish a Certificate of Insurance and a copy of the current insurance policy to YALE. LICENSEE shall secure agreement from its insurer to give [* * *] days’ written notice to YALE prior to any cancellation of or material change to the policy.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(a)                                  YALE MAKES NO, AND EXPRESSLY DISCLAIMS ALL, REPRESENTATIONS OR WARRANTIES THAT ANY CLAIMS OF THE LICENSED PATENTS, ISSUED OR PENDING, ARE VALID, OR THAT THE MANUFACTURE, USE, PRACTICE, SALE OR OTHER DISPOSAL OF THE LICENSED PRODUCTS DOES NOT OR WILL NOT INFRINGE UPON ANY PATENT OR OTHER RIGHTS NOT VESTED IN YALE.

 

(b)                                  YALE MAKES NO, AND EXPRESSLY DISCLAIMS ALL, REPRESENTATIONS AND WARRANTIES WHATSOEVER WITH RESPECT TO THE LICENSED PATENTS AND LICENSED PRODUCTS, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

(c)                                   LICENSEE SHALL MAKE NO STATEMENTS, REPRESENTATION OR WARRANTIES WHATSOEVER TO ANY THIRD PARTIES THAT ARE INCONSISTENT WITH THE DISCLAIMERS BY YALE IN ARTICLE 14.3(a) AND (b).

 

(d)                                  IN NO EVENT SHALL YALE, OR ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER YALE SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

(e)                                   IN NO EVENT SHALL YALE, OR ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE. FOR DAMAGES IN EXCESS OF AMOUNTS YALE HAS RECEIVED FROM LICENSEE UNDER THIS LICENSE.

 

15.  NOTICES

 

15.1                         Any monetary payment, notice or other communication required by this Agreement (a) shall be in writing, (b) may be delivered personally or sent by reputable overnight courier with written verification of receipt or by registered or certified first class United States Mail, postage prepaid, return receipt requested, (c) shall be sent to the following addresses or to such other address as such party shall designate by written notice to the other party, and (d) shall be effective upon receipt:

 

FOR YALE:
Managing Director
YALE UNIVERSITY

Office of Cooperative Research
433 Temple Street

FOR LICENSEE:
President
Biohaven Pharmaceuticals
15 Main Street
Stonington, CT 06378

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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New Haven, CT 06511

 

 

 

With copy to

Edwards Wildman Palmer LLP
2800 Financial Plaza
Providence, RI 02903
Attn.: Douglas G. Gray

 

16.  INVENTOR AGREEMENTS

 

16.1                         If LICENSEE and INVENTOR enter into an INVENTOR AGREEMENT, LICENSEE shall so notify YALE in writing within [* * *] days. The LICENSEE acknowledges that: (i) the INVENTOR is a faculty member, other employee, or student of YALE; (ii) the INVENTOR is subject to certain policies of YALE, as such policies may be revised from time to time, including policies concerning consulting, conflicts of interest, and intellectual property (“YALE POLICIES”); (iii) to the extent any provision of the INVENTOR AGREEMENT conflicts with YALE POLICIES, or imposes obligations or responsibilities compliance with which would require the INVENTOR to act in violation of YALE POLICIES, such provision shall be void. INVENTOR is a third party beneficiary of this paragraph.

 

17.  LAWS, FORUM AND REGULATIONS

 

17.1                         Any matter arising out of or related to this Agreement shall be governed by and in accordance with the substantive laws of the State of Connecticut, without regard to its conflicts of law principles, except where the federal laws of the United States are applicable and have precedence. Any dispute arising out of or related to this Agreement shall be brought exclusively in a court of competent jurisdiction in the State of Connecticut, and the parties hereby irrevocably submit to the jurisdiction of such courts.

 

17.2                         LICENSEE shall comply, and shall cause its AFFILIATES and SUBLICENSEES to comply, with all foreign and United States federal, state, and local laws, regulations, rules and orders applicable to the testing, production, transportation, packaging, labeling, export, practice, sale and use of the LICENSED PRODUCTS. In particular, LICENSEE shall be responsible for assuring compliance with all United States export laws and regulations applicable to this LICENSE and LICENSEE’ s activities under this Agreement.

 

18.  MISCELLANEOUS

 

18.1                         This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

 

18.2                         This Agreement constitutes the entire agreement of the parties relating to the LICENSED PATENTS and LICENSED PRODUCTS, and all prior representations, agreements and understandings, written or oral, are merged into it and are superseded by this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

25



 

18.3                         The provisions of this Agreement shall be deemed separable. If any part of this Agreement is rendered void, invalid, or unenforceable, such determination shall not affect the validity or enforceability of the remainder of this Agreement unless the part or parts which are void, invalid or unenforceable shall substantially impair the value of the entire Agreement as to either party.

 

18.4                         Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement.

 

18.5                         No person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners or joint venturers with each other or any third party, and neither party shall be deemed the agent of the other.

 

18.6                         This Agreement may not be amended or modified except by written agreement executed by each of the parties.

 

18.7                         This Agreement is personal to LICENSEE and shall not be assigned by LICENSEE without the prior written consent of YALE, unless such an assignee is a QUALIFIED ASSIGNEE. Any attempted assignment in contravention of this Article 18.7 shall be null and void and shall constitute a material breach of this Agreement.

 

18.8                         LICENSEE, or any SUBLICENSEE or assignee, will not create, assume or permit to exist any lien, pledge, security interest or other encumbrance on this Agreement or any sublicense.

 

18.9                         The failure of any party hereto to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver of either such provision or of the right of such party thereafter to enforce each and every provision of this Agreement.

 

18.10                  This Agreement may be executed in any number of counterparts and any party may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

 

Signature Page Follows

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

26


 

IN WITNESS to their Agreement, the parties have caused this Agreement to be executed in duplicate originals by their duly authorized representatives.

 

YALE UNIVERSITY

BIOHAVEN PHARMACEUTICAL
HOLDING COMPANY LIMITED

 

 

 

 

 

 

By:

/s/E. Jonathan Sanderstrom

 

By:

/s/Declan Doogan

 

 

 

 

 

 

E. Jonathan Sanderstrom, Ph.D.

Name:

Declan Doogan, M.D.

 

 

Managing Director

Title:

 

 

Office of Cooperative Research

 

 

 

 

 

 

 

Date:

16 Sept 2013

 

Date:

30 Sept 2013

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

27


 

Appendix A LICENSED PATENTS

 

Docket Number

 

Application Type

 

Country

 

Status

 

Application
Number

 

Patent Title

 

Filing Date

 

Patent
Expiration
Date

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

28


 

Appendix B

 

DRAFT PLAN

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

29



 

EXHIBIT 4.3: Intellectual Property associated with LICENSED PRODUCTS Reporting Example:

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

30



 

AMENDMENT TO AGREEMENT

 

This Amendment (“ Amendment ”) to the Agreement by and between Yale University, a corporation organized and existing under and by virtue of a charter granted by the general assembly of the Colony and State of Connecticut and located in New Haven, Connecticut (“ Yale ”), and Biohaven Pharmaceutical Holding Company Ltd., a British Virgin Island company with principal offices located in New Haven, Connecticut (“ Biohaven ” and together with Yale, the “ Parties ”) dated as of September 30, 2013 (Yale Reference OCR4001.50; the “ Original Agreement ”) is effective as of the date set forth on the signature page below (the “ Effective Date ”).

 

WHEREAS, the Parties desire to amend the Original Agreement to revise the change of control payment provision contained in Section 5.5 and the board observer rights contained in Section 4.7 of the Original Agreement.

 

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the Parties agree to amend the Original Agreement as follows:

 

1.             Section 5.5 of the Original Agreement (“ Change of Control ”) is hereby deleted in its entirety and replaced by the following Section 5.5, with such change effective as of the Effective Date:

 

5.5  Change of Control

 

Within Five (5) Days after the first CHANGE OF CONTROL, LICENSEE shall pay to YALE a fee of the lesser of (a) Five Percent (5%) of the dollar value of all initial and future potential consideration paid or payable by acquirer to LICENSEE shareholders, or (b) One and One Half Million Dollars ($1,500,000.00) (the “CHANGE OF CONTROL FEE”). If the CHANGE OF CONTROL is an initial public offering as described in Article 2.2(c), then (i) the CHANGE OF CONTROL FEE shall be due to YALE on the first trading day when YALE is free to sell its equity interest (rather than within Five (5) Days after the CHANGE OF CONTROL as stated above) and (ii) the CHANGE OF CONTROL FEE shall be reduced by the dollar value of YALE’s equity interest, if any, in LICENSEE as set forth in Article 5.1 on the first trading day when YALE is free to sell its equity interest, such reduction to be limited to One and One Half Million Dollar ($1,500,000.00). If, however, LICENSEE has paid the CHANGE OF CONTROL FEE in full prior to YALE crediting the value of the equity interest to the LICENSEE, then YALE shall refund to LICENSEE the value of YALE’s equity interest within Sixty (60) days from the first day when YALE is free to sell its equity interest, such refund to be limited to no more than One and One Half Million Dollar ($1,500,000.00).

 

2.             Section 4.7 of the Original Agreement is hereby deleted in its entirety and replaced by the words “Intentionally omitted.”  This change is effective immediately upon the effectiveness of the registration statement for the initial public offering of the Company’s common shares.

 

3.             The remaining terms and conditions of the Original Agreement will remain in full force and effect.

 



 

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized representatives.

 

Effective Date:  April 1, 2017

 

YALE UNIVERSITY

 

BIOHAVEN PHARMACEUTICAL
HOLDING COMPANY LTD.

 

 

 

 

 

 

 

 

 

 

By:

/s/ E. Jonathan Soderstrom

 

By:

/s/ Vlad Coric

 

Name:

E. Jonathan Soderstrom, Ph.D.

 

 

Name:

Vlad Coric, M.D.

 

Title:

Managing Director, OCR

 

 

Title:

CEO

 

 




Exhibit 10.5

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

ZYDIS® DEVELOPMENT AND LICENSE AGREEMENT
(Riluzole)

 

This Zydis® Development and License Agreement (“ Agreement ”) is made as of this 9th day of March, 2015 (“ Effective Date ”), by and between Biohaven Pharmaceutical Holding Company Ltd., a corporation duly formed under the laws of the British Virgin Islands (“ Client ”), and Catalent U.K. Swindon Zydis Limited, a company organized under the laws of Scotland (registered number SC070961), with a place of business at Frankland Road, Blagrove, Swindon, Wiltshire, UK SN5 8YG (“ Catalent ”) and Client are sometimes referred to in this Agreement as the “ Parties ” and individually as a “ Party ”.

 

RECITALS

 

A.                                     Client is a pharmaceutical company that develops, markets and sells pharmaceutical products, including the Drug (as defined below);

 

B.                                     Catalent and its Affiliates have developed proprietary drug delivery technology for the manufacture of the Orally Disintegrating Tablets (“ ODT ”) including the patented Zydis® Fast Dissolving Dosage Form (“ Zydis ”) for the administration of pharmaceutical drugs (collectively, along with the Zydis Patents and all data, results and information relating to Zydis and the Zydis Patents (whether produced prior to or after the Effective Date), the “ Zydis Technology ”);

 

C.                                     A feasibility study by Catalent pursuant to that certain Biohaven Riluzole Zydis® Feasibility Programme dated March 5, 2014 (the “ Evaluation Agreement ”) has been initiated to determine the likelihood of compatibility between the Zydis Technology and the Drug; and

 

D.                                     Client desires to engage Catalent to conduct the Development Program (as defined herein), upon satisfactory results of the feasibility studies under the Evaluation Agreement, to develop additional data for the regulatory approval and commercialization of a Zydis Formulation, and Catalent desires to provide such services, all pursuant to the terms and conditions set forth in this Agreement.

 

THEREFORE , in consideration of the mutual covenants, terms and conditions set forth below, the Parties agree as follows:

 

ARTICLE 1
DEFINITIONS

 

The following terms have the following meanings in this Agreement:

 

1.1                                Action ” means any legal action, claim, suit or proceeding, including any declaratory judgment action.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.2                                Affiliate(s) ” means, with respect to Client or any third party, any corporation, firm, partnership or other entity that controls, is controlled by or is under common control with such entity; and with respect to Catalent, Catalent Pharma Solutions, Inc. and any corporation, firm, partnership or other entity controlled by it.  For purposes of this definition, “ control ” means the ownership of at least 50% of the voting share capital of an entity or any other comparable equity or ownership interest.

 

1.3                                Agreement ” has the meaning set forth in the introductory paragraph, and includes all its Attachments and other appendices (all of which are incorporated herein by reference) and any amendments to any of the foregoing made as provided herein or therein.

 

1.4                                Applicable Laws ” means, with respect to Client, all laws, ordinances, rules and regulations, currently in effect or enacted or promulgated during the Term, and as amended from time to time, of each jurisdiction in which Drug or Zydis Formulation is produced, marketed, distributed, used or sold; and with respect to Catalent, all laws, ordinances, rules and regulations, currently in effect or enacted or promulgated during the Term, and as amended from time to time, of the jurisdiction in which Catalent performs services; provided , that cGMP shall not constitute Applicable Laws except to the extent expressly stated in the Development Program.

 

1.5                                Catalent ” has the meaning set forth in the introductory paragraph, or any successor or permitted assign.  Catalent shall have the right to cause any of its Affiliates to perform any of its obligations hereunder, and Client shall accept such performance as if it were performance by Catalent.

 

1.6                                Catalent Indemnitees ” has the meaning set forth in Section 8.2 .

 

1.7                                Catalent IP ” has the meaning set forth in Section 6.1 .

 

1.8                                cGMP ” current Good Manufacturing Practices promulgated by the Regulatory Authorities in the jurisdictions included in Applicable Laws (as applicable to Client and Catalent respectively).  In the United States, this includes 21 C.F.R. Parts 210 and 211, as amended; and in the European Union, this includes 2003/94/EEC Directive (as supplemented by Volume 4 of EudraLex published by the European Commission), as amended, if and as implemented in the relevant constituent country.

 

1.9                                Change Order ” has the meaning set forth in Section 2.3 .

 

1.10                         Client ” has the meaning set forth in the introductory paragraph, or any successor or permitted assign.

 

1.11                         Client-supplied Materials ” means any materials to be supplied by or on behalf of Client to Catalent for Catalent to conduct the Development Program, as provided in the Development Program, including Drug and reference standards.

 

1.12                         Client Indemnitees ” has the meaning set forth in Section 8.1 .

 

1.13                         Client Inventions ” has the meaning set forth in Section 6.1 .

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.14                         Client IP ” has the meaning set forth in Section 6.1 .

 

1.15                         Commencement Date ” has the meaning set forth in the Evaluation Agreement, as in effect on the date hereof.

 

1.16                         Confidential Information ” has the meaning set forth in Section 5.1 .

 

1.17                         CPR ” has the meaning set forth in Section 13.10 .

 

1.18                         DEA ” means the U.S. Drug Enforcement Agency or any successor agency thereto.

 

1.19                         Development Batch ” has the meaning set forth in Section 4.6 .

 

1.20                         Development Program ” has the meaning set forth in Section 2.1 .

 

1.21                         Discloser ” has the meaning set forth in Section 5.1 .

 

1.22                         Drug ” means the active pharmaceutical compound riluzole, riluzole prodrugs and [* * *] of riluzole and riluzole prodrugs.

 

1.23                         Effective Date ” has the meaning set forth in the introductory paragraph.

 

1.24                         EMA ” means the European Medicines Agency or any successor agency thereto.

 

1.25                         Evaluation Agreement ” has the meaning set forth in Recital C .

 

1.26                         Facility ” means Catalent’s facility located in Swindon, UK, or such other facility as agreed by the Parties.

 

1.27                         FDA ” means the U.S. Food and Drug Administration or any successor agency thereto.

 

1.28                         Field ” means medical disorders treatable by the Drug in humans.

 

1.29                         First Launch Date ” means the date of Launch for the first Product developed hereunder.

 

1.30                         GAAP ” means U.S. generally accepted accounting principles, consistently applied over the relevant period.

 

1.31                         Intellectual Property ” has the meaning set forth in Section 6.1 .

 

1.32                         Inventions ” has the meaning set forth in Section 6.1 .

 

1.33                         Launch ” means, with respect to each Product developed hereunder, the first commercial sale of such Product by or on behalf of Client or Client’s permitted sublicensees in the Territory after receipt of Regulatory Approval and, if required, Pricing Approval.

 

1.34                         Losses ” has the meaning set forth in Section 8.1 .

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.35                         Net Sales ” means, for the measured period, the gross invoiced amounts for Products sold or commercially disposed of for value by Client or its permitted sublicensees (including its Affiliates) or distributors, less the following:

 

A.                                     customary trade allowances, discounts [* * *];

 

B.                                     credits or allowances given or made for rejection, recall or return of previously sold Product actually taken or allowed;

 

C.                                     [* * *] payments and rebates [* * *];

 

D.                                     [* * *];

 

E.                                      sales taxes, value-added taxes, excise or use taxes, tariffs, duties and customs fees and other taxes, [* * *];

 

F.                                       freight, insurance, inventory and other transportation expenses [* * *];

 

G.                                     [* * *]; and

 

deductions for [* * *].

 

In addition, Net Sales shall include (A) [* * *] and (B) [* * *].

 

Sales of Products between Client and its permitted sublicensees (including its Affiliates) shall be disregarded for the purposes of calculating Net Sales, and in such case Net Sales shall include only subsequent sales by the relevant sublicensee to a third party.  Subject to the foregoing sentence, if any Products are sold or disposed of by Client or its permitted sublicensees other than in a bona fide arm’s length sale exclusively for money, then Net Sales for such products shall be deemed to be [* * *].

 

The amount of any reduction or reversal of any accrual or reserve related to any deduction from the amount invoiced for Products shall be included in Net Sales in the Quarter in which such reduction or reversal occurs.  All calculations shall be made in accordance with GAAP.

 

1.36                         Parties ” and “ Party ” have the meaning set forth in the introductory paragraph.

 

1.37                         Pricing Approval ” means subsequent to Regulatory Approval, pricing and any relevant reimbursement approval to allow marketing and sales of Products in the given country within the Territory for which such Regulatory Approval relates.

 

1.38                         Process Inventions ” has the meaning set forth in Section 6.1 .

 

1.39                         Product ” means each product developed hereunder which uses, contains, comprises or otherwise incorporates a Zydis Formulation.

 

1.40                         Quarter ” means each respective period of three (3) consecutive months ending on March 31 st , June 30 th , September 30 th  and December 31 st .

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.41                         Recipient ” has the meaning set forth in Section 5.1 .

 

1.42                         Records ” has the meaning set forth in Section 4.5 .

 

1.43                         Regulatory Approval ” means any approvals, permits, product and/or establishment licenses, registrations or authorizations, including approvals pursuant to U.S. Investigational New Drug applications, New Drug Applications and Abbreviated New Drug Applications (or equivalent non-U.S. filings, such as European marketing authorization applications), as applicable of any Regulatory Authorities that are necessary or advisable in connection with the development, manufacture, testing, use, storage, exportation, importation, transport, promotion, marketing, distribution or sale of Products in the Territory, excluding Pricing Approvals.

 

1.44                         Regulatory Authorities ” means the international, federal, state or local governmental or regulatory bodies, agencies, departments, bureaus, courts or other entities in the Territory that are responsible for (A) the regulation (including pricing) of any aspect of pharmaceutical or medicinal products intended for human use or (B) health, safety or environmental matters generally.  In the United States, this includes the FDA; and in the European Union, this includes the EMA.

 

1.45                         Representatives ” of an entity means any of such entity’s duly-authorized officers, directors, employees, agents, accountants, attorneys or other professional advisors.

 

1.46                         Review Period ” has the meaning set forth in Section 4.5 .

 

1.47                         Supplies ” has the meaning set forth in Section 2.4(B) .

 

1.48                         Supply Agreement ” has the meaning set forth in Section 2.6 .

 

1.49                         Term ” has the meaning set forth in Section 11.1 .

 

1.50                         Territory ” means worldwide, but excluding any countries that are targeted by the comprehensive sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States.  Catalent shall not be obliged to develop or manufacture Products for sale in any of such countries if it is prevented from doing so, or would be required to obtain or apply for special permission to do so, due to any restrictions (such as embargoes) imposed on it by any governmental authorities, including without limitation, those imposed by the U.S. Office of Foreign Assets Control.

 

1.51                         Valid Claim ” means a claim within the Zydis Patents that is issued or has not been pending more than [* * *] years from the priority date and has not been held invalid by a court of competent jurisdiction after all avenues for appeal have been taken or the time period for the same has expired, or disclaimed or admitted to be invalid or unenforceable through reissue or otherwise, or held unpatentable in a re-examination, opposition or similar proceeding from a patent office of competent jurisdiction after all avenues for appeal have been taken or the time period for the same has expired.

 

1.52                         Zydis ” has the meaning set forth in Recital B.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

1.53                         Zydis Formulations ” means the formulations of Drug developed hereunder whose development, formulation, manufacture, or sale utilizes or incorporates the Zydis Technology for use in the Field.

 

1.54                         Zydis Patents ” mean the patents and patent applications (until such time as such applications or any of them are denied, abandoned or issued into patents), and patent disclosures, together with all revisions, renewals, extensions, reexaminations, provisionals, reissuances, continuations, continuations-in-part, divisionals, foreign cognates, patents of addition, confirmation patents, registration patents, pipeline protections or supplementary protection certificate related thereto, that include claims relating to fast dissolving drug delivery systems, that Catalent or its Affiliates own or under which Catalent or its Affiliates have in- licensed with the right to sublicense and that would be infringed or misappropriated by the development, manufacture, sale or use of any Product in the Territory.

 

1.55                         Zydis Technology ” has the meaning set forth in Recital B .

 

ARTICLE 2
DEVELOPMENT PROGRAM

 

2.1                                Development Program .  The Parties have agreed upon, and set forth in Attachment A , requirements and objectives for a program to develop and produce for clinical trials Products suitable for Regulatory Approval and commercialization (as the same may be amended in accordance with the terms of this Agreement, the “ Development Program ”).

 

2.2                                Performance Standards .  Each Party shall use its commercially reasonable efforts to carry out the responsibilities assigned to it in the Development Program, if any, in a timely manner.  In addition, Client shall use its commercially reasonable efforts to cooperate with Catalent’s conduct of the Development Program, including by timely providing any approvals that may be required during each phase of the Development Program.  Catalent shall keep Client reasonably informed of the progress and all significant developments of the Development Program by delivery of written reports as specified in Attachment A and by participation in telephone conferences from time to time as reasonably requested by Client.

 

2.3                                Amendments to Development Program .  Any material change in the details of the Development Program or the assumptions upon which the Development Program is based may require changes in the pricing and/or time lines, and shall require a written amendment to the Development Program, sometimes referred to as a Quotation Amendment Request or a QAR (a “ Change Order ”).  Each Change Order shall detail the requested changes to the applicable task, responsibility, duty, pricing, time line or other matter.  The Change Order will become effective upon the execution of the Change Order by both Parties, and following such execution shall be appended hereto as part of Attachment A . Catalent will be given a reasonable period of time within which to implement the changes in an executed Change Order.  Both Parties agree to act in good faith and promptly when considering a Change Order requested by the other Party.  Without limiting the foregoing, Client agrees that it will not unreasonably withhold approval of a Change Order if the proposed changes in pricing or time lines result from, among other appropriate reasons, forces outside the reasonable control of Catalent or changes in the assumptions upon which the initial pricing or time lines were

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

6



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

based.  Catalent shall not be obligated to perform any modified or additional changes in the Development Program’s scope until such time as the Parties execute the corresponding Change Order.

 

2.4                                Materials and Supplies .

 

A.                                     Client shall arrange for the delivery, at its own cost and risk, of Drug and any other Client-supplied Materials to the Facility in sufficient quantities and sufficiently in advance of the commencement of the Development Program to permit Catalent to timely perform its obligations hereunder.  Client shall retain title to Client-supplied Materials at all times and shall bear the risk of loss thereof.  Catalent shall take all reasonable steps to store and properly preserve Drug and any other Client-supplied Materials in Catalent’s Facility.  Client shall be responsible at its expense for securing any necessary DEA, export or import, similar clearances, permits or certifications required in respect of the Drug and any other Client-supplied Materials.  Prior to delivery of any such items, Client shall provide to Catalent a copy of all associated material safety data sheets, safe handling instructions and health and environmental information and any Regulatory certifications or authorizations that may be required under Applicable Laws relating to the Drug and any other Client-supplied Materials, and shall promptly provide any updates thereto.  Following receipt of Client-supplied Materials, Catalent shall inspect such items to verify their identity.  Unless otherwise expressly required by the Development Program, Catalent shall have no obligation to test such items to confirm that they meet the associated specifications or certificate of analysis or otherwise; but in the event that Catalent detects a nonconformity with applicable specifications, Catalent shall give Client prompt notice of such nonconformity.

 

B.                                     Shipment of all samples and clinical supplies of Products and Zydis Formulations to be provided to Client pursuant to the Development Program (collectively, the “ Supplies ”) shall be Ex Works (Incoterms 2010) the Facility.  Catalent shall assist Client and cooperate with Client’s designated common carrier in coordinating such shipments.  Title to the Supplies shall pass to Client when released by Catalent at the Facility to Client’s designated common carrier.

 

2.5                                Clinical and Regulatory .

 

A.                                     Within [* * *] months after the execution of this Agreement, but in any event prior to the delivery by Catalent of any Supplies required to be manufactured in accordance with cGMP, including Supplies to be used in human clinical trials, the Parties shall negotiate in good faith and enter into a Quality Agreement substantially in the form attached hereto as Attachment B . In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to quality-related activities, including compliance with cGMP, the provisions of the Quality Agreement shall govern.  In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to any commercial matters, including allocation of risk, liability and financial responsibility, the provisions of this Agreement shall govern.

 

B.                                     Except as provided for in the following Section 2.5(C) , Catalent shall obtain and maintain all necessary Regulatory Approvals with respect to general Facility operations

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

or that may be required for Catalent to conduct the Development Program, including manufacturing of the Supplies, and to comply with all Applicable Laws in this respect.

 

C.                                     Client shall be responsible for conducting the clinical program (i.e., all activities relating to the planning and execution of pre-clinical and clinical studies in animals or humans directed towards obtaining Regulatory Approval for marketing) with respect to Products and for preparing and filing regulatory submissions in the Territory with respect thereto, including any expenses associated therewith pursuant to Section 4.4 .  Client shall obtain and maintain all necessary Regulatory Approvals and Pricing Approvals that may be required for Client to conduct the clinical program with respect to Products and commercialize Products in the Territory and to comply with all Applicable Laws in this respect, including filing all periodic reports, safety reports, and all other notifications as required by the Regulatory Authorities.  Client shall be responsible for retaining and maintaining all study records, financial information, and reserve samples, as required under Applicable Law, generated or used in the execution of the pre-clinical and clinical studies in animals or humans performed in accordance with this Agreement.

 

D.                                     Catalent will co-operate with Client, upon Client’s reasonable request and at Client’s cost, to assist Client in obtaining and maintaining Regulatory Approvals that may be required for Client to fulfill its obligations under Section 2.5(C) ; provided, however , Client shall not identify Catalent in any regulatory filing or submission without Catalent’s prior written consent unless required by Applicable Law, including disclosure of Catalent as the manufacturer of the Product.  Such consent shall not be unreasonably withheld or delayed and shall be memorialized in a writing signed by authorized representatives of both Parties.

 

E.                                      Client shall use its commercially reasonable efforts to carry out its responsibilities under this Section 2.5 with the objective of satisfying the requirements of Regulatory Authorities as effectively and expeditiously as possible and to enhance the prospects of the overall commercial success of the Products.

 

F.                                       Each Party shall (i) promptly notify the other Party promptly of any Regulatory Authority inspection, inquiry or correspondence concerning the Products, including inspections of investigational sites or laboratories and (ii) to the extent permitted by Applicable Laws promptly forward to the other Party copies of any correspondence from or to any Regulatory Authority relating to any such inspection, inquiry or correspondence or otherwise relating to Products, including FDA Form 483 notices, and FDA refusal to file, deficiency, rejection or warning letters (or equivalent non-U.S. documents), purged only of Confidential Information that is unrelated to the Products.

 

2.6                                Commercial Supply .  After the receipt of the final report required pursuant to the Development Program, Client shall notify Catalent within [* * *] thereafter whether or not it desires to proceed with commercialization of any Products; provided that such time period may be extended by Catalent upon the reasonable request of Client for up to an additional [* * *].  If Client desires to proceed with commercialization, then Client and Catalent (or one of its Affiliates) shall enter into good faith negotiations for a separate supply agreement [* * *] (any such agreement, a “ Supply Agreement ”).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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2.7                                Exclusivity .  Catalent agrees that, for the period commencing on the Effective Date and ending when Client notifies Catalent, in accordance with Section 2.6 , whether or not it desires to proceed with commercialization of any Products, Catalent will not enter into any agreement, arrangement, understanding or negotiations with any third party relating to the application of the Zydis Technology to formulations of Drug in the Territory.  If Client notifies Catalent that it does desire to proceed with such commercialization, the period described in the preceding sentence will be extended for an additional thirty (30) days (or until a Supply Agreement is executed, if earlier).

 

2.8                                Non-Compete .  Catalent agrees that during the Term of this Agreement and for a period of [* * *] after the end of such Term (the “ Non-Compete Period ”), Catalent shall not, without the prior written consent of Client, directly or indirectly develop or manufacture for itself or for any other person or entity, other than Client, a formulation of the Drug that uses or employs the Zydis Technology in the Field.  This non-compete covenant shall terminate upon any earlier termination of this Agreement pursuant to Sections 11.2, 11.3 or 11.4 hereof and may only be extended by mutual written agreement of the Parties.  During the Term or Non-Compete Period, if Client no longer wishes to pursue a formulation of the Drug that uses or employs the Zydis Technology in the Field, then Client shall promptly provide Catalent with written notification of its decision, and the non-compete covenant described herein shall terminate as of the date of such notice.

 

ARTICLE 3
LICENSE

 

3.1                                Grant .  Subject to the terms of this Agreement, including the payment of the license fees and royalties described in Sections 4.1(D)  and (E) , Catalent hereby grants to Client an exclusive license, with the right to sublicense subject to Section 3.2 , under the Zydis Technology for the sole purposes of using and selling (but not manufacturing except as provided in Attachment C and the Supply Agreement) Products in the Field in the Territory.  Notwithstanding the foregoing, Catalent shall retain such rights under the Zydis Technology as may be required to allow Catalent to carry out its obligations under the Development Program and any Supply Agreement.  Any rights under the Zydis Technology not expressly granted to Client in this Section 3.1 shall be retained by Catalent.

 

3.2                                Sublicenses .  Client may sublicense to any of its Affiliates any of the rights granted to Client pursuant to Section 3.1 (without the right to further sublicense), or to third parties any of the rights granted to Client pursuant to Section 3.1 (without the right to further sublicense) upon the prior written consent of Catalent, which shall not be unreasonably withheld; provided , that Client shall provide to Catalent within five (5) days after execution a copy of each sublicense agreement with any sublicensee that is not an Affiliate.  Client shall ensure that each sublicensee accepts in writing and complies with all of the terms and conditions of this Agreement as if such sublicensee were a Party to this Agreement, and Client shall guarantee and be responsible for its sublicensees’ performance under (and breach of) this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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3.3          Trademark .  In the event Client desires to use the trademark ZYDIS® in connection with the use or sale of the Products permitted hereunder, the Parties shall negotiate in good faith a royalty-free trademark license agreement on Catalent’s standard terms.

 

3.4          Client Technology .  Client hereby grants to Catalent a non-exclusive, fully paid-up and royalty-free license, with the right to sublicense to Catalent’s Affiliates, under any and all technology owned by or licensed to Client with respect to the Drug or any formulations of the Drug for the sole purpose of carrying out Catalent’s obligations under this Agreement, the Development Program and any Supply Agreement.

 

ARTICLE 4
PAYMENTS

 

4.1          Fees .  In consideration for Catalent conducting the Development Program and granting to Client the rights pursuant to Section 3.1 :

 

A.            Performance Fees . Client shall pay to Catalent the milestone or other performance-based fees described in the Development Program.  Such fees shall be paid within [* * *] days following invoice, which invoice shall be submitted to Client by Catalent upon the occurrence of each such milestone event, and shall be non-refundable and non-creditable.

 

B.            Fees for Supplies .  Client shall pay to Catalent the fees relating to the manufacture and delivery of Supplies as described in the Development Program, if any, and as described in Section 2.4 .  Such fees shall be paid within [* * *] days following invoice, which invoice shall be submitted to Client by Catalent upon tender of delivery of the relevant Supplies to the designated carrier.

 

C.            Retesting .  All retesting performed that is not due to a Catalent error will be billed to Client.  All required investigational studies or additional Client requests not outlined in the Development Program will be invoiced for the cost of performance at the current standard pricing.

 

D.            Milestones .

 

(i)            On the Effective Date, Client shall pay to Catalent $275,000.00.

 

(ii)           For each Product developed hereunder, Client shall pay to Catalent the following non-refundable and non-creditable milestone payments in connection with Client’s license of the Zydis Technology:

 

i.              $[* * *] invoiced after [* * *]; and

 

ii.             $[* * *] invoiced after [* * *].

 

Client shall notify Catalent of the achievement of each such milestone within [* * *] business days following achievement.  Such milestones shall be paid within [* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

days following invoice, which invoice shall be submitted to Client by Catalent promptly following receipt of Client’s notification.

 

E.            Royalties .  Client shall pay to Catalent, on a calendar quarter basis, a royalty in connection with Client’s license of the Zydis Technology equal to [* * *]% of Net Sales.  The foregoing royalty shall decrease by [* * *]% to [* * *]% of Net Sales effective as of the first Quarter following the expiration or other lapse of the last Valid Claim covering any Zydis Formulation; provided, however, in the event that a patent is issued that protects any Zydis Formulation or an extension of an existing patent covering any Zydis Formulation be granted, such royalty rate shall be increased back to [* * *]% of Net Sales for the life of such patent’s Valid Claim(s).  Client shall deliver to Catalent within [* * *] days following the end of each Quarter following the First Launch Date: (i) a written statement setting forth in reasonable detail its calculation of the royalty due for such most recently completed Quarter, including its calculation of Net Sales and all appropriate backup information, and (ii) payment of the royalty due on such Net Sales.

 

F.             Other Fees .  Client shall pay Catalent for all other fees and expenses of Catalent owing in accordance with the terms of this Agreement, including, if and when applicable, any cancellation fees set forth in the Development Program and any payments Catalent is required to make to any Regulatory Authority pursuant to Applicable Laws resulting from Catalent’s formulation, development, manufacturing, processing, filling, packaging or testing of Product at the Facility (including without limitation any payments or fees Catalent is required to make pursuant to the Generic Drug User Fee Act of 2012, if applicable).  Such fees and expenses shall be paid within [* * *] days following invoice, which invoice shall be submitted to Client by Catalent as and when appropriate.

 

4.2          Payment Terms .  Client shall make payment as directed in the applicable invoice.  In the event payment (except for any amount disputed that will be subject to Section 13.10) is not received by Catalent on or before the [* * *] day after the date of the invoice, then Catalent may, in addition to any other remedies available at equity or in law, at its option, elect to do any one or more of the following: (A) charge interest on the outstanding sum from the due date (both before and after any judgment) at [* * *]% per month until paid in full (or, if less, the maximum amount permitted by Applicable Laws); (B) suspend any further performance hereunder until such invoice is paid in full; and/or (C) terminate this Agreement pursuant to Section 3 .  Except as expressly set forth in the Development Program, all payments hereunder shall be made in U.S. dollars.  If Net Sales are invoiced by Client or its Affiliates or any permitted sublicensees to third parties in other currencies, royalties due on such Net Sales pursuant to Section 4.1(E)  shall be converted into U.S. dollars in accordance with GAAP at the closing rates of exchange as published in The Wall Street Journal , in effect on the last business day of the month within the calendar quarter for which royalties are due.

 

4.3          Taxes .  All taxes, duties and other amounts assessed (excluding tax based on net income and franchise taxes) on services, components, Drug or Supplies prior to or upon provision or sale to Catalent or Client, as the case may be, and on any other Client-supplied Materials, are the responsibility of Client, and Client shall reimburse Catalent for all such taxes, duties or other expenses paid by Catalent or such sums will be added to invoices directed at Client, where applicable.  If any deduction or withholding in respect of tax or

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

otherwise is required by law to be made from any of the sums payable as mentioned in Section 4.1 , Client shall be obliged to pay to Catalent such greater sum as will leave Catalent, after deduction or withholding as is required to be made, with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding.

 

4.4          Client and Third Party Expenses .  Except as may be expressly set forth in the Development Program, Client shall be responsible for 100% of its own and all third-party expenses associated with the development, Regulatory Approval and commercialization of Products, including regulatory filings, pre-clinical studies and clinical studies.

 

4.5          Records; Audit Rights .  Client will keep complete and accurate books and records relating to all amounts payable to Catalent hereunder, sales of Products, its calculation of royalties and Net Sales (including all relevant deductions) and is achievement of the milestone events referred to in Section 4.1(D)  for at least [* * *] years after the expiration of the year to which they relate, in each case, in sufficient detail to enable the calculation and verification of all payments payable to Catalent hereunder (“ Records ”).  Upon the written request and not more than once per calendar year, Catalent shall be entitled to audit, or to have an independent accountant audit, such books and records.  Client shall provide Catalent or such auditors, as applicable, with access during normal business hours to appropriate space at Client’s relevant location and to such of the pertinent Records of Client as may be reasonably necessary to verify the matters in question.  Such access shall include the right of Catalent or the independent accounting firm to interview Catalent’s personnel as Catalent or such independent accounting firm determines appropriate.  Each such examination shall be limited to pertinent Records for any year ending not more than [* * *] years prior to the date of such request.  Before permitting such independent accounting firm to have access to such Records and personnel, Client may require such independent accounting firm and its personnel involved in such audit, to sign to sign a confidentiality agreement reasonably acceptable to Catalent to prohibit the independent accounting firm from disclosing Client’s financial and proprietary information except as contemplated by this Agreement.  Prior to disclosing the results of any such audit to Catalent, the auditors shall present Client with a preliminary report of findings and provide Client with up to [* * *] days to respond to any questions raised or issues identified (the “ Review Period ”).  Following the Review Period, the auditors will prepare and provide to Client and Catalent a written report stating whether the payments made to Catalent for the audit period are correct or incorrect and the details of any discrepancies.  If an audit discloses an underpayment by Client of any amounts paid pursuant to any provision of this Agreement, such amounts shall be paid to Catalent within [* * *] days after the date Client receives the auditors’ final written report.  Any fees and expenses of the audit shall be paid by Catalent unless the audit discloses an understatement by Client of more than [* * *]% of the aggregate amounts payable to Catalent pursuant to this Agreement during such audit period, in which case Client shall bear the responsibility for any such reasonable fees and expenses.

 

4.6          Development Batches .  Each batch of Supplies produced under this Agreement will be considered to be a “ Development Batch ” until manufacturing, testing and storage methods and processes have been validated or qualified in accordance with industry standards (including production of at least [* * *] consecutive batches of Supplies that meet the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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applicable specifications).  The term “Development Batch” shall include any batch manufactured following (A) a Change Order, or (B) a scale-up in the manufacturing process to produce greater quantities of Supplies, until Catalent has manufactured at least [* * *] consecutive batches of Supplies meeting the new specifications.  Client shall be responsible for the cost of each Development Batch, even if such batch fails to meet the specifications therefor, unless Catalent was grossly negligent in the manufacture of the out-of-specification batch.  Catalent and Client shall cooperate in good faith to resolve any problems causing the out-of-specification batch.

 

ARTICLE 5
CONFIDENTIALITY AND NON-USE

 

5.1          Definition .  As used in this Agreement, the term “ Confidential Information ” includes all information furnished by or on behalf of Catalent or Client (the “ Discloser ”), its Affiliates or any of its or their respective Representatives, to the other Party (the “ Recipient ”), its Affiliates or any of its or their respective Representatives, whether furnished before, on or after the Effective Date and furnished in any form, including written, verbal, visual, electronic or in any other media or manner and information acquired by observation or otherwise during any site visit at the other Party’s facility.  Confidential Information includes all proprietary technologies, inventions and any other Intellectual Property, analyses, compilations, business or technical information and other materials prepared by either Party, their respective Affiliates, or any of its or their respective Representatives, containing or based in whole or in part on any information furnished by the Discloser, its Affiliates or any of its or their respective Representatives.  Confidential Information also includes the existence of this Agreement and its terms (including all Attachments).

 

5.2          Exclusions .  Notwithstanding Section 5.1 , Confidential Information does not include information that (A) is or becomes generally available to the public or within the industry to which such information relates other than as a result of a breach of this Agreement, (B) is already known by the Recipient at the time of disclosure as evidenced by the Recipient’s written records, (C) becomes available to the Recipient on a non-confidential basis from a source that is entitled to disclose it on a non-confidential basis or (D) was or is independently developed by or for the Recipient without reference to the Confidential Information of the Discloser as evidenced by the Recipient’s written records.

 

5.3          Mutual Obligation .  The Recipient agrees that it will not use the Discloser’s Confidential Information except in connection with the performance of its obligations hereunder (except that Confidential Information necessary for manufacture or production of a Product may be used during any commercialization pursuant to a Supply Agreement).  Recipient will not disclose, without the prior written consent of the Discloser, Confidential Information of the Discloser to any third party, except that the Recipient may disclose the Discloser’s Confidential Information to any of its Affiliates and its or their respective Representatives that (A) need to know such Confidential Information for the purpose of performing under this Agreement, (B) are advised of the contents of this Article 5 and (C) are bound to the Recipient by obligations of confidentiality at least as restrictive as the terms of this Article 5 .  Each Party shall be responsible for any breach of this Article 5 by its Affiliates or any of its or their respective Representatives.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

5.4          Permitted Disclosure .  The Recipient may disclose the Discloser’s Confidential Information to the extent required by Applicable Law, regulation or court or administrative order; provided , that prior to making any such legally required disclosure, the Recipient shall give the Discloser as much prior notice of the requirement for and contents of such disclosure as is practicable under the circumstances.  Any such disclosure, however, shall not relieve the Recipient of its obligations contained herein.

 

5.5          No Implied License .  Except as expressly set forth in this Article 5 , the Recipient will obtain no right of any kind or license under any Confidential Information of the Discloser, including any patent application or patent, by reason of this Agreement.  Subject to Article 6 , all Confidential Information will remain the sole property of the Discloser.

 

5.6          Return of Confidential Information .  Upon expiration or termination of this Agreement, the Recipient will (and will cause its Affiliates and its and their respective Representatives to) cease its and their use and, upon written request, within thirty (30) days either return or destroy (and certify as to such destruction) all Confidential Information of the Discloser, including any copies thereof, except for a single copy which may be retained for the sole purpose of ensuring compliance with its obligations under this Agreement; provided that such retained copy shall remain subject to the obligations of confidentiality set forth herein.

 

5.7          Survival .  The obligations of this Article 5 will terminate five (5) years from the expiration or termination of this Agreement.

 

ARTICLE 6
INTELLECTUAL PROPERTY

 

6.1          Definitions .  For purposes hereof, “ Intellectual Property ” means all intellectual property (whether or not patented), including without limitation, patents, patent applications, know-how, trade secrets, copyrights, trademarks, designs, concepts, technical information, manuals, standard operating procedures, instructions, specifications, inventions, discoveries, processes, data, improvements and developments.  “ Client IP ” means (i) all Intellectual Property and embodiments thereof owned by or licensed (other than by Catalent) to Client as of the date hereof or developed (other than by Catalent) by or for Client other than in connection with this Agreement, including Client’s proprietary formulation of the Drug, and (ii) all Inventions (as defined in the Evaluation Agreement) described in subclauses (A) and (B) in the third sentence of clause K of Attachment A to the Evaluation Agreement developed at any time during the term of the Evaluation Agreement.  “ Catalent IP ” means all Intellectual Property and embodiments thereof owned by or licensed to Catalent as of the date hereof or developed by Catalent other than in connection with this Agreement; “ Invention ” means any Intellectual Property developed by either Party or jointly by the Parties in connection with this Agreement (including all Change Orders under this Agreement); [* * *].

 

6.2          Disclosure of Inventions .  Client shall promptly provide written notice to Catalent of Inventions developed by Client.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

6.3          Ownership of Intellectual Property .  All Client IP and Client Inventions shall be owned solely by Client and no right therein is granted to Catalent under this Agreement, except that Catalent shall have a non-exclusive, fully paid-up, royalty-free license pursuant to Section 3.4 to such Client IP and Client Inventions and, as applicable, the Client-supplied Materials, solely to the extent necessary to perform its obligations under this Agreement, the Development Program and any Supply Agreement.  All Catalent IP and Process Inventions shall be owned solely by Catalent and except as set forth in Section 3.1 no other right therein is granted to Client under this Agreement.

 

6.4          Patentable Inventions .  In the event that any Inventions may be patentable:

 

A.            the Party owning such Invention pursuant to Section 6.3 shall have the right, in its sole discretion, to determine the patent strategy for such Invention, which may include not obtaining patent protection in a particular country or any country;

 

B.            without prejudice to the generality of Section 6.4 , the Party not owning an Invention shall cooperate with the other Party and/or its attorneys upon reasonable request, at the expense of the other Party, in (i) properly filing and prosecuting patent applications, (ii) vesting title herein provided and (iii) providing non-financial assistance in enforcing any patents resulting from such patent applications; and

 

C.            the cost of patenting Inventions will be borne by the owner of the Invention.

 

6.5          Assignment of Rights .  Each of Client and Catalent shall, and does hereby, assign, and shall cause its Affiliates, employees, consultants and agents to so assign with full title guarantee, to the other Party, without additional compensation, such right, title and interest in and to any Intellectual Property (including Inventions) as is necessary to fully effect the ownership provisions set out in this Article 6 and any accrued rights of action in respect thereof.  Each of Client and Catalent shall, if so requested by the other Party, execute all such documents and do all such other acts and things as may be reasonably required to comply with this Article 6 to vest in the appropriate Party all rights in the relevant Intellectual Property and shall procure execution by any named inventor of all such documents as may reasonably be required by the other Party in connection with any related patent application.

 

6.6          [* * *].

 

6.7          Enforcement of Zydis Patents .  If either Party becomes aware of any third party infringement or threatened infringement of any of the Zydis Patents, the following shall apply:

 

A.            The Party becoming so aware shall promptly give written notice to the other Party of such infringement or threatened infringement describing the facts relating thereto in reasonable detail, including a copy of any written correspondence received from third parties.

 

B.            If there is disagreement between the Parties as to whether the third party act is in fact an infringement of any of the Zydis Patents or whether an infringement Action would stand a reasonable chance of success, the Parties shall refer such issue to an independent experienced intellectual property counsel, and the costs incurred in this regard shall be borne

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

by the Party whose view does not prevail.  Each Party shall have the right to present evidence in support of its position to the independent intellectual property counsel.

 

C.            With or without the advice of independent intellectual property counsel pursuant to clause (B), Catalent shall have the initial right, but not the obligation, to pursue any alleged third party infringement of any of the Zydis Patents in any country, within or outside the Territory.  Catalent shall notify Client within ninety (90) days after delivery of any notice pursuant to clause (A) (or, if later, thirty (30) days after the decision of the intellectual property counsel described in clause (B)) whether it intends to so pursue.  Catalent may agree to settle any such Action in its sole discretion; provided that Catalent will not settle any such Action if such settlement would adversely affect the rights or interests of Client without the prior written consent of Client, which shall not be unreasonably withheld, conditioned or delayed.  If Catalent elects to pursue such third party infringement, then Catalent shall bear the cost of such Action and Catalent shall be entitled to retain all sums recovered in such Action for its own account.

 

D.            If Catalent elects not to pursue any Action in accordance with clause (C) and the intellectual property counsel described in clause (B) has opined that the third party act is, or most likely is, an infringement of a Zydis Patent in the relevant country of the Territory, then Client may, in its sole discretion and expense, bring suit in its name to restrain such third party infringement in such country of the Territory.  To the extent that Catalent must be named as a necessary party to the litigation, Catalent agrees to be so named.  In such event, Client shall conduct such Action properly and diligently and shall keep Catalent reasonably informed, including by providing copies of all litigation filings and material correspondence.  Client will not settle any such Action without the prior written consent of Catalent.  If Client elects to pursue such third party infringement Action, then Client shall bear the cost of such Action.  Any proceeds recovered by Client from such Action shall be used to reimburse Client and Catalent for their costs and expenses reasonably incurred in connection with such Action (including attorneys’ and experts’ fees), if any, and then any remaining proceeds shall be retained by Client and treated as Net Sales accruing during the Quarter in which such proceeds are actually remitted to Client.

 

6.8          Defense of Zydis Formulations .  If either Party becomes aware of any third party Action alleging infringement or threatened infringement of any third party Intellectual Property rights by the development, use, sale or manufacture of any Zydis Formulation, the following shall apply:

 

A.            The Party becoming so aware shall promptly give written notice to the other Party of such Action describing the facts relating thereto in reasonable detail, including a copy of any written correspondence received from third parties, and shall keep the other Party informed of all developments related to such alleged infringement.  Without limiting the generality of the foregoing, Client shall promptly inform Catalent in writing if Client becomes aware that a third party has initiated or filed any Action alleging that the Zydis Technology embodied in any Zydis Formulation infringes the Intellectual Property rights of such third party.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

B.            Catalent shall have the initial right, but not the obligation, to prosecute and control the defense of any such third party Action using counsel of its choice.  Catalent may agree to settle any such Action in its sole discretion; provided that Catalent will not settle any such Action with a third party plaintiff if such settlement would adversely affect the rights or interests of Client without the prior written consent of Client, which shall not be unreasonably withheld, conditioned or delayed.  If Catalent assumes the defense of such Action, then Catalent shall bear the cost of such defense, and Catalent shall be entitled to retain all sums recovered in such Action for its own account.

 

C.            If Catalent elects not to defend such Action in accordance with clause (B) within 75 days after delivery of any notice pursuant to clause (A), or not less than 7 days before a response is due as is required to respond to a complaint if a complaint has been filed, then Client may assume the defense of such Action using counsel of its choice solely to the extent that such Action involves the Zydis Technology embodied in any Zydis Formulation.  Client shall not settle any Action without (i) a full release of both Parties and their respective Affiliates from such third party plaintiff and (ii) the prior written consent of Catalent, which shall not be unreasonably withheld, delayed or conditioned.  If Client assumes the defense of such Action, then Client shall bear the cost of such defense.  Any proceeds recovered by Client from such Action shall be used to reimburse Client and Catalent (to the extent either Party incurs any costs or expenses in relation to such Action) for their costs and expenses reasonably incurred in connection with such Action (including attorneys’ and experts’ fees) and then any remaining proceeds shall be retained by Client and treated as Net Sales accruing during the Quarter in which such proceeds are actually remitted to Client.

 

D.            Notwithstanding the foregoing, where any Action alleges that (i) Catalent IP and/or Process Inventions and (ii) Client IP and/or Client Inventions, infringe the Intellectual Property rights of a third party, then irrespective of which Party controls the defense of such Action, the Parties will discuss in good faith how to defend such Action.

 

6.9          Cooperation .  In any Action pursuant to Sections 6.7 or 6.8 , the Parties shall provide each other with reasonable cooperation and assistance and, upon the request and at the expense of the Party making such request, the other Party shall make available, at reasonable times and under appropriate conditions, all relevant records and personnel currently employed by such Party.

 

6.10        No Challenge .  As long as Client has any license rights pursuant to this Agreement, Client shall not dispute or challenge in any manner Catalent’s ownership of, rights to or the validity or enforceability of any of the Zydis Technology licensed to Client pursuant to this Agreement.

 

ARTICLE 7
REPRESENTATIONS AND WARRANTIES

 

7.1          Catalent .  Catalent represents, warrants and undertakes to Client that:

 

A.            this Agreement has been duly executed and delivered by Catalent’s authorized representative and, assuming the due authorization, execution and delivery hereof by Client,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

constitutes and will at all times constitute the legal, valid and binding obligation of Catalent enforceable against Catalent in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity;

 

B.            Catalent has no obligations, contractual or otherwise, that would conflict with Catalent entering into and performing its obligations set forth in this Agreement;

 

C.            at the time of delivery by Catalent to the designated carrier hereunder, the Supplies shall have been manufactured in accordance with Applicable Laws and shall not be adulterated, misbranded or mislabeled within the meaning of Applicable Laws; provided, that Catalent shall not be liable for defects attributable to Drug or other Client-supplied Materials (including artwork, advertising, packaging and labeling) provided to Catalent by Client or its Affiliates;

 

D.            (i) to Catalent’s knowledge, it has all necessary authority to use and to permit Client to use pursuant to the terms of this Agreement and the performance of services contemplated hereunder, all Catalent IP related to the Drug and the Zydis Technology, including any copyrights, trademarks, trade secrets, patents, inventions and developments; (ii) to Catalent’s knowledge and except pursuant to which Catalent has a valid license, there are no patents, trade secrets or other proprietary rights owned by others that would be infringed or misused by Catalent’s performance of the Agreement; and (iii) to Catalent’s knowledge and except pursuant to which Catalent has a valid license, no trade secrets or other proprietary rights of others related to the Catalent IP utilized with the Drug or Zydis Technology that would be infringed or misused by Catalent’s performance of this Agreement;

 

E.            no transactions or dealings under this Agreement shall be conducted with or for an individual or entity that is designated as the target of any sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom or the United States of America; and

 

F.             Catalent will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended under 21 U.S.C. §335(a) or (b).

 

7.2          Client .  Client represents, warrants and undertakes to Catalent that:

 

A.            this Agreement has been duly executed and delivered by Client’s authorized representative and, assuming the due authorization, execution and delivery hereof by Catalent, constitutes and will at all times constitute the legal, valid and binding obligation of Client enforceable against Client in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally and to general principles of equity;

 

B.            Client has no obligations, contractual or otherwise, that would conflict with Client entering into and performing its obligations set forth in this Agreement;

 

C.            at the time of delivery hereunder, to Client’s knowledge, all Drug and other Client-supplied Materials supplied by it or its Affiliates hereunder shall have been

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

manufactured in accordance with Applicable Laws, shall not be adulterated, misbranded or mislabeled within the meaning of Applicable Laws and shall meet the applicable specifications and will continue to do so until the applicable expiration date;

 

D.            Client has provided to Catalent all safe handling instructions, health and environmental information and material safety data sheets applicable to the Drug and other Client-supplied Materials supplied by it or its Affiliates hereunder in sufficient time for review and training by Catalent;

 

E.            (i) to Client’s knowledge and except pursuant to which Client has a valid license, it has all necessary authority to use and to permit Catalent to use pursuant to the terms of this Agreement and the performance of services contemplated hereunder, all Client IP related to the Drug and all other Client-supplied Materials, including any copyrights, trademarks, trade secrets, patents, inventions and developments; (ii) to Client’s knowledge and except pursuant to which Client has a valid license, there are no patents owned by others that would be infringed or misused by Client’s performance of the Agreement; and (iii) to Client’s knowledge and except pursuant to which Client has a valid license, no trade secrets or other proprietary rights of others related to the Client IP utilized with the Drug or other Client-supplied Materials that would be infringed or misused by Client’s performance of this Agreement;

 

F.             all Products, Supplies, results, data, samples and other materials and deliverables provided to Client by Catalent hereunder shall be held, used and disposed of by or on behalf of Client as set forth in the Development Program and otherwise in accordance with all Applicable Laws (including, in connection with any Supplies or other Products that are not labeled, 21 CFR § 201.150 and equivalent non-U.S. regulations); specifically, Client shall not permit the human consumption of any Supplies or other Products, except to the extent such consumption occurs in the course of clinical studies that expressly permit such use and that have been approved by appropriate governmental authorities; and Client will otherwise comply with all Applicable Laws applicable to Client’s performance under this Agreement;

 

G.            to Client’s knowledge, the services to be performed by Catalent under this Agreement will not violate or infringe upon any trademark, trade name, copyright, patent, trade secret, or other intellectual property or other right held by any person or entity; and

 

H.            no transactions or dealings under this Agreement shall be conducted with or for an individual or entity that is designated as the target of any sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom or the United States of America.

 

7.3          Limitations .  THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 7 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY TO THE OTHER PARTY, AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING ANY IMPLIED

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE 8
INDEMNIFICATION

 

8.1          Indemnification by Catalent .  Catalent shall indemnify and hold harmless Client, its Affiliates, and their respective directors, officers, employees and agents (“ Client Indemnitees ”) from and against any and all suits, claims, losses, demands, liabilities, damages, costs and expenses (including reasonable attorneys’ fees and reasonable investigative costs) in connection with any suit, demand or action by any third party (“ Losses ”) arising out of or resulting from (A) any breach of its representations, warranties or obligations set forth in this Agreement or (B) any gross negligence or willful misconduct by Catalent; except to the extent that any of the foregoing arises out of or results from any Client Indemnitee’s negligence, willful misconduct or breach of this Agreement.

 

8.2          Indemnification by Client .  Client shall indemnify and hold harmless Catalent, its Affiliates, and their respective directors, officers, employees and agents (“ Catalent Indemnitees ”) from and against any and all Losses arising out of or resulting from (A) any breach of its representations, warranties or obligations set forth in this Agreement, (B) any development, manufacture, packaging, sale, promotion, distribution, importation, exportation, storage, handling, transportation, disposition or use of or exposure to the Drug, Supplies or any other Zydis Formulation, including product liability or strict liability, (C) Client’s exercise of control over the Development Program to the extent that Client’s instructions or directions violate Applicable Laws, (D) the conduct of any clinical trials utilizing the Drug, Supplies or any other Zydis Formulation, (E) any actual or alleged infringement or violation of any third party patent, trade secret, copyright, trademark or other proprietary rights arising from or by intellectual property or information provided by Client, including Client-supplied Materials, or (F) any gross negligence or willful misconduct by Client; except to the extent that any of the foregoing arises out of or results from any Catalent Indemnitee’s negligence, willful misconduct or breach of this Agreement.

 

8.3          Indemnification Procedures .  All indemnification obligations in this Agreement are conditioned upon the Party seeking indemnification (A) promptly notifying the indemnifying Party of any claim or liability of which the Party seeking indemnification becomes aware (including a copy of any related complaint, summons, notice or other instrument); provided , that failure to provide such notice within a reasonable period of time shall not relieve the indemnifying Party of any of its obligations hereunder except to the extent the indemnifying Party is prejudiced by such failure, (B) allowing the indemnifying Party, if the indemnifying Party so requests, to conduct and control the defense of any such claim or liability and any related settlement negotiations (at the indemnifying Party’s expense), (C) cooperating with the indemnifying Party in the defense of any such claim or liability and any related settlement negotiations (at the indemnifying Party’s expense) and (D) not compromising or settling any claim or liability without prior written consent of the indemnifying Party.  Without limiting the generality of the foregoing, the indemnifying Party is authorized to direct all aspects of the defense for which it has an obligation of indemnification and defense hereunder, including without limitation, selection of counsel, discovery, motions and settlement;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

provided, however , the indemnifying Party may not settle or dispose of any such matter (i) without obtaining a full release in favor of the indemnified Party with respect to such matter and (ii) if such settlement or disposition would confess wrongdoing or otherwise adversely impact the rights or interests of the indemnified Party, in each case, without the prior written consent of the indemnified Party.

ARTICLE 9
LIMITATIONS OF LIABILITY

 

9.1          CATALENT SHALL HAVE NO LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS FOR LOST, DAMAGED OR DESTROYED DRUG OR OTHER CLIENT-SUPPLIED MATERIALS, WHETHER OR NOT SUCH DRUG OR CLIENT-SUPPLIED MATERIALS ARE INCORPORATED INTO ZYDIS FORMULATIONS, EXCEPT ARISING FROM CATALENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

9.2          CATALENT’S TOTAL LIABILITY UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE TOTAL FEES PAID UNDER THIS AGREEMENT BY CLIENT TO CATALENT FOR THE DEVELOPMENT PROGRAM. Nothing in this Section 9.2 or in any other provision of this Agreement shall, to the extent applicable, limit the liability of Catalent for (A) death or personal injury arising from Catalent’s or any of its Affiliate’s negligence, (B) for the fraud of Catalent, any of its Affiliates or any their respective Representatives, (C) any breach of Catalent’s obligations under s12 of the Sale of Goods Act 1979 or s2 of the Supply of Goods and Services Act 1982 or (D) any matter for which it would be illegal for Catalent or any of its Affiliates to exclude or to attempt to exclude liability.

 

9.3          NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOSS OF REVENUES, PROFITS OR DATA ARISING OUT OF PERFORMANCE UNDER THIS AGREEMENT, WHETHER IN CONTRACT OR IN TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 10
INSURANCE

 

Each Party shall, at its own cost and expense, obtain and maintain in full force and effect during the Term the following: (A) Commercial General Liability Insurance with a per-occurrence limit of an amount equivalent to $[* * *]; (B) Products and Completed Operations Liability Insurance (including coverage for Products used in clinical trials) with a per-occurrence limit of an amount equivalent to (i) $[* * *] prior to the first administration of Product in a human and (ii) $[* * *] in the aggregate thereafter; (C) Workers’ Compensation Insurance with statutory limits and Employers Liability Insurance with limits of an amount equivalent to $[* * *] per accident; and (D) All Risk Property Insurance, including transit coverage, in an amount equal to the full replacement value of its property while in, or in transit to, a Catalent facility as required under this Agreement.  Each Party may self-insure all or any portion of the required insurance as long as, together with its Affiliates, its US GAAP

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

net worth is greater than $[* * *] million or its annual EBITDA (earnings before interest, taxes, depreciation and amortization) is greater than $[* * *] million.  Each required insurance policy, other than self-insurance, shall be obtained from an insurance carrier with an A.M. Best rating of at least A-VII. If any of the required policies of insurance are written on a claims made basis, such policies shall be maintained throughout the Term and for a period of at least [* * *] years thereafter.  Each Party shall obtain a waiver of subrogation clause from its property insurance carriers in favor of the other Party.  Each Party shall be named as an additional insured within the other Party’s products liability insurance policies; provided, that such additional insured status will apply solely to the extent of the insured Party’s indemnity obligations under this Agreement.  Such waivers of subrogation and additional insured status obligations will operate the same whether insurance is carried through third parties or self-insured.  Upon the other Party’s written request from time to time, each Party shall promptly furnish to the other Party a certificate of insurance or other evidence of the required insurance.

 

ARTICLE 11
TERM AND TERMINATION

 

11.1        Term .  This Agreement shall commence on the Effective Date and shall continue on a country-by-country basis until the later of (A) ten (10) years after Launch of the most recently Launched-Product in such country and (B) the expiration of the last Valid Claim covering each Product in such country unless earlier terminated in accordance with Section 11.3 (as may be extended in accordance with this Section 11.1 , the “ Term ”).  The Term shall automatically be extended for successive one (1) year periods unless and until one Party gives the other Party at least [* * *] prior written notice of its desire to terminate as of the end of the then-current Term.

 

11.2        Termination by Catalent .  Catalent may, at its option in its sole discretion, (x) terminate this Agreement in its entirety or (y) terminate the exclusive nature of this Agreement by adding multiple additional licensees on a country-by-country basis in the Territory with respect to the relevant country, at any time during the Term immediately on written notice to Client if with respect to any country in the Territory:

 

A.            Client directly or indirectly (i) opposes or assists any Party to oppose the grant of a patent on any patent application or any extension of or the grant of a supplementary protection certificate within the Zydis Patents or (ii) disputes or directly or indirectly assists any third party to dispute the validity or enforceability of any patent within the Zydis Patents or any of the claims thereof;

 

B.            Client shall have failed to file an investigational new drug (IND) application (or equivalent) with the FDA or EMA within [* * *] of the Effective Date;

 

C.            Client fails to file a new drug application (NDA) (or equivalent) with the FDA or EMA within [* * *] of the Effective Date;

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

D.            Client fails to obtain Regulatory Approval to market and sell the Products within [* * *] after the filing of a NDA (or equivalent) with a Regulatory Authority except for circumstances outside Client’s control;

 

E.            Client shall have failed to Launch a Product within [* * *] following receipt of all required Regulatory Approvals and Pricing Approvals; or

 

F.             Client shall have failed to use its commercially reasonable efforts to promote the demand for Products within the Territory.

 

Notwithstanding the foregoing, Client may extend any of the deadlines in clauses A, B, C, D, E and F in this Section 11.2 by a period of [* * *] by providing prior notice to Catalent that a deadline will be missed and by paying Catalent an extension payment of $[* * *] on or before the date of the applicable deadline prior to its extension.  Client shall have the right to exercise this remedy up to [* * *] times during the life of the definitive agreement.

 

11.3        Voluntary Termination by Client .  Client may terminate this Agreement without cause at any time during the Term on [* * *] prior written notice to Catalent.  Upon receipt by Catalent of any such termination notice, Catalent will promptly cease or wind down, as appropriate, work under the Development Program unless otherwise requested by Client in such notice.

 

11.4        Mutual Termination Rights .  Either Party may terminate this Agreement immediately without further action if (A) the other Party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver, administrative receiver, trustee or administrator, or makes an assignment for the benefit of creditors, or suffers or permits the entry of any order adjudicating it to be bankrupt or insolvent and such order is not discharged within thirty (30) days, or takes any equivalent or similar action in consequence of debt in any jurisdiction or (B) the other Party materially breaches any of the provisions of this Agreement and such breach is not cured within [* * *] days after the giving of written notice requiring the breach to be remedied; provided , that in the case of a failure of Client to make payments in accordance with the terms of this Agreement, Catalent may terminate this Agreement if such payment breach is not cured within [* * *] days of receipt of written notice of non-payment from Catalent.

 

11.5        Effect of Termination .  Expiration or termination of this Agreement shall be without prejudice to any rights or obligations that accrued to the benefit of either Party prior to such expiration or termination.  In the event this Agreement is terminated, Client shall pay Catalent (A) for all services performed pursuant to the Development Program up to the effective date of termination, (B) for all costs and expenses incurred, and all noncancellable commitments made, by Catalent or its Affiliates in the performance of the Development Program, and (C) any applicable cancellation fees as set forth in the Development Program, is not in connection with a completed phase of the Development Program and was not effected prior to the commencement of the next phase of the Development Program, an amount equal to the value of the services that would have been performed by Catalent in order to complete the then-current phase of the Development Program.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

11.6        Survival .  The rights and obligations of the Parties shall continue under Articles 5 (Confidentiality and Non-Use), 6 (Intellectual Property), 8 (Indemnification), 9 (Limitations of Liability), 12 (Notice), 13 (Miscellaneous) and 10 (Insurance); and under Sections 2.6 (Commercial Supply), 4.2 (Payment Terms), 4.3 (Taxes), 4.4 (Client and Third Party Expenses), 4.5 (Records; Audit Rights), 7.3 (Limitations on Warranties), 11.5 (Effect of Termination) and 11.6 (Survival), in each case in accordance with their respective terms if applicable, notwithstanding expiration or termination of this Agreement.

 

ARTICLE 12
NOTICE

 

All notices and other communications hereunder shall be in writing and shall be deemed given: (A) when delivered personally or by hand; (B) when delivered by facsimile transmission (receipt verified); (C) when received or refused, if sent by registered or certified mail (return receipt requested), postage prepaid; (D) when sent by electronic mail or email transmission (receipt verified) or (E) when delivered, if sent by express courier service, in each case, 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):

 

To Client:

Biohaven Pharmaceutical Holding Company Ltd.

 

234 Church Street, Suite 301

 

New Haven, CT 06510 USA

 

Attn: Robert M. Berman, M.D. Chief Medical Officer

 

email: [* * *]

 

 

With a copy to:

Locke Lord LLP

 

2800 Financial Plaza

 

Providence, RI 02903 USA

 

Attn: Douglas Gray, Esq.

 

Facsimile: (888) 325-9018

 

email: [* * *]

 

 

To Catalent:

Catalent U.K. Swindon U.K. Zydis Ltd.

 

Frankland Road, Blagrove

 

Swindon, Wiltshire, UK SN5 8YG

 

Attn: General Manager

 

Facsimile: 44 1793 548340

 

 

With a copy to:

Catalent Pharma Solutions, LLC

 

14 Schoolhouse Road

 

Somerset, New Jersey 08873

 

USA

 

Attn: General Counsel (Legal Department)

 

Facsimile: +1 (732) 537-6491

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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ARTICLE 13
MISCELLANEOUS

 

13.1        Entire Agreement; Amendments .  This Agreement, including any Change Orders or other amendments to any of the foregoing constitutes the entire understanding between the Parties, and supersedes any contracts, agreements or understandings (oral or written) of the Parties, with respect to the subject matter hereof, including, for avoidance of doubt, the Evaluation Agreement; provided, however, Attachment B to the Evaluation Agreement shall be of no further force and effect and in the event of a conflict between any of the provisions of this Agreement and Attachment B to the Evaluation Agreement, the provisions of this Agreement shall govern.  For the avoidance of doubt, this Agreement does not supersede any existing generally applicable confidentiality agreement between the Parties as it relates to time periods prior to the date hereof or to business dealings not covered by this Agreement.  No term of this Agreement may be amended except upon written agreement of both Parties, unless otherwise expressly provided in this Agreement.

 

13.2        Captions; Certain Conventions .  The captions in this Agreement are for convenience only and are not to be interpreted or construed as a substantive part of this Agreement.  Unless otherwise expressly provided herein or the context of this Agreement otherwise requires, (A) words of any gender include each other gender, (B) words such as “herein”, “hereof’, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (C) words using the singular shall include the plural, and vice versa, (D) the words “include(s)” and “including” shall be deemed to be followed by the phrase “but not limited to”, “without limitation” or words of similar import, (E) the word “or” shall be deemed to include the word “and” (e.g., “and/or”), (F) references to “Article,” “Section,” “subsection,” “clause” or other subdivision, or to an Attachment or other appendix, without reference to a document are to the specified provision or Attachment of this Agreement and (G) all monetary amounts expressed herein shall be in U.S. dollars unless otherwise stated.  This Agreement shall be construed as if it were drafted jointly by the Parties.

 

13.3        Further Assurances .  The Parties agree to execute, acknowledge and deliver such further instruments and to take all such other incidental acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.

 

13.4        No Waiver .  Failure by either Party to insist upon strict compliance with any term of this Agreement in any one or more instances will not be deemed to be a waiver of its rights to insist upon such strict compliance with respect to any subsequent failure.

 

13.5        Severability .  If any term of this Agreement is declared invalid or unenforceable by a court or other body of competent jurisdiction, the remaining terms of this Agreement will continue in full force and effect.

 

13.6        Independent Contractors .  The relationship of the Parties is that of independent contractors, and neither Party will incur any debts or make any commitments for the other Party except to the extent expressly provided in this Agreement.  Nothing in this Agreement is intended to create or will be construed as creating between the Parties the relationship of

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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joint ventures, co-partners, employer/employee or principal and agent.  Neither Party shall have any responsibility for the hiring, termination or compensation of the other Party’s employees or contractors or for any employee benefits of any such employee or contractor.

 

13.7        Successors and Assigns .  This Agreement will be binding upon and inure to the benefit of the Parties, their successors and permitted assigns.  Neither Party may assign this Agreement, in whole or in part, without the prior written consent of the other Party, except that either Party may, without the other Party’s consent (but subject to prior written notice), assign this Agreement in its entirety to an Affiliate or to a successor to substantially all of the business or assets of the assigning company or the assigning company’s business unit responsible for performance under this Agreement.

 

13.8        No Third Party Beneficiaries .  This Agreement shall not confer any rights or remedies upon any person or entity other than the Parties named herein and their respective successors and permitted assigns.

 

13.9        Governing Law .  This Agreement shall be governed by and construed under the laws of the State of Delaware, USA, excluding its conflicts of law provisions.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

13.10      Alternative Dispute Resolution .  Any dispute arises between the Parties in connection with this Agreement shall first be presented to the respective senior executives of the Parties for their consideration and resolution.  If such Parties’ executives cannot resolve such dispute within ninety (90) days, then such dispute shall be submitted to arbitration by the International Institute for Conflict Prevention and Resolution, 575 Lexington Avenue, 21st Floor, New York, NY 10022 (“ CPR ”) by one arbitrator mutually agreed upon by the Parties.  If no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the CPR, then the CPR will choose one arbitrator having reasonable experience in commercial transactions of the type provided for in this Agreement.  The arbitration shall take place in the English language in New York City, New York, in accordance with the CPR administered arbitration rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof.  The arbitration shall commence within sixty (60) days of the date on which a written demand for arbitration is filed.  The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability.  The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages.  The arbitrator shall award to the prevailing party, if any, the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration.

 

13.11      Publicity .  Neither Party will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other Party’s express prior written consent, except as required under Applicable Laws or by any governmental agency or by the rules of any stock exchange on which the securities of the disclosing Party are listed, in which case the Party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure.  Without limiting the generality of the foregoing, Client shall not use Catalent’s name in a manner that could be construed as an endorsement of Client’s Drug, including any scientific conclusion as to safety or efficacy.

 

13.12      Right to Dispose and Settle .  If Catalent requests in writing from Client direction with respect to disposal of any inventories of Supplies, Client-supplied Materials, Drug, equipment, samples or other items belonging to Client and is unable to obtain a response from Client within a reasonable time period after making reasonable efforts to do so, Catalent shall be entitled in its sole discretion to (A) dispose of all such items and (B) set-off any and all amounts due to Catalent or any of its Affiliates from Client against any credits Client may hold with Catalent or any of its Affiliates.

 

13.13      Force Majeure .  Except as to payments required under this Agreement, neither party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party’s performance hereunder if such default or delay is caused by events beyond such party’s reasonable control, including acts of God, law or regulation or other action or failure to act of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or weather, labor disturbances, epidemic or failure of suppliers, vendors, public utilities or common carriers; provided, that the party seeking relief under this Section 13.13 shall immediately notify the other party of such cause(s) beyond such party’s reasonable control.  The party that may invoke this Section 13.13 shall use commercially reasonable efforts to reinstate its ongoing obligations to the other party as soon as practicable.  If the cause(s) shall continue unabated for 180 days, then both parties shall meet to discuss and negotiate in good faith what modifications to this Agreement should result from such cause(s).

 

13.14      Counterparts .  This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.  Any photocopy, facsimile or electronic reproduction of the executed Agreement shall constitute an original.

 

[Signature page follows]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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IN WITNESS WHEREOF , the Parties have caused their respective duly authorized representatives to execute this Agreement effective as of the Effective Date.

 

 

CATALENT U.K. SWINDON ZYDIS LIMITED

 

 

 

 

 

 

 

 

 

By:

/s/ B. Littlejohns

 

 

Name:

B. Littlejohns

 

 

Title:

President DDS

 

 

 

 

 

 

 

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD

 

 

 

 

 

 

 

 

 

By:

/s/ Robert Berman

 

 

Name:

Robert Berman, MD

 

 

Title:

Chief Medical Officer

 

Signature Page to Zydis® Development and License Agreement

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

ATTACHMENT A

 

DEVELOPMENT PROGRAM

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Catalent Pharma Solutions, LLC and Biohaven Pharmaceutical Holding
Company Limited Zydis® Terms and Conditions for Riluzole

 

A.                   Expiration .  This Quotation is valid for 30 days from the date hereof, and becomes binding if signed and delivered by both parties during that period.

 

B.                   Audits .  Client may conduct one quality assurance facility audit every [* * *] months at no cost.  Additional audits will be invoiced separately at the current rate for such services.

 

C.                   Regulatory Inspections .  Catalent will promptly notify Client of any regulatory inspections directly relating to the services performed under this Quotation (the “Project”).  Client shall reimburse Catalent for reasonable and documented costs associated with such regulatory inspections.

 

D.                   Changes .  Catalent may revise the prices provided in this Quotation (i) if Client’s requirements or any Client-provided information is materially inaccurate or incomplete; (ii) if Client revises Catalent’s responsibilities or the Project specifications, instructions, procedures, assumptions, processes, test protocols, test methods or analytical requirements; or (iii) for such other reasons set forth in this Quotation.  Any revision to this Quotation shall be set forth in a Quotation Amendment Request (“QAR”) signed by both Parties in accordance with Section V.

 

E.                    Payments .  Catalent will invoice Client as set forth in this Quotation.  Catalent charges a late payment fee of [* * *]% per month for payments not received by the date specified in this Quotation (or if no date is specified, within 30 days of invoice date).  Failure to bill for interest due shall not be a waiver of Catalent’s right to charge interest.

 

F.                     Taxes .  All sales, use, gross receipts, compensating, value-added or other taxes, duties, licenses or fees (excluding Catalent’s net income and franchise taxes) assessed by any tax jurisdiction arising from the Project are the responsibility of Client, whether paid by Catalent or Client.

 

G.                   Hazardous Materials .  Client warrants to Catalent that no specific safe handling instructions are applicable to any Client-supplied materials, except as disclosed to Catalent in writing by the Client in sufficient time for review and training by Catalent prior to delivery.  Where appropriate or required by law, Client will provide a Material Safety Data Sheet for all Client-supplied materials and finished product.

 

H.                  Delivery .  (i) Catalent shall deliver all products and other materials EXW (Incoterms 2010) Catalent’s facilities.  To the extent not already held by Client, title shall pass to Client upon such tender of delivery.  If Catalent provides storage services, title and risk of loss shall pass to client upon transfer to storage.

 

(ii) In the event Catalent arranges shipping or performs similar loading and/or logistics services for Client at Client’s request, such services are performed by

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Catalent at Client’s expense and on Client’s behalf as a convenience to Client only and does not alter subsection (i) above.

 

I.                       Limitations of Liability .  CATALENT’S TOTAL LIABILITY UNDER THIS QUOTATION SHALL IN NO EVENT EXCEED THE TOTAL FEES PAID UNDER THIS QUOTATION OR QAR, RESPECTIVELY (BUT EXCLUDING FEES AND COSTS FOR PROCURING COMPARATOR DRUG).  CATALENT SHALL HAVE NO LIABILITY UNDER THIS QUOTATION OR QAR FOR ANY AND ALL CLAIMS FOR LOST, DAMAGED OR DESTROYED API OR CLIENT-SUPPLIED MATERIALS, WHETHER OR NOT INCORPORATED INTO FINISHED PRODUCT. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF PERFORMANCE UNDER THIS QUOTATION OR QAR, INCLUDING WITHOUT LIMITATION LOSS OF REVENUES, PROFITS OR DATA, WHETHER IN CONTRACT OR IN TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTHING IN THIS QUOTATION SHALL LIMIT THE LIABILITY OF CATALENT FOR DEATH OR PERSONAL INJURY ARISING FROM THE NEGLIGENCE OF CATALENT, THE LIABILITY OF CATALENT FOR FRAUDULENT MISREPRESENTATION OR ANY OTHER MATTER FOR WHICH IT WOULD BE ILLEGAL FOR CATALENT TO EXCLUDE OR ATTEMPT TO EXCLUDE LIABILITY.

 

J.                       Confidentiality .  All information disclosed by a party in connection with this Quotation shall be confidential information, unless such information is (i) already known to the receiving party, on a non-confidential basis, as evidenced by written records; (ii) independently developed or discovered by the receiving party without the use of the disclosing party’s confidential information, as evidenced by written records; (iii) in the public domain, other than through the fault of the receiving party; (iv) disclosed to the receiving party by a third party not in breach of a duty of confidentiality owed to the disclosing party.  Neither party shall, without the other party’s prior written consent, use the confidential information of the other party or disclose such information except (a) to provide to employees of the receiving party or its affiliated entities who require such information to perform such party’s obligations under this Quotation, or (b) as required to be disclosed by law, or court or administrative order, provided that the receiving party first gives prompt written notice thereof to the disclosing party.  This undertaking shall survive for [* * *] years following the date of this Quotation.  The data and results of the Project (the “Project Results”) shall be the property of Client and shall be deemed confidential information of Client.  Catalent may request permission to use any Project Results which permission will not be unreasonably withheld.

 

K.                   Intellectual Property .  For purposes hereof, “Intellectual Property” means all intellectual property (whether or not patented), including without limitation, patents, patent applications, know-how, trade secrets, copyrights, trademarks, designs, concepts, technical information, manuals, standard operating procedures, instructions, specifications, inventions, processes, data, improvements and developments; and “Inventions” means Intellectual Property characterized, conceived, developed, derived, discovered, generated, identified, first reduced to

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

practice or otherwise made, as the case may be, by employees, servants or agents of Client and/or Catalent in connection with this Project.  All rights to and interests in Intellectual Property that is owned by, licensed to or otherwise controlled by a party or its affiliates (A) as of the date of this Quotation or (B) except as provided below in this Section K, at any time following the date of this Quotation, shall remain vested solely in such party and the other party will obtain no right of any kind or license therein by reason of this Quotation, except that Catalent shall have the right to use such Intellectual Property of Client to the extent required in connection with the performance of its obligations hereunder.  As between Client and Catalent, all Inventions shall be (A) the property of Client if the Invention specifically relates to Client’s compounds [* * *] and formulations thereof, (B) the property of Client if the Invention relates to the application or use of [* * *] (for example, [* * *]), and (c) the property of Catalent in all other circumstances, including Inventions relating specifically to the Zydis Technology, except to the extent that such Invention is specifically related to [* * *].  The party owning such Invention shall have the right, in its sole discretion, to determine the patent strategy for such Invention, which may include not obtaining patent protection in a particular country or any country.  The parties shall cooperate to achieve the allocation of rights to Inventions anticipated herein and each party shall be solely responsible for costs associated with the protection of its Intellectual Property.  Catalent and its Affiliates have developed and licensed proprietary technology for the manufacture of the patented Zydis® Fast Dissolving Dosage Form (“Zydis”) for the administration of pharmaceutical drugs (collectively, along with the Zydis Patents and all know-how, data, results and information relating to Zydis and the Zydis Patents (whether produced prior to or after the Effective Date), the “Zydis Technology”.  “Zydis Patents” mean the valid and issued patents and pending patent applications (until such time as such applications or any of them are denied, abandoned or issued into patents), and any foreign cognates, divisional, continuation, continuation-in-part, reissue, re-examination, extension, patent of addition, provisional applications, confirmation patent, registration patent, pipeline protection or supplementary protection certificate related thereto, that include claims relating to fast dissolving drug delivery systems, that Catalent or its Affiliates own or under which Catalent or its Affiliates are licensed with the right to sublicense.  [* * *].  The parties acknowledge that Catalent shall have no right to use [* * *], that Client is not granted any rights to the Zydis Technology, and that any use of [* * *] by Client may require a license from Catalent to make, use, sell or produce any such [* * *].

 

L.                    Warranties .  Catalent will perform the Project in accordance with the written specifications and Project instructions expressly set forth or referenced in this Quotation and United States current Good Manufacturing Practices.  THE WARRANTIES SET FORTH IN THIS ARTICLE ARE THE SOLE AND EXCLUSIVE WARRANTIES MADE BY CATALENT TO CLIENT, AND CATALENT MAKES NO OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

M.                Client Obligations .  Unless otherwise agreed to by the parties in writing, Client is solely responsible at its cost and expense to (i) provide complete and accurate scientific data regarding the Project; (ii) deliver to Catalent all Client-supplied materials; (iii) prepare all submissions to regulatory authorities and obtain Catalent’s prior written consent (which will not be unreasonably withheld) before identifying Catalent in such regulatory submissions; (iii) if applicable, review and approve all in-process and finished product test results to ensure conformity of such results with the product specifications, regardless of which party is responsible for finished product release; and (iv) perform such other obligations of Client set forth in this Quotation.

 

N.                   Regulatory Compliance .  Catalent shall obtain and maintain all permits and licenses with respect to general facility operations in the jurisdiction in which Catalent performs the services.  Client shall be responsible at its cost to obtain and maintain all other regulatory approvals, authorizations, certifications and permits relating to Client-supplied materials and Client product, including without limitation those relating to the import, export, use, distribution and sale of Client-supplied materials and Client product.  Client shall reimburse Catalent for any payments Catalent is required to make to any regulatory authority resulting directly from Catalent’s formulation, development, manufacturing, processing, filling, packaging, storing or testing of Client’s product or Client-supplied materials (including without limitation any payments or fees Catalent is required to make pursuant to the Generic Drug User Fee Act of 2012).  Catalent shall not be obligated to perform any services which would involve any countries that are targeted by the comprehensive sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom or United States.

 

O.                   Indemnification .  Client will indemnify, defend and hold harmless Catalent, its affiliates and their respective directors, officers, employees and agents against any third-party claim arising directly or indirectly from (i) the manufacture, promotion, marketing, distribution or sale of, or use of or exposure to, the product, API and Client-supplied materials that are the subject of the Project; (ii) the negligence or willful misconduct of Client; (iii) the breach of this Quotation by Client; or (iv) the use of any intellectual property, materials or other information provided by Client to Catalent; in each case, including but not limited to costs associated with responding to subpoenas and giving testimony relating to disputes between Client and third parties.  Catalent will indemnify, defend and hold harmless Client, its affiliates and their respective directors, officers, employees and agents from any third-party claim arising directly or indirectly from the negligence or willful misconduct of Catalent or the breach of this Quotation by Catalent.

 

P.                     Right to Dispose and Settle .  If Catalent requests in writing from Client direction with respect to disposal of products, materials, equipment, samples or other items belonging to Client and is unable to obtain a response from Client within a reasonable time period (but in no event less than [* * *] days) after making reasonable efforts to do so, Catalent may in its sole discretion (i) dispose of all such items and (ii) set-off any and all amounts due to Catalent or any of its affiliates from Client against any credits Client may hold with Catalent or any of its affiliates.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Q.                   Force Majeure .  Neither party will be liable for any failure to perform or for delay in performance resulting from any cause beyond its reasonable control, including without limitation acts of God, fires, floods or weather, strikes or lockouts, factory shutdowns, embargoes, wars, hostilities or riots, or shortages in transportation.  If the cause continues unabated for 90 days, then both parties shall meet to discuss and negotiate in good faith what modifications to this Quotation should result from such cause.

 

R.                   Use and Disposal .  Client represents and warrants to Catalent that Client will hold, use and/or dispose of products and other materials provided by Catalent in accordance with all applicable laws, rules and regulations.  Client grants Catalent full authority to use any Client-supplied materials for purposes of the Project.

 

S.                     Record Retention .  Unless the parties otherwise agree in writing, Catalent will retain batch, laboratory and other technical records for the minimum period required by applicable law.

 

T.                    Independent Contractor .  The relationship of the parties is that of independent contractors and not of joint venturers, co-partners, employer/employee or principal/agent.

 

U.                   Publicity .  Neither party will make any press release or other public disclosure regarding this Quotation or the transactions contemplated hereby without the other party’s express prior written consent, except as required by applicable law, by any governmental agency or by the rules of any stock exchange on which the securities of the disclosing party are listed, in which case the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or public disclosure.

 

V.                   Amendment & Precedence .  These Terms and Conditions constitute a part of the Quotation to which they are attached (collectively, “this Quotation”); provided, that these Terms and Conditions supersede any conflicting terms and conditions set forth in the Quotation to which they are attached or any other document, including Client purchase order.  This Quotation constitutes the entire understanding between the parties, and supersedes any contracts, agreements or understandings (oral or written) of the parties, with respect to the Project.  No term of this Quotation may be amended except upon written agreement signed by both parties.

 

W.                Dispute Resolution .  If a dispute arises between the parties in connection with this Quotation, the respective presidents or Senior Executives of Catalent and Client shall first attempt to resolve the dispute.  If such parties cannot resolve the dispute, such dispute shall be resolved by the International Institute for Conflict Prevention and Resolution (“CPR”), 575 Lexington Avenue, 21st Floor, New York, NY 10022 in accordance with CPR’s then existing commercial arbitration rules.  The arbitration proceedings shall be conducted in New York, New York and the exclusive language of the proceedings shall be English.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

X.                   Survival .  Subject to execution, the rights and obligations of Client and Catalent in Articles E, F, I, J, K, O, S, U, W, X and Y of these Terms and Conditions shall survive termination or expiration of this Quotation.

 

Y.                   Governing Law .  This Quotation shall be governed by and construed under the laws of the State of New Jersey, USA, excluding its conflict of law provisions.  The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Quotation.

 

Z.                    Clinical and Regulatory .  Within [* * *] months after the execution of this Quotation, but in any event prior to the delivery by Catalent of any supplies required to be manufactured in accordance with cGMP, including supplies to be used in human clinical trials, the parties shall negotiate in good faith and enter into a Quality Agreement.  In the event of a conflict between any of the provisions of this Quotation and the Quality Agreement with respect to quality-related activities, including compliance with cGMP, the provisions of the Quality Agreement shall govern.  In the event of a conflict between any of the provisions of this Quotation and the Quality Agreement with respect to any commercial matters, including allocation of risk, liability and financial responsibility, the provisions of this Quotation shall govern.  Client shall be responsible for conducting any activities relating to the planning and execution of pre-clinical and clinical studies in animals or humans and for preparing and filing regulatory submissions with respect thereto, including any costs associated therewith.  Client shall obtain and maintain all necessary regulatory approvals and to comply with all applicable laws and regulations in this respect, including filing all periodic reports, safety reports, and all other notifications as required by the regulatory authorities.  Client shall be responsible for retaining and maintaining all study records, financial information, and reserve samples, as required under applicable laws generated or used in the execution of the pre-clinical and clinical studies in animals or humans performed in connection with this Quotation.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

 

Why Catalent?

 

Unrivaled experience, deepest expertise, and a track record of market success on a global scale.

 

We serve 49 of the top 50 pharmaceutical and 36 of the top 50 biotech companies.

 

We support thousands of innovative prescription, generics, and consumer health companies.

 

We operate 20+ global sites across 100+ markets.

 

We create expert solutions from over 1,000 scientists, including key opinion leaders in drug development and delivery.

 

We support 40% of recent new U.S. drug approvals.

 

We manufacture or package 100 billion units annually.

 

We are the industry leader in drug delivery technology.

 

We use a multi-faceted approach to solve bioavailability and patient adherence challenges.

 

We provide end-to-end biologics technologies, from gene expression to fill/finish.

 

We offer fully-integrated medication supply chain solutions.

 

We have a proven track record in regulatory compliance in all key jurisdictions.

 

We are fully dedicated to high standards of quality, cGMP leadership, and LEAN operational excellence.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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ATTACHMENT B

 

FORM OF QUALITY AGREEMENT

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 



 

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Quality Agreement

 

Between

 

CUSTOMER

 

And

 

Catalent Pharma Solutions, LLC
14 Schoolhouse Road
Somerset, NJ 08873

 

With Offices At

 

 

 

 

 

Site address

 

 

Site address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Product
(add product name or refer to product list in appendix)
Effective dates from month/year to month year
Next Review add month/year

 

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This Quality Agreement has been reviewed, approved, and accepted by:

 

 

 

 

 

 

 

 

Name

 

Date

 

Name

 

Date

Company Name

 

 

 

Company Name

 

 

Company Address

 

 

 

Company Address

 

 

Email Address

 

 

 

Email Address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional names of signatories as needed

 

Date

 

Additional names of signatories as needed

 

Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional names of signatories as needed

 

Date

 

Additional names of signatories as needed

 

Date

 

 

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Quality Agreement

 

This is a Quality Agreement for the PRODUCT: add product name or list products in Appendix Il (this “Quality Agreement”).  This Quality Agreement defines the duties of Catalent Pharma Solutions, LLC (CATALENT) and (CUSTOMER) for the pharmaceutical manufacturing and packaging of PRODUCT . This Quality Agreement applies to clinical/submission batches prior to product commercialization.  A separate Quality Agreement will be executed for commercialization.

 

This Quality Agreement takes the form of a detailed checklist of all the activities associated with pharmaceutical manufacturing, release testing, and stability testing of Product.  Responsibility for each activity is assigned to either CATALENT or CUSTOMER in the appropriate box in the Responsibility Delegation Checklist, which follows.  Activities and/or requirements assigned to both Catalent and the Customer means that both parties will be responsible for carrying out the referenced activity or meeting the listed requirement.  For example, the following requirement, “Is not debarred and does not employ or use the services of any individual who is debarred” would apply to both the customer and Catalent and both responsibility boxes would be checked off.  If both Customer and Catalent activity/responsibility boxes are checked off but the referenced activity/responsibility does not equally apply to both the Customer and Catalent, the relevant activities/responsibilities applying to the customer and to Catalent shall be denoted in the respective box.

 

In order to provide better quality assurance, CATALENT will perform the activities defined herein in accordance with Standard Operating Procedures (defined below) to the extent that a Standard Operating Procedure is applicable to such activity.  In the event of a conflict between the terms of this Quality Agreement and a Standard Operating Procedure, the Quality Agreement shall control.  This Quality Agreement is subject to the terms of a Services Agreement (defined below).  In the event of a conflict between the provisions of this Quality Agreement and the Services Agreement with respect to quality-related activities outlined in this Quality Agreement, including responsibility for compliance with cGMP, this Quality Agreement shall control.  In the event of a conflict between the Services Agreement and this Quality Agreement relating to allocation of risk, financial responsibility and liability, the provisions of the Services Agreement shall control.

 

For purposes of this Quality Agreement, the following definitions shall apply:

 

A.                         “Aberrant/Atypical Data” means any data or result that is still within specification, but is unexpected, questionable, irregular, deviant or abnormal.

 

B.                         “Active Pharmaceutical ingredient” (API) shall mean the active pharmaceutical ingredient used in the manufacture of the Product as identified in the Specifications.

 

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C.                         “Applicable Laws” means, with respect to CUSTOMER, all laws, ordinances, rules and regulations, as amended from time to time, of each jurisdiction in which API or Product is produced, marketed, distributed, used or sold; and with respect to Catalent, all laws, ordinances, rules and regulations, as amended from time to time, of the jurisdiction in which Catalent performs the services.

 

D.                         “Certificate of Analysis” (COA) is a listing of all results for tests conducted on samples of a lot of product compared to the specifications defined by the CUSTOMER and listed in the regulatory applications and application compendia.

 

E.                          “Certificate of Compliance/Conformance” (COC) is a statement that the lot of product was manufactured, packaged and tested in accordance with cGMP, identifies the master batch record documents and lists any incident reports and investigations identified associated with the lot of Product.

 

F.                           “Controlled Drug Substances” (CDS) is any drug, or therapeutic agent, commonly understood to include narcotics with a potential for abuse or addiction, which is held under strict governmental control, as defined by the United States Controlled Substances Act, 21 U.S.C. 802 et seq.

 

G.                         “Code of Federal Regulations (USA)” (CFR) is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government.  It is divided into 50 titles that represent broad areas subject to Federal regulation.  Each volume of the CFR is updated once each calendar year and is issued on a quarterly basis.

 

H.                        “Current Good Manufacturing Practice” (cGMP) means current Good Manufacturing Practices promulgated by the Regulatory Authorities in the jurisdictions included in Applicable Laws (as applicable to CUSTOMER and Catalent, respectively).  In the European Union, this includes Directive 2003/94/EC (as supplemented by Volume 4 of EudraLex published by the European Commission), as amended, if and as implemented in the relevant constituent country, and in the United States, this includes 21 C.F.R. Parts 210 and 211, as amended.

 

I.                             “Debarred” shall mean the penalty imposed by the US FDA pursuant to 21 USC 335a (a) or 335a (b) on persons or companies that have engaged in criminal conduct with respect to the development or approval of new or generic drugs or engaged in certain other types of criminal conduct.  A debarred person or company is precluded from submitting or assisting in the submission of an NDA or ANDA and may not provide services in any capacity to a party that has an approved or pending drug application.

 

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J.                             “For Cause Audit” shall mean any of a series of inspections conducted for various compelling reasons (questionable data in a final report, tips from informers, etc.).

 

K.                         “Drug Enforcement Administration” (DEA) is the US federal agency responsible for enforcing laws and regulations governing narcotics and controlled substances.

 

L.                          “Excipients” shall mean the inactive ingredients found in a drug product.  These include dyes, flavors, binders, emollients, fillers, lubricants, and preservatives.

 

M.                      “Facilities” means the following Catalent facilities located at:

 

Facility

 

Service

List each facility (name, address)

 

List services the facility is providing

 

 

 

List each facility (name, address)

 

List services the facility is providing

 

 

 

List each facility (name, address)

 

List services the facility is providing

 

N.                         “Marketing Authorization Application” shall mean any application for marketing authorization, which has not yet been approved by the FDA or other Regulatory Authority, including without limitation, FDA New Drug Application (NDA), FDA Abbreviated New Drug Application (ANDA) and similar marketing applications promulgated by Regulatory Authorities.

 

O.                         “Marketing Authorizations” shall mean any approved application for marketing authorization, including without limitation, FDA New Drug Application (NDA), FDA Abbreviated New Drug Application (ANDA) and similar marketing authorizations promulgated by Regulatory Authorities.

 

P.                           “Out of Specification” (OOS) shall mean a result that falls outside of the test’s acceptance criteria (e.g. criteria established in filed applications, approved marketing submissions, official compendia, or by the manufacturer or the customer).

 

Q.                         “Out of Tolerance” shall mean a calibration result that is outside of the instrument’s specified performance limits.

 

R.                         “Out of Trend” shall mean a result that is not in trend with previously acquired results.  This will typically apply to either stability projects when comparisons

 

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are made with previous intervals or to release testing when a substantial testing history has been generated.

 

S.                           “Packaging Materials” shall mean collectively all packaging components and ingredients (including labels, product inserts, and other labeling for Products) required to package the Products in accordance with the specifications.

 

T.                          “Process” or “Processing” shall mean the compounding, filling, producing and/or packaging of the Raw Materials into Product in accordance with the Specifications.  Such activities include the requisite in-process analytical testing and inspections.

 

U.                         “Product” shall mean such drug product being manufactured and/or packaged by Catalent pursuant to a Services Agreement.  The term “Product” shall comprise both “Bulk Product” and “Finished Product” where Bulk Product means such Product which has completed all parts of the Process up to but not including final packaging and where Finished Product shall mean Product which has undergone all stages of the Process including packaging in its final container.

 

V.                         “Raw Materials” shall mean all raw materials, supplies, components and packaging materials, not including the API, necessary to process, bulk package and ship the Product in accordance with specifications.

 

W.                      “Regulatory Authority” shall mean the FDA and any other regulatory authority within a Territory involved in regulating any aspect of the development, manufacture, market approval, sale, distribution, packaging or use of the Product.

 

X.                         “Reprocessing” shall mean the duplication of a step or steps currently in the manufacturing formula in order to bring the batch into conformance with specifications, and which will not alter the safety, identity, strength, quality or purity of the drug product beyond the established requirements.

 

Y.                         “Rework” shall mean any additional steps that are not part of the manufacturing formula, taken to process a batch to bring the batch into conformance with the specifications and which will not alter the safety, identity, strength, quality or purity of the drug product beyond the established requirements.

 

Z.                          “Services Agreement” shall mean the agreement entered into between Catalent and Customer which sets forth the terms and conditions agreed between the parties governing the provision of services by Catalent on behalf of Customer, including but not limited to supply agreements, standard or negotiated terms and conditions, master clinical or commercial services

 

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agreements, development and manufacturing agreements (collectively referred to herein as “Services Agreement”).

 

AA.                “Specifications” shall mean the written specifications for the Product set forth in the Services Agreement and attached hereto as an Exhibit.

 

BB.                “Standard Operating Procedures” (SOP) shall mean the standard operating procedures in effect at Catalent which have been approved by Catalent Quality Assurance department and which are applicable to the Processing.  The Standard Operating Procedures shall be in compliance with cGMP.

 

CC.                “Territories” shall mean the United States of America [and the European Union] and any other country, which the parties agree in writing to add to this Quality Agreement and the Services Agreement from time to time.

 

DD.                “US Food and Drug Administration” (FDA) is an agency of the United States Department of Health and Human Services responsible for protecting public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, foods, cosmetics, and products that emit radiation.

 

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RESPONSIBILITY DELEGATION CHECKLIST

 

RESPONSIBILITIES

 

CUSTOMER

 

CATALENT 
Manufacturing 
Site

 

CATALENT 
Packaging Site

 

CATALENT 
Testing Site

1.

 

Regulatory Authorizations & GMP Compliance

 

 

 

 

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

APPENDIX I

 

KEY CONTACT INFORMATION

 

CATALENT

 

Contact Person

 

Address

 

Numbers

 

Email Address

Name:

 

 

 

P:

 

 

Title: Director, QA

 

 

 

F:

 

 

Name:

 

 

 

P:

 

 

Title: Testing Labs

 

 

 

F:

 

 

Name:

 

 

 

P:

 

 

Title: Project Manager

 

 

 

F:

 

 

Name:

 

 

 

P:

 

 

Title: Technical Services

 

 

 

F:

 

 

 

CUSTOMER

 

Contact Person

 

Address

 

Numbers

 

Email Address

Name:

 

 

 

P:

 

 

Title: Director, QA

 

 

 

F:

 

 

Name:

 

 

 

P:

 

 

Title:

 

 

 

F:

 

 

 

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APPENDIX II

 

Products Covered By Quality Agreement

 

This Quality Agreement covers the following products:

 

Product Name

 

 

API Source

 

Product Code/Identifier

 

 

 

 

 

 

 

 

 

 

QUALITY AGREEMENT REVISION HISTORY

 

Version
Number

 

Description of Document Revision

 

Date

0.0

 

New Version

 

Jun 2013

 

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ATTACHMENT C

 

COMMERCIAL SUPPLY TERMS

 

THIS ATTACHMENT C INCLUDES CERTAIN TERMS TO BE INCLUDED IN A SUPPLY AGREEMENT BETWEEN CLIENT AND CATALENT. THE TERMS INCLUDED ARE NOT INTENDED TO BE EXHAUSTIVE. CATALENT OR ITS COUNSEL WILL PREPARE THE INITIAL DRAFT OF THE SUPPLY AGREEMENT. ANY AGREEMENT RELATING TO THE SUBJECT MATTER HEREOF SHALL BE SUBJECT AMONG OTHER THINGS TO THE NEGOTIATION AND EXECUTION OF A DEFINITIVE SUPPLY AGREEMENT BETWEEN CLIENT AND CATALENT.

 

·                   If Catalent refuses or are unable to manufacture any of the Products for whatever reason, other than force majeure, Client may seek alternate manufacturers, subject to Client obtaining the necessary license for the additional rights to make or have made the Product, which shall be negotiated in good faith by the Parties.

 

·                   Catalent will, at Client’s request and expense, fully transfer, qualify, and validate all manufacturing and testing of each Product to a second Catalent facility, or at Catalent’s discretion, a third party facility acceptable to Client, within [* * *] months of the first regulatory approval in the Territory.

 

·                   In addition, Catalent shall put a description of its Zydis Technology reasonably sufficient for a third party to manufacture the Products in a technology escrow to be released to a third party only in the event that Catalent is unable or unwilling to manufacture the Products for Client at a Catalent facility or a qualified third-party facility.

 

·                   Product per tablet cost to Client from Catalent shall be between $[* * *] and $[* * *] including COG, costs of manufacturing and primary unit dose packaging, but excluding the cost of Drug.

 

·                   For any Products sold or supplied by Catalent, Catalent will represent and warrant to Client that the Products shall be manufactured in accordance with Applicable Laws and cGMP, shall comply with the applicable specifications, and shall not be adulterated, misbranded or mislabeled within the meaning of Applicable Laws and cGMP; provided, that Catalent shall not be liable for defects attributable to Client-supplied materials (including artwork, advertising and labeling), provided further, that Catalent shall not utilize any debarred person in the supply, manufacture, packaging or labeling of any Product for Client.

 

·                   Catalent agrees to properly pack, label and deliver Products Ex Works (Incoterms 2010) in accordance with Applicable Laws and Catalent’s standard procedures.

 

·                   Client shall be granted access upon at least [* * *] business days’ prior notice, at reasonable times during regular business hours, to inspect the portion of

 

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Catalent’s facility where Catalent processes the Products and to the relevant personnel performing services for Client.  Client may not conduct such an inspection audit more than [* * *] during any 12-month period; provided, that additional inspections may be conducted in the event there is a material quality or compliance issue concerning the Products.

 

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Exhibit 10.6

 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

THE GENERAL HOSPITAL CORPORATION

 

EXCLUSIVE PATENT LICENSE AGREEMENT

 

MGH Agreement No: 221771

MGII Case No: 21125

 

This License Agreement (“Agreement”) is made as of the 13 day of September, 2014 (“Effective Date”), by and between BioHaven Pharmaceutical Holding Company, a British Virgin Island corporation, having a principal place of business at Suite 304 / 234 Church Street / New Haven CT 06510 (“Company”) and The General Hospital Corporation, d/b/a Massachusetts General Hospital, a not-for-profit Massachusetts corporation, with a principal place of business at 55 Fruit Street, Boston, Massachusetts 02114 (“Hospital”), each referred to herein individually as a “Party” and collectively as the “Parties”.

 

RECITALS

 

Hospital, as a center for patient care, research and education, is the owner of certain Patent Rights (defined below) and desires to grant a license of those Patent Rights to Company in order to benefit the public by disseminating the results of its research via the commercial development, manufacture, distribution and use of Products and Processes (defined below).

 

Company has the capability to commercially develop, manufacture, distribute and use Products and Processes for public use and benefit and desires to license such Patent Rights.

 

For good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.  CERTAIN DEFINITIONS

 

As used in this Agreement, the following terms shall have the following meanings, unless the context requires otherwise.

 

1.1                                Affiliate ” with respect to either Party shall mean any corporation or other legal entity other than that Party in whatever country organized, controlling, controlled by or under common control with that Party. The term “control” shall mean (i) in the ease of Company, direct or indirect ownership of fifty percent (50%) or more of the voting securities having the right to elect directors, and (ii) in the case of Hospital, the power, direct or indirect, to elect or appoint fifty percent (50%) or more of the directors or trustees, or to cause direction of management and policies, whether through the ownership of voting securities, by contract or otherwise.

 

1.2                                Claim ” shall mean any pending or issued claim of any Patent Right that has not been permanently revoked, nor held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction that is unappealable or unappealed in the time allowed for appeal.

 

Change of Control ” shall mean (a) a merger or consolidation of the Company with or into any other entity or (b) the sale, conveyance or other disposition of all or substantially all of the Company’s assets.

 

1.3                                Distributor ” shall mean any third party entity to whom Company, a Company Affiliate or a Sublicensee has granted, express or implied, the right to distribute any Product or Process pursuant to Section 2.1(b)(ii).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

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1.4                                First Commercial Sale ” shall mean the initial Sale anywhere in the applicable License Territory of a Product or Process.

 

1.5                                License Field ” shall mean therapeutics for any INDICATION of the central nervous system in humans.

 

1.6                                “INDICATION(S)” shall mean any indication bearing a distinct reference number under the list of diseases officially published by the World Health Organization (WIN)) or list of disorders published in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM 5, or above) or such successor organizations that are in effect at the relevant time during the term of this Agreement.

 

1.7                                License Territory ” shall mean worldwide.

 

1.8                                Net Sales ” shall be calculated as set forth in this Section 1.7.

 

(a)                                  Subject to the conditions set forth below, “Net Sales” shall mean:

 

(i)                                      the gross amount billed or invoiced, or if no such bill or invoice is issued the amount received, whichever is greatest, by Company and its Affiliates and Sublicensees for or on account of Sales of Products and Processes;

 

(ii)                                   less the following amounts:

 

(A)                                to the extent separately stated on the bill or invoice, [* * *]:

 

1.                                       amounts repaid or credited [* * *];

 

2.                                       reasonable and customary [* * *] rebates or discounts [* * *];

 

3.                                       amounts for outbound transportation, insurance, handling and shipping, [* * *]; and

 

4.                                       taxes, customs duties and other governmental charges [* * *].

 

5.                                       unpaid accounts or bad debt [* * *]

 

(B)                                [* * *].

 

(b)                                  Specifically excluded from the definition of “Net Sales” are amounts attributable to any Sale of any Product or Process between or among Company and any Company Affiliate and/or Sublicensee, unless the transferee is the end purchaser, user or consumer of such Product or Process.

 

(c)                                   No deductions shall be made for any commissions paid to any individuals or for any costs or expenses of collections.

 

(d)                                  Net Sales shall be deemed to have occurred and the applicable Product or Process “Sold” on the earliest of the date of billing, invoicing, delivery or payment or the due date for payment.

 

(e)                                   If any Product or Process is Sold at a discounted price that is lower than the customary price charged, or for non-cash consideration (whether or not at a discount), Net Sales shall be

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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calculated based on [* * *]. Non-cash consideration that could affect any payment due to Hospital hereunder shall not be accepted without the prior written consent of Hospital.

 

1.9                                “Patent Rights” shall mean, inclusively, the U.S. Patent Application number Hospital’s rights in the U.S. provisional patent application number [* * *], filed on [* * *] and PCT Patent Application number [* * *], filed on [* * *] and/or the equivalent of such application including any division, continuation (but not including continuation-in-part), foreign patent application, Letters Patent, and/or the equivalent thereof issuing thereon, and/or reissue, reexamination or extension thereof, as may be further described in Appendix A .

 

1.10                         Process ” shall mean any process, method or service the use or performance of which, in whole or in part:

 

(a)                                  absent the license granted hereunder would infringe, or is covered by, one or more Claims of Patent Rights; or

 

(b)                                  employs, is based upon or is derived from Technological Information.

 

1.11                         Product ” shall mean any article, device or composition, the manufacture, use, or sale of which, in whole or in part:

 

(a)                                  absent the license granted hereunder would infringe, or is covered by, one or more Claims of Patent Rights; or

 

(b)                                  employs, is based upon or is derived from Technological Information.

 

1.12                         Reporting Period ” shall mean each three month period ending March 31, June 30, September 30 and December 31.

 

1.13                         Sell ” (and “Sale” and “Sold” as the case may be) shall mean to sell or have sold, to lease or have leased, to import or have imported or otherwise to transfer or have transferred a Product or Process for valuable consideration (in the form of cash or otherwise), and further in the case of a Process to use or perform such Process for the benefit of a third party.

 

1.14                         Sublicense Income ” shall mean consideration in any form received by Company and/or Company’s Affiliate(s) in connection with or otherwise attributable to a grant of a sublicense or any other right, license, privilege or immunity (regardless of whether such grantee is a “Sublicensee” as defined in this Agreement) to make, have made, use, have used, Sell or have Sold Products or Processes, but excluding consideration included within Net Sales. Sublicense Income shall include without limitation any license signing fee, license maintenance fee, unearned portion of any minimum royalty payment, distribution or joint marketing fee, research and development funding in excess of the cost of performing such research and development, and any consideration received for an equity interest in, extension of credit to or other investment in Company or Company’s Affiliates to the extent such consideration exceeds the fair market value of the equity or other interest received as determined by agreement of the Parties or by an independent appraiser mutually agreeable to the Parties.

 

1.15                         Sublicensee ” shall mean any sublicensee of rights granted in accordance with Section 2.1(a)(ii). For purpose of this Agreement, a Distributor of a Product or Process shall not be included in the definition of Sublicensee unless such Distributor (i) is granted any right to make, have made, use or have used Products or Processes in accordance with Section 2,1(a)(ii), or (ii) has agreed to pay to Company or its Affiliate(s) royalties on such Distributor’s sales of Products or Processes, in which case such Distributor shall be a Sublicensee for all purposes of this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.16                         Technological Information ” shall mean research data, designs, formulae, process information and other information pertaining to the invention(s) claimed in the Patent Rights which is created by Dr. Fava and Dr. Petryshen and owned by Hospital and is not confidential information of or otherwise obligated to any third party and which Dr. Fava and Dr. Petryshen knows as of the Effective Date and reasonably believes is necessary in order for Company to utilize the licenses granted hereunder, as further described in Appendix B . Company agrees to treat all Technological Information in accordance with the provisions of Appendix E .

 

2.  LICENSE

 

2.1                                Grant of License.

 

(a)                                  Subject to the terms of this Agreement and Hospital’s rights in Patent Rights, Hospital hereby grants to Company in the License Field in the License Territory:

 

(i)                                      an exclusive, royalty-bearing license under its rights in Patent Rights to make, have made, use, have used, Sell and have Sold Products and Processes;

 

(ii)                                   the right to grant sublicenses under the rights granted in Section 2.1(a)(i) to Sublicensees, provided that in each case Company shall be responsible for the performance of any obligations of Sublicensees relevant to this Agreement as if such performance were carried out by Company itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts to be paid by the Sublicensee directly to Hospital; and

 

(iii)                                the nonexclusive right to use Technological Information disclosed by Hospital to Company hereunder in accordance with this Agreement.

 

(b)                                  The license granted in Section 2.1(a) above includes:

 

(i)                                      the right to grant to the final purchaser, user or consumer of Products the right to use such purchased Products in a method coming within the scope of Patent Rights within the License Field and License Territory; and

 

(ii)                                   the right to grant a Distributor the right to Sell (but not to make, have made, use or have used) such Products and/or Processes for or on behalf of Company, its Affiliates and Sublicensees in a manner consistent with this Agreement.

 

(c)                                   The foregoing license grant shall include the grant of such license to any Affiliate of Company, provided that such Affiliate shall assume the same obligations as those of Company and be subject to the same terms and conditions hereunder; and further provided that Company shall be responsible for the performance of all of such obligations and for compliance with all of such terms and conditions by Affiliate. Company shall provide to Hospital a fully signed, non-redacted copy of each agreement with each Affiliate that assumes the aforesaid obligations, including all exhibits, attachments and related documents and any amendments, within thirty (30) days of request by Hospital.

 

2.2                                Sublicenses . Each sublicense granted hereunder shall be consistent with and comply with all terms of this Agreement, shall incorporate terms and conditions sufficient to enable Company to comply with this Agreement, shall prohibit any further sublicense or assignment by a Sublicensee without Hospital consent and shall provide that Hospital is a third party beneficiary thereof Any sublicense granted by Company shall be subject to the prior written approval of Hospital, which approval shall not be unreasonably withheld. Company

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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shall provide to Hospital a fully signed non-redacted copy of all sublicense agreements and amendments thereto, including all exhibits, attachments and related documents, within thirty (30) days of executing the same. Upon termination of this Agreement or any license granted hereunder for any reason, any sublicenses shall be addressed in accordance with Section 10.7. Any sublicense which is not in accordance with the forgoing provisions shall be null and void.

 

2.3                                Retained Rights; Requirements . Any and all licenses granted hereunder are subject to:

 

(a)                                  the right of Hospital and Hospital’s Affiliates and academic, government and not-for-profit institutions to make and to use the subject matter described and/or claimed in the Patent Rights; and

 

(b)                                  for Patent Rights supported by federal funding, the rights, conditions and limitations imposed by U.S. law (see 35 U.S.C. § 202 et seq. and regulations pertaining thereto), including without limitation:

 

(i)                                      the royalty-free non-exclusive license granted to the U.S. government; and

 

(ii)                                   the requirement that any Products used or sold in the United States shall be manufactured substantially in the United States.

 

2.4                                No Additional Rights . It is understood that nothing in this Agreement shall be construed to grant Company or any of its Affiliates a license, express or implied, under any patent owned solely or jointly by Hospital other than the Patent Rights expressly licensed hereunder. Hospital shall have the right to license any Patent Rights to any other party for any purpose outside of the License Field or the License Territory.

 

2.5                                Disclosure of Technological Information . At Company’s request prior to execution of this Agreement, Hospital (through Dr. Fava or Dr. Petryshen shall use reasonable efforts to disclose in confidence within thirty (30) days after execution of this Agreement the Technological Information licensed hereunder.

 

3.  DUE DILIGENCE OBLIGATIONS

 

3.1                                Diligence Requirements . Company shall use, and shall cause its Affiliates and Sublicensees, as applicable, to use, best efforts to develop and make available to the public Products and Processes throughout the License Territory in the License Field. Such efforts shall include achieving the following objectives within the time periods designated below following the Effective Date:

 

(a)                                  Pre-Sales Requirements .

 

1.                                       Within [* * *] of the Effective Date, Company shall raise at least $[* * *] to support development efforts of Products and Processes

2.                                       Within [* * *] of the Effective Date, Company shall [* * *];

3.                                       Within [* * *] of the Effective Date, Company shall [* * *];

4.                                       Within [* * *] of the Effective Date, Company shall [* * *];

5.                                       Within [* * *] of the Effective Date, Company shall [* * *];

6.                                       Within [* * *] of the Effective Date, Company shall [* * *]; and

7.                                       Within [* * *] of the Effective Date, Company shall [* * *].

 

(b)                                  Post-Sales Requirements .

 

(i)                                      Following the First Commercial Sale in any country in the License Territory, Company shall itself or through its Affiliates and/or Sublicensees make continuing

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Sales in such country without any elapsed time period of [* * *] or more in which such Sales do not occur.

 

(ii)                                   Company shall itself or through an Affiliate or Sublicensee make such First Commercial Sale within the following countries and regions in the License Territory within [* * *] after the Effective Date of this Agreement: [* * *].

 

Achievement of the foregoing objectives shall be deemed to satisfy Company’s obligations to use best efforts under this Section 3.1.

 

3.2                                Diligence Failures . If Hospital determines that Company has failed to fulfill any of its obligations under Section 3.1, then Hospital may treat such failure as a default and may terminate this Agreement and/or any license granted hereunder in accordance with Section 10.4 provided, however, that Company may elect to extend any of the Diligence Requirements in accordance with Section 3.3 below.

 

3.3                                Diligence Extension . Company may elect to extend any of the Diligence Requirement in the article 3.1(a) by a maximum of [* * *] (“Diligence Extension”) upon payment to Hospital of:

(i)                                      [* * *] dollars ($[* * *]) if such an extension is for [* * *]; or;

(ii)                                   [* * *] dollars ($[* * *]) if such an extension is for [* * *];

(iii)                                [* * *] dollars ($[* * *]) if such an extension is for [* * *];

 

A Diligence Extension shall apply to the elected Diligence Requirement and all subsequent Diligence Requirements. Company may elect no more than [* * *] Diligence Extensions total and any Diligence Extension must be requested at least [* * *] prior to the date of the specific diligence Requirement for which a Diligence Extension is being requested by Company. The Diligence Extension shall take effect only if payment is made to Hospital by the date of the specific Diligence Requirement for which a Diligence Extension has been requested.

 

3.4                                Diligence Reports. Company shall provide all reports with respect to its obligations under Section 3.1 as set forth in Section 5.

 

4.  PAYMENTS AND ROYALTIES

 

4.1                                License Issue Fee . Company shall pay Hospital a non-refundable license issue fee in the amount of twenty thousand dollars ($20,000) upon execution of this Agreement.

 

4.2                                Patent Cost Reimbursement . Company shall reimburse Hospital for all costs associated with the preparation; filing, prosecution and maintenance of all Patent Rights (“Patent Costs”). As of the Effective Date, Hospital has incurred approximately thirteen thousand dollars ($13,000) in Patent Costs, which amount Company shall pay to Hospital within one year of the Effective Date. Company shall pay to Hospital, or at Hospital’s request directly to patent counsel, all other Patent Costs within [* * *] days of Company’s receipt of an invoice for such Patent Costs either from Hospital or Hospital’s patent counsel. Company agrees to indemnify, defend and hold Hospital harmless from and against any and all liabilities, damages, costs and expenses arising from the failure of Company to timely pay such invoices and Patent Costs. Hospital shall instruct patent counsel to provide copies to Hospital for hospital’s administrative files of all invoices detailing Patent Costs which are sent directly to Company. If Company pays any Patent Costs directly, Company shall advise patent counsel that Hospital is and shall remain patent counsel’s client.

 

4.3                                Annual License Fee :

 

(a)                                  Company shall pay to Hospital the following non-refundable amounts as an annual license fee within [* * *] days after each of the following anniversaries of the Effective Date:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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(i)                                      the [* * *] anniversary of the Effective Date: [* * *] dollars ($[* * *]);

 

(ii)                                   the [* * *] anniversary of the Effective Date: [* * *] dollars ($[* * *]);

 

(iii)                                the [* * *] anniversary and on each subsequent anniversary of the Effective Date thereafter: [* * *] dollars ($[* * *]).

 

4.4                                Milestone Pay ments. In addition to the payments set forth in Sections 4.1 through 4.3 above, Company shall pay Hospital milestone payments as follows:

 

(a)                                  [* * *] dollars ($[* * *]) within [* * *] days of [* * *]; and

 

(b)                                  [* * *] dollars ($[* * *]) within [* * *] days of [* * *]; and

 

(c)                                   [* * *] dollars ($[* * *]) at the later of (i) [* * *]; or (ii) [* * *]; provided however that in any case this milestone payment 4.4 (c) shall be paid within [* * *] of [* * *] if it has not been paid before. For the avoidance of any doubt, this milestone 4.4 (c) shall be due in addition to any payment made under 4.4 (e) or 4.5; and

 

(d)                                  [* * *] dollars ($[* * *]) within [* * *] days of [* * *]; and

 

(e)                                   [* * *] dollars ($[* * *]) within [* * *] days of [* * *]; and

 

(f)                                    [* * *] dollars ($[* * *]) within [* * *] days of [* * *]; and

 

(g)                                   [* * *] dollars ($[* * *]) [* * *].

 

4.5                                Royalties and Sublicense Income .

 

(a)                                  Beginning with the First Commercial Sale in any country in the License Territory, Company shall pay Hospital:

 

(i)                                      during the term of any license granted under Section 2.1(a)(i), a royalty of [* * *] percent ([* * *]%) of the Net Sales of all Products and Processes;

 

(ii)                                   Necessary License. If Company enters into a license or otherwise acquires the use of any intellectual property on technology from a third party that is legally required to practice Patent Rights (a “Necessary License”), royalties payable to Hospital are subject to an offset of [* * *] percent ([* * *]%) of the amounts paid for royalties to such third parties under any Necessary License(s) provided however that in no event shall Company pay Hospital less than [* * *] percent ([* * *]%) of the Net Sales of all Products and Processes (“Minimum Royalty”).

 

(b)                                  Company shall pay Hospital [* * *] percent ([* * *]%) of any and all Sublicense Income before [* * *].

 

(c)                                   Company shall pay Hospital [* * *] percent ([* * *]%) of any and all Sublicense Income after [* * *].

 

(d)                                  All payments due to Hospital under this Section 4.5 shall be due and payable by Company within [* * *] days after the end of each Reporting Period, and shall be accompanied by a report as set forth in Sections 5.3 and 5.4.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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4.6                                Form of Payment . All payments due under this Agreement shall be drawn on a United States bank and shall be payable in United States dollars. Each payment shall reference this Agreement and its Agreement Number and identify the obligation under this Agreement that the payment satisfies. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States, as reported in The Wall Street Journal, on the last working day of the applicable Reporting Period. Such payments shall be without deduction of exchange, collection or other charges, and, specifically, without deduction of withholding or similar takes or other government imposed fees or taxes, except as permitted in the definition of Net Sales.

 

Checks for all payments due to the Hospital under this Agreement shall be made payable to the Hospital and addressed as set forth below:

 

Massachusetts General Hospital

BOA-Lockbox Services

PCSR Lockbox 11415007

MA5-527-02-07

2 Morrissey Blvd

Dorchester, MA 02125

Reference Agreement #: A221771

 

Payments via wire transfer should be made as follows:

 

ACH Credit: [* * *]

Federal Reserve Wire: [* * *]

SWIFT Code: [* * *]

Account [* * *]

Massachusetts General Hospital

Bank of America

100 Federal Street

Boston, MA 02110

Reference Agreement #: [* * *]

 

4.7                                Overdue Payments . The payments due under this Agreement shall, if overdue, bear interest beginning on the first day following the Reporting Period to which such payment was incurred and until payment thereof at a per annum rate equal to [* * *], such interest rate being compounded on the last day of each Reporting Period, not to exceed the maximum permitted by law. Any such overdue payments when made shall be accompanied by all interest so accrued. Said interest and the payment and acceptance thereof shall not preclude Hospital from exercising any other rights it may have as a consequence of the lateness of any payment.

 

5.  REPORTS AND RECORDS

 

5.1                                Diligence Reports . Within [* * *] days after the end of each calendar year, Company shall report in writing to Hospital on progress made toward the objectives set forth in Section 3.1 during such preceding 12 month period, including, without limitation, progress on research and development, status of applications for regulatory approvals, manufacturing, sublicensing and the number of sublicenses entered into and marketing.

 

5.2                                Milestone Achievement Notification . Company shall report to Hospital the dates on which it achieves the milestones set forth in Section 4.4 within [* * *] days of each such occurrence.

 

5.3                                Sales Reports . Company shall report to Hospital the date of the First Commercial Sale in each country of the License Territory within [* * *] days of each such occurrence. Following the First Commercial Sale, Company shall deliver reports to Hospital within [* * *] days after the end of each Reporting Period. Each

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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report under this Section 5.4 shall have substantially the format outlined in Appendix C , shall be certified as correct by an officer of Company and shall contain at least the following information as may be pertinent to a royalty accounting hereunder for the immediately preceding Reporting Period:

 

(a)                                  the number of Products and Processes Sold by Company, its Affiliates and Sublicensees in each country;

 

(b)                                  the amounts billed, invoiced and received by Company, its Affiliates and Sublicensees for each Product and Process, in each country, and total billings or payments due or made for all Products and Processes;

 

(c)                                   calculation of Net Sales for the applicable Reporting Period in each country, including an itemized listing of permitted offsets and deductions;

 

(d)                                  total royalties payable on Net Sales in U.S. dollars, together with the exchange rates used for conversion; and

 

(e)                                   any other payments due to Hospital under this Agreement.

 

If no amounts are due to Hospital for any Reporting Period, the report shall so state.

 

5.4                                Sublicense Income Reports . Company shall, along with delivering payment as set forth in Section 4.6, report to Hospital within [* * *] days of receipt the amount of all Sublicense Income received by Company, and Company’s calculation of the amount due and paid to Hospital from such income, including an itemized listing of the source of income comprising such consideration, and the name and address of each entity making such payments in substantially the format outlined in Appendix D .

 

5.5                                Audit Rights . Company shall maintain, and shall cause each of its Affiliates and Sublicensees to maintain, complete and accurate records relating to the rights and obligations under this Agreement and any amounts payable to Hospital in relation to this Agreement, which records shall contain sufficient information to permit Hospital and its representatives to confirm the accuracy of any payments and reports delivered to Hospital and compliance in all other respects with this Agreement. Company shall retain and make available, and shall cause each of its Affiliates and Sublicensees to retain and make available, such records for at least [* * *] years following the end of the calendar year to which they pertain, to Hospital and/or its representatives and upon at least [* * *] days’ advance written notice, for inspection during normal business hours, to verify any reports and payments made and/or compliance in other respects under this Agreement. If any examination conducted by Hospital or its representatives pursuant to the provisions of this Section show an underreporting or underpayment of [* * *] percent ([* * *]%) or more in any payment due to Hospital hereunder, Company shall bear the full cost of such audit and shall remit any amounts due to Hospital (including interest due in accordance with Section 4.7) within [* * *] days of receiving notice thereof from Hospital.

 

6.  PATENT PROSECUTION AND MAINTENANCE

 

6.1                                Prosecution . Hospital shall be responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents included in Patent Rights. Company shall reimburse Hospital for Patent Costs incurred by Hospital relating thereto in accordance with Section 4.2.

 

6.2                                Copies of Documents . With respect to any Patent Right licensed hereunder, Hospital shall instruct the patent counsel prosecuting such Patent Right to (i) copy Company on patent prosecution documents that are received from or filed with the United States Patent and Trademark Office and foreign equivalent, as applicable; (ii) if requested by Company, provide Company with copies of draft submissions to the USPTO prior to filing; and (iii) give consideration to the comments and requests of Company or its patent counsel.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.3                                Company’s Election Not to Proceed . Company may elect to surrender any patent or patent application in Patent Rights in any country upon [* * *] days advance written notice to Hospital. Such notice shall relieve Company from the obligation to pay for future Patent Costs but shall not relieve Company from responsibility to pay Patent Costs incurred prior to the expiration of the [* * *] day notice period. Such U.S. or foreign patent application or patent shall thereupon cease to be a Patent Right hereunder, Company shall have no further rights therein and Hospital shall be free to license its rights to that particular U.S. or foreign patent application or patent to any other party on any terms.

 

6.4                                Confidentiality of Prosecution and Maintenance Information . Company agrees to treat all information related to prosecution and maintenance of Patent Rights as Confidential Information in accordance with the provisions of Appendix E .

 

7.  THIRD PARTY INFRINGEMENT AND LEGAL ACTIONS

 

7.1                                Hospital Right to Prosecute . Hospital will protect its Patent Rights from infringement and prosecute infringers when, in its sole judgment, such action may be reasonably necessary, proper and justified. If Company shall have supplied Hospital with written evidence demonstrating to Hospital’s reasonable satisfaction prima facie infringement of a claim of a Patent Right in the License Field in the License Territory by a third party which poses a material threat to Company’s rights under this Agreement, Company may by notice request Hospital to take steps to protect such Patent Right. Hospital shall notify Company within [* * *] of the receipt of such notice whether Hospital intends to prosecute the alleged infringement. If Hospital notifies Company that it intends to so prosecute, Hospital shall, within [* * *] months of its notice to Company either (i) cause such infringement to terminate, or (ii) initiate legal proceedings against the infringer.

 

7.2                                Company Right to Prosecute . In the event Hospital notifies Company that Hospital does not intend to prosecute infringement identified under Section 7.1, Company may, upon notice to Hospital, initiate legal proceedings against the infringer at Company’s expense with respect to a claim of a Patent Right in the License Field in the License Territory. Before commencing such action, Company and, as applicable, any Affiliate, shall consult with Hospital, concerning, among other things, Company’s standing to bring suit, the advisability of bringing suit, the selection of counsel and the jurisdiction for such action (provided Company must have Hospital’s prior written consent with respect to selection of jurisdiction for any action in which Hospital may be joined as a party-plaintiff) and shall use reasonable efforts to accommodate the views of Hospital regarding the proposed action, including without limitation with respect to potential effects on the public interest. Company shall be responsible for all costs, expenses and liabilities in connection with any such action and shall indemnify and hold Hospital harmless therefrom, regardless of whether Hospital is a party-plaintiff, except for the expense of any independent counsel retained by Hospital in accordance with Section 7.5 below.

 

7.3                                Hospital Joined as Party-Plaintiff . If Company elects to commence an action as described in Section 7.2 above, Hospital shall have, in its sole discretion, the option to join such action as a party-plaintiff. If Hospital is required by law to join such action as a party-plaintiff, Hospital may either, in its sole discretion, permit itself to be joined as a party-plaintiff at the sole expense of Company, or assign to Company all of Hospital’s right, title and interest in and to the Patent Right which is the subject of such action (subject to all of Hospital’s obligations to the government under law and any other rights that others may have in such Patent Right). If Hospital makes such an assignment, such action by Company shall thereafter be brought or continued without Hospital as a party; provided, however, that Hospital shall continue to have all rights of prosecution and maintenance with respect to Patent Rights and Company shall continue to meet all of its obligations under this Agreement as if the assigned Patent Right were still licensed to Company hereunder.

 

7.4                                Notice of Actions; Settlement . Company shall promptly inform Hospital of any action or suit relating to Patent Rights and shall not enter into any settlement, consent judgment or other voluntary final disposition

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

10



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

of any action relating to Patent Rights, including but not limited to appeals, without the prior written consent of Hospital.

 

7.5                                Cooperation . Each Party agrees to cooperate reasonably in any action under Section 7 which is controlled by the other Party, provided that the controlling party reimburses the cooperating party for any costs and expenses incurred by the cooperating party in connection with providing such assistance, except for the expense of any independent counsel retained by the cooperating party in accordance with this Section 7.5. Such controlling party shall keep the cooperating party informed of the progress of such proceedings and shall make its counsel available to the cooperating party. The cooperating party shall also be entitled to independent counsel in such proceedings but at its own expense, said expense to be offset against any damages received by the Party bringing suit in accordance with Section 7.6.

 

7.6                                Recovery . Any award paid by third parties as the result of such proceedings (whether by way of settlement or otherwise) shall first be applied to reimbursement of any legal fees and expenses incurred by either Party and then the remainder shall be divided between the Parties as follows:

 

(a)                                  (i)                                      Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales, or whichever measure of damages the court shall have applied; and

 

(ii)                                   Hospital shall receive an amount equal to the royalties and other amounts that Company would have paid to Hospital if Company had Sold the infringing Products and Services rather than the in flinger; and

 

(b)                                  the balance, if any, remaining after Company and Hospital have been compensated under Section 7,6(a) shall be shall be shared equally by the Parties.

 

8.  INDEMNIFICATION AND INSURANCE

 

8.1                                Indemnification .

 

(a)                                  Company shall indemnify, defend and hold harmless Hospital and its Affiliates and their respective trustees, directors, officers, medical and professional staff, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss or expense (including reasonable attorney’s fees and expenses of litigation) incurred by or imposed upon the Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of contract, tort, warranty, or strict liability) concerning any product, process or service made, used, or sold or performed pursuant to any right or license granted under this Agreement.

 

(b)                                  Company agrees, at its own expense, to provide attorneys reasonably acceptable to the Hospital to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought; provided, however, that any Indemnitee shall have the right to retain its own counsel, at the expense of Company, if representation of such Indemnitee by counsel retained by Company would be inappropriate because of conflict of interests of such Indemnitee and any other party represented by such counsel. Company agrees to keep Hospital informed of the progress in the defense and disposition of such claim and to consult with Hospital prior to any proposed settlement.

 

(c)                                   This section 8.1 shall survive expiration or termination of this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

11



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

8.2                                Insurance .

 

(a)                                  Beginning at such time as any such product, process or service is being commercially distributed, sold, leased or otherwise transferred, or performed or used (other than for the purpose of obtaining regulatory approvals), by Company, an Affiliate or Sublicensee, Company shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $[* * *] per incident and $[* * *] annual aggregate and naming the indemnitees as additional insureds. Such commercial general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for Company’s indemnification under Section 8.1 of this Agreement. If Company elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $[* * *] annual aggregate) such self-insurance program must be acceptable to the Hospital and the Risk Management Foundation. The minimum amounts of insurance coverage required under this Section 8.2 shall not be construed to create a limit of Company’s liability with respect to its indemnification under Section 8,1 of this Agreement.

 

(b)                                  Company shall provide Hospital with written evidence of such insurance upon request of Hospital. Company shall provide Hospital with written notice at least [* * *] days prior to the cancellation, non-renewal or material change in such insurance; if Company does not obtain replacement insurance providing comparable coverage prior to the expiration of such [* * *] day period, Hospital shall have the right to terminate this Agreement effective at the end of such [* * *] day period without notice or any additional waiting periods.

 

(c)                                   Company shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during (i) the period that any such product, process, or service is being commercially distributed, sold, leased or otherwise transferred, or performed or used (other than for the purpose of obtaining regulatory approvals), by Company or by a licensee, affiliate or agent of Company and (ii) a reasonable period after the period referred to in (c) (i) above which in no event shall be less than [* * *] years.

 

(d)                                  This section 8.2 shall survive expiration or termination of this Agreement.

 

9.  DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY

 

9.1                                Title to Patent Rights . To the best knowledge of Hospital’s Office of Innovation, Hospital is the owner by assignment from Dr.Fava and Dr.Petryshen of the Patent Rights and has the authority to enter into this Agreement and license the Patent Rights to Company hereunder.

 

9.2                                No Warranties . HOSPITAL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE PATENT RIGHTS AND THE RIGHTS GRANTED HEREUNDER, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AND HEREBY DISCLAIMS THE SAME. SPECIFICALLY, AND NOT TO LIMIT THE FOREGOING, HOSPITAL MAKES NO WARRANTY OR REPRESENTATION (i) REGARDING THE VALIDITY OR SCOPE OF ANY OF THE CLAIM(S), WHETHER ISSUED OR PENDING, OF ANY OF THE PATENT RIGHTS, AND (ii) THAT THE EXPLOITATION OF THE PATENT RIGHTS OR ANY PRODUCT WILL NOT INFRINGE ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF HOSPITAL OR OF ANY THIRD PARTY.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

12



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

9.3                                Limitation of Liability . IN NO EVENT SHALL ‘HOSPITAL OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS, MEDICAL OR PROFESSIONAL STAFF, EMPLOYEES AND AGENTS BE LIABLE TO LICENSEE OR ANY OF ITS AFFILIATES, SUBLICENSEES OR DISTRIBUTORS FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE LICENSE OR RIGHTS GRANTED HEREUNDER, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION ECONOMIC DAMAGES OR INJURY TO PROPERTY OR LOST PROFITS, REGARDLESS OF WHETHER HOSPITAL SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

10.  TERM AND TERMINATION

 

10.1                         Term . The term of this Agreement shall commence on the Effective Date and shall remain in effect the date on which all issued patents and filed patent applications within the Patent Rights have expired or been abandoned unless this Agreement is terminated earlier in accordance with any of the other provisions of Section 10.

 

10.2                         Termination for Failure to Pay . If Company fails to make any payment due hereunder, Hospital shall have the right to terminate this Agreement upon [* * *] business days written notice, unless Company makes such payments plus any interest due, as set forth in Section 4.7, within said [* * *] day notice period. If payments are not made, Hospital may immediately terminate this Agreement at the end of said [* * *] day period. Company shall be entitled to only [* * *] such cure periods in a calendar year; for a [* * *] failure to make payment on time, Hospital shall have the right to terminate this Agreement immediately upon written notice.

 

10.3                         Termination for Insurance and Insolvency .

 

(a)                                  Insurance . Hospital shall have the right to terminate this Agreement in accordance with Section 8.2(b) if Company fails to maintain the insurance required by Section 8.2.

 

(b)                                  Insolvency and other Bankruptcy Related Events . Hospital shall have the right to terminate this Agreement immediately upon written notice to Company with no further notice obligation or opportunity to cure if Company: (i) shall become insolvent; (ii) shall make an assignment for the benefit of creditors; or (iii) or shall have a petition in bankruptcy filed for or against it.

 

10.4                         Termination for Non-Financial Default . If Company, any of its Affiliates or any Sublicensee shall default in the performance of any of its other obligations under this Agreement not otherwise covered by the provisions of Section 10.2 and 10.3, and if such default has not been cured within [* * *] days after notice by Hospital in writing of such default, Hospital may immediately terminate this Agreement, and/or any license granted hereunder with respect to the country or countries in which such default has occurred, at the end of said [* * *] day cure period. Hospital shall also have the right to terminate this Agreement and/or any such license immediately, upon written notice, in the event of repeated defaults even if cured within such [* * *] day periods.

 

10.5                         Challenging Validity . During the term of this Agreement, Company shall not challenge, and shall restrict Company Affiliates and Sublicensees from challenging, the validity of the Patent Rights and in the event of any breach of this provision Hospital shall have the right to terminate this Agreement and any license granted hereunder immediately. In addition, if the Patent Rights are upheld Company shall reimburse Hospital for its legal costs and expenses incurred in defending any such challenge.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

13



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

10.6                         Termination by Company . Company shall have the right to terminate this Agreement by giving [* * *] days advance written notice to Hospital and upon such termination shall immediately cease all use and Sales of Products and Processes, subject to Section 10.9.

 

10.7                         Effect of Termination on Sublicenses . Any sublicenses granted by Company under this Agreement shall provide for termination or assignment to Hospital of Company’s interest therein, at the option of Hospital, upon termination of this Agreement or upon termination of any license hereunder under which such sublicense has been granted.

 

10.8                         Effects of Termination of Agreement . Upon termination of this Agreement or any of the licenses hereunder for any reason, final reports in accordance with Section 5 shall be submitted to Hospital and all royalties and other payments, including without limitation-any unreimbursed Patent Costs, accrued or due to Hospital as of the termination date shall become immediately payable. Company shall cease, and shall cause its Affiliates and Sublicensees to cease under any sublicense granted by Company, all Sales and uses of Products and Processes upon such termination, subject to Section 10.9. The termination or expiration of this Agreement or any license granted hereunder shall not relieve Company, its Affiliates or Sublicensees of obligations arising before such termination or expiration.

 

10.9                         Inventory . Upon early termination of this Agreement other than for Company default, Company, Company Affiliates and Sublicensees may complete and sell any work-in-progress and inventory of Products that exist as of the effective date of termination provided that (i) Company pays Hospital the applicable running royalty or other amounts due on such Net Sales in accordance with the terms and conditions of this Agreement, and (ii) Company, Company Affiliates and Sublicensees shall complete and sell all Work-in-progress and inventory of Products within [* * *] after the effective date of termination. Upon expiration of this Agreement, Company shall pay to Hospital the royalties set forth in Section 4.5(a) for Sales of any Product that was in inventory or was a work-in-progress on the date of expiration of the Agreement.

 

11.  COMPLIANCE WITH LAW

 

11.1                         Compliance . Company shall have the sole obligation for compliance with, and shall ensure that any Affiliates and Sublicensees comply with, all government statutes and regulations that relate to Products and Processes, including, but not limited to, those of the Food and Drug Administration and the Export Administration, as amended, and any applicable laws and regulations of any other country in the License Territory. Company agrees that it shall be solely responsible for obtaining any necessary licenses to export, re-export, or import Products or Processes covered by Patent Rights and/or Confidential Information. Company shall indemnify and hold harmless Hospital for any breach of Company’s obligations under this Section 11.1.

 

11.2                         Patent Numbers . Company shall cause all Products sold in the United States to be marked with all applicable U.S. Patent Numbers, to the full extent required by United States law. Company shall similarly cause all Products shipped to or sold in any other country to be marked in such a manner as to conform with the patent laws and practices of such country.

 

12.  MISCELLANEOUS

 

12.1                         Entire Agreement . This Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereof.

 

12.2                         Notices . Any notices, reports, waivers, correspondences or other communications required under or pertaining to this Agreement shall be in writing and shall be delivered by hand, or sent by a reputable overnight mail service (e.g.; Federal Express), or by first class mail (certified or registered), or by facsimile confirmed by one of the foregoing methods, to the other party. Notices will be deemed effective (a) three (3) working days after deposit, postage prepaid, if mailed, (b) the next day if sent by overnight mail, or (c) the

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

14



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

same day if sent by facsimile and confirmed as set forth above or delivered by hand. Unless changed in writing in accordance with this Section, the notice address for Hospital shall be as follows:

 

Executive Director, Partners Innovation

Massachusetts General Hospital

101 Huntington Avenue, 4 th  Floor

Boston, MA 02199

 

Fax No. (617) 954-9361

 

the notice address for Company shall be as follows:

Biohaven Pharmaceutical Holding Company LTD

Suite 304

234 Church Street

New Haven, CT 06510

Signatory: Robert Berman, M.D. (Title: Chief Medical Officer)

Fax: 203-244-4239

 

12.3                         Amendment; Waiver . This Agreement may be amended and any of its terms or conditions may be waived only by a written instrument executed by an authorized signatory of the Parties or, in the case of a waiver, by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or term shall be deemed as a further or continuing waiver of such condition or term or of any other condition or term.

 

12.4                         Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

 

12.5                         Assignment . Company shall not assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of Hospital; provided, however, that if Company has fulfilled its diligence obligations as set forth in Section 3, no such consent will be required to assign this Agreement to a successor of the Company’s business to which this Agreement pertains or to a purchaser of substantially all of the Company’s assets related to this Agreement, so long as such successor or purchaser shall agree in writing to be bound by all of the terms and conditions hereof prior to such assignment. Company shall notify Hospital in writing of any such assignment and provide a copy of all assignment documents and related agreements to Hospital within thirty (30) days of such assignment. Failure of an assignee to agree to be bound by the terms hereof or failure of Company to notify hospital and provide copies of assignment documentation shall be grounds for termination of this Agreement for default. Further, neither any rights granted under this Agreement nor any sublicense may be assigned by any Sublicensee without the prior written consent of Hospital.

 

12.6                         Force Majeure . Neither Party shall be responsible for delays resulting from causes beyond the reasonable control of such Party, including without limitation fire, explosion, flood, war, sabotage, strike or riot, provided that the nonperforming Party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.

 

12.7                         Use of Name . Neither Party shall use the name of the other Party or of any trustee, director, officer, staff member, employee, student or agent of the other Party or any adaptation thereof in any advertising, promotional or sales literature, publicity or in any document employed to obtain funds or financing without the prior written approval of the Party or individual whose name is to be used. For Hospital, such approval shall be obtained from Hospital’s VP of Public Affairs.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

15



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

12.8                         Governing Law . This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, excluding with respect to conflict of laws, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. Each Party agrees to submit to the exclusive jurisdiction of the Superior Court for Suffolk County, Massachusetts, and the United States District Court for the District of Massachusetts with respect to any claim, suit or action in law or equity arising in any way out of this Agreement or the subject matter hereof.

 

12.9                         Hospital Policies . Company acknowledges that Hospital’s employees and medical and professional staff members and the employees and staff members of Hospital’s Affiliates are subject to the applicable policies of Hospital and such Affiliates, including, without limitation, policies regarding conflicts of interest, intellectual property and other matters. Company shall provide Hospital with any agreement it proposes to enter into with any employee or staff member of Hospital or any of Hospital’s Affiliates for Hospital’s prior review and shall not enter into any oral or written agreement with such employee or staff member which conflicts with any such policy. Hospital shall provide Company, at Company’s request, with copies of any such policies applicable to any such employee or staff member.

 

12.10                  Severability . If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the parties that the remainder of this Agreement shall not be effected thereby. It is further the intention of the parties that in lieu of each such provision which is invalid, illegal or unenforceable, there be substituted or added as part of this Agreement a provision which shall be as similar as possible in economic and business objectives as intended by the parties to such invalid, illegal or enforceable provision, but shall be valid, legal and enforceable.

 

12.11                  Survival . In addition to any specific survival references in this Agreement, Sections 1, 2.4, 4.2, 4.6, 4.7, 5.3, 54, 5.5, 6.4, 8.1, 8.2, 9.2, 9.3, 10.7, 10.8, 10.9, 12.1, 12.2, 12.3, 12.4, 12.7, 12.8, 12.9, 12.10, 12.11, 12.12 and 12.13 shall survive termination or expiration of this Agreement. Any other rights, responsibilities, obligations, covenants and warranties which by their nature should survive this Agreement shall similarly survive and remain in effect.

 

12.12                  Interpretation . The parties hereto are sophisticated, have had the, opportunity to consult legal counsel with respect to this transaction and hereby waive any presumptions of any statutory or common law rule relating to the interpretation of contracts against the drafter.

 

12.13                  Headings . All headings are for convenience only and shall not affect the meaning of any provision of this Agreement.

 

[Remainder of page intentionally left blank]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

16



 

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Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date first written above.

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

THE GENERAL HOSPITAL CORPORATION

 

 

 

 

By:

 

/s/ Rob Berman

 

By:

/s/ Kim Betres

 

 

Name:  Rob Berman

 

 

Name:   Kim Betres

 

 

 

 

Title:

CMO

 

Title:

 Associate Director, Research & Licensing

 

 

 

 

Date:

20-Sep-2014

 

Date:

Sept 22 2014

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

17


 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix A

 

DESCRIPTION OF PATENT RIGHTS

 

[* * *]

 

TO BE INCLUDED BY-AMENDMENT

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

18



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix B

 

DESCRIPTION OF TECHNOLOGICAL INFORMATION

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

19


 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix C

SALES REPORTS

 

AGREEMENT INCOME REPORT

Royalty Income

[MGH][BWH] Agreement #-

Licensee -

Sub-Licensee -

 

Separate reports must be filed for:

1.                                       Each Product sold.

2.                                       Each country of sale, if different deductions or royalty rates apply.

 

Product Name:

Report Time Period:

 

From                    mm/dd/yyyy

To                                  mm/dd/yyyy

 

 

Country of Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quantity Sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Sales (USD)

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Exchange Rate

 

 

 

 

 

 

 

 

Deductions (itemize)

 

Please list each deduction separately. Use same definition as appears in Agreement and include the contract paragraph as a reference (Std Section 1.17(a)(ii) line item deductions listed below).

 

A1.

 

 

 

 

 

 

 

A2.

 

 

 

 

 

 

 

A3.

 

 

 

 

 

 

 

A4.

 

 

 

 

 

 

 

B.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Deductions

 

(     

)

(     

)

(     

)

 

 

 

 

 

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty Percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credits (itemize)

 

(     

)

(     

)

(     

)

 

 

 

 

 

 

 

 

Royalties Due

 

$

 

 

$

 

 

$

 

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

20


 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

PLEASE ATTACH DETAIL SALES REPORTS AS REQUIRED

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

21



 

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Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix D

 

AGREEMENT INCOME REPORT

Sublicense Income

[MGH][BWH] Agreement #-

 

Licensee -

 

Sub-Licensee -

 

Separate reports must be filed for Payments associated with each Product:

 

Product Name:

 

Report Time Period:

 

From      mm/dd/yyyy

To           mm/dd/yyyy

 

 

 

Detailed Explanation of Payment
Required for “Other Payment”

 

Annual Fees/Minimum Royalties

 

$

 

 

 

 

 

 

 

 

 

 

Milestone Payments

 

$

 

 

 

 

 

 

 

 

 

 

Sublicense Fees and Royalties

 

$

 

 

 

 

 

 

 

 

 

 

Other Payment

 

$

 

 

 

 

 

 

 

 

 

 

Other Payment

 

$

 

 

 

 

 

 

 

 

 

 

Other Payment

 

$

 

 

 

 

 

 

 

 

 

 

TOTAL

 

$

 

 

 

 

 

 

 

PLEASE ATTACH DETAIL AS REQUIRED

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

22


 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

Appendix E

 

CONFIDENTIALITY TERMS AND CONDITIONS

 

1.             Definition of Confidential Information . “Confidential Information” shall mean any information, including but not limited to data, techniques, protocols or results, or business, financial, commercial or technical information, disclosed by one Party (each a “Discloser” as applicable) to the other Party (each a “Recipient” as applicable) in connection with the terms of that certain Exclusive License Agreement dated September 13, 2014 (the “License Agreement”) and identified as confidential at the time of disclosure (the “Purpose”). Hospital’s Confidential Information shall also include all information disclosed by Hospital to Company in connection with the Patent Rights. Capitalized terms used in this Appendix that are not otherwise defined herein have the meanings ascribed in the License Agreement to which this Appendix is attached and made a part thereof

 

2.             Exclusions . “Confidential Information” under this Agreement shall not include any information that (i) is or becomes publicly available through no wrongful act of Recipient; (ii) was known by Recipient prior to disclosure by Discloser, as evidenced by tangible records; (iii) becomes known to Recipient after disclosure from a third party having an apparent bona fide right to disclose it; (iv) is independently developed or discovered by Recipient without use of Discloser’s Confidential Information, as evidenced by tangible records; or (v) is disclosed to another party by Discloser without restriction on further disclosure. The obligations of confidentiality and non-use set forth in this Agreement shall not apply with respect to any information that Recipient is required to disclose or produce pursuant to applicable law, court order or other valid legal process provided that Recipient promptly notifies Discloser prior to such required disclosure, discloses such information only to the extent so required and cooperates reasonably with Discloser’s efforts to contest or limit the scope of such disclosure.

 

3.             Permitted Purpose . Recipient shall have the right to, and agrees that it will, use Discloser’s Confidential Information solely for the Purpose as described in the License Agreement, except as may be otherwise specified in a separate definitive written agreement negotiated and executed between the parties.

 

4.             Restrictions . For the term of the License Agreement and a period of [* * *] years thereafter (and indefinitely with respect to any individually identifiable health information disclosed by Hospital to Company, if any), each Recipient agrees that: (i) it will not use such Confidential Information for any purpose other than as specified herein, including without limitation for its own benefit or the benefit of any other person or entity; and (ii) it will use reasonable efforts (but no less than the efforts used to protect its own confidential and/or proprietary information of a similar nature) not to disclose such Confidential Information to any other person or entity except as expressly permitted hereunder. Recipient may, however, disclose Discloser’s Confidential Information only on a need-to-know basis to its and its Affiliates employees, staff members and agents (“Receiving Individuals”) who are directly participating in the Purpose and who are informed of the confidential nature of such information, provided Recipient shall be responsible for compliance by Receiving Individuals with the terms of this Agreement and any breach thereof. Each party further agrees not to use the name of the other party or any of its Affiliates or any of their respective trustees, directors, officers, staff members, employees, students or agents in any advertising, promotional or sales literature, publicity or in any document employed to obtain funds or financing without the prior written approval of the party or individual whose name is to be used, in the case of Hospital such approval to be given by the Public Affairs Department. This Section 4 shall survive termination or expiration of this Agreement.

 

5.             Right to Disclose . Discloser represents that to the best of its knowledge it has the right to disclose to each Recipient all of Discloser’s Confidential Information that will be disclosed hereunder.

 

6.             Ownership . All Confidential Information disclosed pursuant to this Agreement, including without limitation all written and tangible forms thereof, shall be and remain the property of the Discloser. Upon

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

23



 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

termination of this Agreement, if requested by Discloser, Recipient shall return or destroy at Discloser’s discretion all of Discloser’s Confidential Information, provided that Recipient shall be entitled to keep one copy of such Confidential Information in a secure location solely for the purpose of determining Recipient’s legal obligations hereunder.

 

7.             No License . Nothing in this Agreement shall be construed as granting or conferring, expressly or impliedly, any rights by license or otherwise, under any patent, copyright, or other, intellectual property rights owned or controlled by Discloser relating to Confidential Information, except as specifically set forth in the License Agreement.

 

8.             Remedies . Each party acknowledges that any breach of this Agreement by it may cause irreparable harm to the other party and that each party is entitled to seek injunctive relief and any other remedy available at law or in equity.

 

9.             General . These Confidentiality Terms and Conditions, along with the License Agreement, contain the entire understanding of the parties with respect to the subject matter hereof, and supersede any prior oral or written understandings between the parties relating to confidential treatment of information. Sections 1, 2, 4, 6, 8 and 9 of these Confidentiality Terms and Conditions shall survive any expiration or termination of the License Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

24




EXHIBIT 10.7

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

EXCLUSIVE LICENSE AGREEMENT

 

between

 

Biohaven Pharmaceutical Holding Co. Ltd

 

and

 

RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY

 

Concerning Rutgers Case Number:  Numerous dockets concerning methods of treating cancer

 

Docket Number (s):  [* * *]

 

Primary Inventor (s):                                Drs Chen, Goydos, Khan

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

TABLE OF CONTENTS

 

1.

DEFINITIONS

1

 

 

 

2.

GRANT

3

 

 

 

3.

SUBLICENSES

3

 

 

 

4.

LICENSE ISSUE FEE, MILESTONE AND OTHER PAYMENTS AND EQUITY

4

 

 

 

5.

RUNNING ROYALTIES

5

 

 

 

6.

PATENT PROSECUTHON AND MAINTENANCE

7

 

 

 

7.

DILIGENCE

9

 

 

 

8.

PROGRESS AND PAYMENT REPORTS

9

 

 

 

9.

BOOKS AND RECORDS

10

 

 

 

10.

TERM OF THE AGREEMENT

11

 

 

 

11.

TERMINATION FOR CAUSE BY EITHER PARTY

12

 

 

 

12.

VOLUNTARY TERMINATION BY LICENSEE

12

 

 

 

13.

DISPOSITION OF LICENSED PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION

12

 

 

 

14.

USE OF NAMES AND TRADEMARKS

13

 

 

 

15.

LIMITED WARRANTY AND DISCLAIMERS AND LICENSEE REPRESENTATIONS

13

 

 

 

16.

INFRINGEMENT AND PATENT MARKING

14

 

 

 

17.

INDEMNIFICATION AND INSURANCE

14

 

 

 

18.

NOTICES

15

 

 

 

19.

ASSIGNABILITY

16

 

 

 

20.

LATE PAYMENTS

16

 

 

 

21.

WAIVER

16

 

 

 

22.

GOVERNING LAWS AND DISPUTE RESOLUTION

16

 

 

 

23.

FOREIGN GOVERNMENT APPROVAL OR REGISTRATION

17

 

 

 

24.

EXPORT CONTROL LAWS

17

 

 

 

25.

CONFIDENTIALITY

17

 

 

 

26.

MISCELLANEOUS

17

 

 

 

27.

INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT

18

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

i



 

EXCLUSIVE LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is made and is effective as of June 15, 2016, (the “Effective Date”) between Rutgers, The State University of New Jersey, having its statewide Office of Research Commercialization at 33 Knightsbridge Road, Piscataway, NJ 08854, (hereinafter “Rutgers”), and Biohaven Pharmaceutical Holding Co. Ltd, a corporation having a principal place of business at an address of c/o Maples Corporate Services (BVI) Limited, P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands (hereinafter “Licensee”, and together with Rutgers the “Parties”, and each individually a “Party”).

 

RECITALS

 

WHEREAS, Certain invention(s) disclosed under Rutgers Docket Nos. [* * *], generally characterized as or related to “Methods and compositions for treating cancer”, hereinafter the “Invention”, that were made or discovered in the course of research at Rutgers by the following employees and/or students: Drs Chen, Goydos and Khan (hereinafter, the “Inventor(s)”); and

 

WHEREAS, Licensee wishes to obtain certain rights from Rutgers for the commercial development, manufacture, use, and sale of the Invention, and Rutgers is willing to grant such rights on the terms and conditions set forth in this Agreement; and

 

WHEREAS, Rutgers wants the Invention to be developed and utilized to the fullest extent so that the benefits can be enjoyed by the general public; and

 

WHEREAS, Licensee represents that it possesses the relevant experience, resources, and desire to vigorously and diligently commercialize the Invention in the Territory.

 

NOW THEREFORE, the Parties agree as follows:

 

1.  DEFINITIONS

 

1.1                                “Affiliate” means, with respect to Licensee, any Entity (defined below) that controls, is controlled by, or is under common control with Licensee. The term “control” means possession, direct or otherwise, of the power to direct or cause the direction of the management and policies of an Entity, whether through the ownership of voting securities, by contract or otherwise.

 

1.2                                “Entity” means any corporation, partnership, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, governmental entity (or any department, agency, or political subdivision thereof) or any other legal enterprise.

 

1.3                                “Confidential Information” means (i) all data, information, and/or tangible material, developments, discoveries, trade secrets and physical objects owned or controlled by Rutgers, that is acquired by Licensee, its Affiliates or its sublicensees directly or indirectly from or through Rutgers, its units, its employees, the Inventor(s), or its consultants, relating to the Invention, Licensed Products, or this Agreement to the extent identified as confidential or proprietary at the time delivered to Licensee, (ii) all Rutgers Technology, and (iii) all patent prosecution documents related to the Invention.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1



 

1.4                                “Fair Market Value” means the cash consideration that would have been received by Licensee, an Affiliate or sublicensee from an unaffiliated and unrelated buyer in an arm’s length sale of a substantially equivalent Licensed Product.

 

1.5                                “First Commercial Sale” means the first sale of any Licensed Product hereunder to a non-affiliated third party in exchange for cash or some equivalent to which a value can be assigned.

 

1.6                                “Licensed Field” means therapy for the treatment of a condition or disease covered by a valid claim of the licensed intellectual property.

 

1.7                                “Licensed Product(s)” means any material, compound, product, or kit, or any service, process, or procedure that either (i) is covered in whole or in part by at least one Valid Claim within Rutgers Patent Rights or (ii) is discovered, developed, made, sold, registered, or practiced using Rutgers Technology.

 

1.8                                “Net Sales” means the total of the gross consideration charged for Licensed Products made, used, leased, transferred, distributed, sold, or otherwise disposed of by Licensee, its Affiliates, and its sublicensees, less the sum of the following actual and customary deductions (net of rebates or allowances of such deductions received) included on the invoice and actually paid: [* * *]. In the event Licensee or any of its Affiliates or sublicensees makes a sale or transfer of a Licensed Product to a third party (i) for other than cash or (ii) where there are sales or transfers of Licensed Products as well as other products and/or services to the third party, such sales or transfers shall be considered a sale to be calculated at Fair Market Value for accounting and royalty purposes. Furthermore if Licensee, its Affiliates or sublicensees use Licensed Product for a commercial purpose with no expectation of subsequent royalty bearing transfer of such Licensed Product to an unaffiliated third party, such commercial use shall be considered a sale to be calculated at a Fair Market Value for royalty and accounting purposes.

 

A Licensed Product shall be deemed sold at the earliest date of billing, invoicing, shipping, or receipt of payment.

 

1.9                                “Running Royalties” is defined in Section 5.1 of this Agreement.

 

1.10                         “Rutgers Patent Rights” means (i) all patent applications and issued patents listed in Exhibit A, (ii) all foreign patent application filings selected by Licensee and (iii) any and all patent(s) issuing thereon corresponding to all of the foregoing that are owned by Rutgers, including any reissues, extensions (including governmental equivalents thereto), substitutions, and continuations, but excluding continuations-in-part.

 

1.11                         “Rutgers Technology” means all information, know-how, trade secrets, intellectual property and physical objects to the extent reasonably necessary or useful to practice the Invention in the Licensed Field, (i) owned by Rutgers, (ii) which Rutgers has the right to disclose and license to third parties without incurring obligations, (iii) and which was created and/or discovered by one or more of the Inventors or under the direction of one or more of the Inventors prior to the Effective Date of this Agreement.

 

1.12                         “Territory” means worldwide.

 

1.13                         “Valid Claim” means (i) a claim of an issued and unexpired patent included within Rutgers Patent Rights that has not been held permanently revoked, invalid or unenforceable by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal; or (ii) a claim of a pending patent application within the Patent Rights that was filed in good faith, has been pending no more than [* * *] years from the earliest priority date, and which has not been

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2



 

abandoned or finally disallowed without the possibility of appeal or refiling of such application. If a claim that is not a Valid Claim later issues, it then becomes a Valid Claim.

 

2.  GRANT

 

2.1                                Subject to the limitations set forth in this Agreement, Rutgers hereby grants to Licensee an exclusive license under the Rutgers Patent Rights and a non-exclusive license to use the Rutgers Technology in the Licensed Field to make, have made, use, import, put into use, distribute, sell and have sold Licensed Products in the Territory during the term of this Agreement. Licensee may delegate performance of duties and obligations under this Agreement to its Affiliates, but Licensee shall at all times have primary responsibility and liability for the performance of all Licensee duties and obligations arising under this Agreement, whether or not so delegated.

 

2.2                                Should Licensee, an Affiliate or sublicensee bring an action seeking to invalidate any of the Rutgers Patent Rights during the term of this Agreement, Licensee shall reimburse Rutgers for [* * *] percent ([* * *]%) of Rutgers out-of-pocket legal and related costs and expenses to defend such action. All payments shall be made to Rutgers within [* * *] days of submission of each third party invoice to Licensee. Furthermore, (i) neither Licensee or its Affiliates shall have any right to recoup any Running Royalties or other payments paid before or payable during the pendency of the aforementioned action with respect to any payments due to Rutgers under the terms of this Agreement, (ii) any dispute initiated by Licensee or an Affiliate regarding the validity of any Rutgers Patent Rights shall be litigated in the courts located in Newark, New Jersey, and the Parties agree not to challenge personal jurisdiction in that forum, and (iii) Licensee shall pay all such Running Royalties and other payments to Rutgers in a timely manner during the pendency of the action.

 

2.3                                If the Invention was funded by the U.S. Government, the license granted hereunder shall be subject to the overriding obligations to the U.S. Government set forth in 35 U.S.C. §§200-212 and any future amendments thereto, applicable governmental implementing regulations, as well as any other applicable governmental restrictions, including, without limitation (i) to the obligation to manufacture Licensed Product in the U.S. intended for consumption in the U.S. unless a waiver is obtained, and (ii) the royalty-free non-exclusive license thereunder to which the U.S. Government is entitled.

 

2.4                                Rutgers expressly reserves the right (i) to use by itself or with third party collaborators the Invention and associated intellectual property rights exclusively licensed hereunder, provided that such use is for educational, non-commercial research or other non-commercial purposes (ii) and to publish the results thereof. Nothing in this Agreement shall be interpreted to limit in any way the right of Rutgers and its faculty or employees to practice and use such Invention and practice the Rutgers Patent Rights for any purpose outside the Licensed Field or to license or permit such use outside the Licensed Field by third parties.

 

2.5                                All rights not specifically granted herein are reserved to Rutgers. Except as expressly provided under this Article 2, no right or license is granted (expressly or by implication or estoppel) by Rutgers to Licensee, its Affiliates or sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, trade secret, know-how, technical information, data or other proprietary right.

 

3.  SUBLICENSES

 

3.1                                Rutgers grants to Licensee the right to grant sublicenses to third parties under any or all of the licenses granted in Article 2, provided Licensee has current exclusive rights thereto under this Agreement at the time it exercises a right of sublicense. To the extent applicable, such sublicense shall include all of the rights of and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3



 

obligations due to Rutgers (and to the U.S. Government) that are contained in this Agreement. In addition, any sublicense must include the following provisions which will be effective in the event a sublicensee brings an action seeking to invalidate any Rutgers Patent Rights: (i) sublicensee will have no right to recoup any Running Royalties or other payments paid before or payable during the pendency of the aforementioned action, (ii) any dispute regarding the validity of any Rutgers Patent Rights shall be litigated in the courts located in Newark, New Jersey, and sublicensee agrees not to challenge personal jurisdiction in that forum, and (iii) sublicensee shall pay all such Running Royalties or other payments in a timely manner to Licensee during the pendency of the action.

 

3.2                                In each such sublicense, the sublicensee shall be prohibited from further sublicensing without the prior written consent of Rutgers, which consent shall not be unreasonably withheld, and shall further be subject to the applicable terms and conditions of the license granted to Licensee under this Agreement.

 

3.3                                Licensee shall provide Rutgers with a copy of each sublicense at least seven (7) business days prior to execution for review by Rutgers, but Rutgers receipt and review of such document shall not constitute an approval of such sublicense or a waiver of any of Rutgers rights or Licensee’s obligations hereunder. Licensee shall thereafter collect and guarantee payment of all Running Royalties and other obligations and consideration due Rutgers relating to the sublicenses and deliver all reports due Rutgers relating to the sublicenses.

 

3.4                                Licensee shall forward to Rutgers, within thirty (30) days of execution, a complete and accurate copy of each sublicense granted hereunder. Rutgers receipt of such sublicense shall not constitute an approval of such sublicense or a waiver of any of Rutgers rights or Licensee’s obligations hereunder. The legally controlling language of any sublicense shall be English.

 

3.5                                Upon termination of this Agreement for any reason, Rutgers, at its sole discretion, shall determine whether any or all sublicenses shall be terminated, canceled, or assigned to Rutgers.

 

3.6                                Notwithstanding any such sublicense, Licensee shall remain liable to Rutgers for all of Licensee’s duties and obligations contained in this Agreement, and any act or omission of a sublicensee that would be a breach of this Agreement if performed by Licensee shall be deemed to be a breach by Licensee of this Agreement.

 

4.  LICENSE ISSUE FEE, MILESTONE AND OTHER PAYMENTS AND EQUITY

 

4.1                                Licensee does not have a license issue fee.

 

4.2                                Licensee agrees to pay to Rutgers a license maintenance fee of five thousand dollars ($5,000), with the initial payment due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, and [* * *] dollars ($[* * *]) due annually on each anniversary date thereafter until the date of the First Commercial Sale. The license maintenance fee shall cease after the instatement of the Minimum Annual Royalty (“MAR”) obligation pursuant to Section 5.4. (i.e., Licensee will not pay both a license maintenance fee and a MAR in the same year.)

 

4.3                                Licensee shall pay to Rutgers milestone payment fees in accordance with the following schedule, and within [* * *] days of the Milestone Event:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4



 

Milestone Event

 

Amount

 

[* * *]

 

$

[* * *]

 

[* * *]

 

$

[* * *]

 

 

Milestone payment fees are non-refundable nor creditable against any other payments due Rutgers hereunder.

 

4.4                                Licensee shall pay to Rutgers [* * *] percent ([* * *]%) of all non-Running Royalty consideration received by Licensee from sublicensing or transferring the rights licensed to Licensee hereunder if the sublicense or transfer occurs [* * *], [* * *] ([* * *]%) of all non-Running Royalty considerations received by Licensee from sublicenses in consideration for the sublicensing of Patent Rights to sublicensees by Licensee (including options to sublicense and like rights) if the sublicense is entered into [* * *], and [* * *] ([* * *]%) of all non-Running Royalty considerations received by Licensee from sublicenses in consideration for the sublicensing of Patent Rights to sublicensees by Licensee (including options to sublicense and like rights) if the sublicense is entered into [* * *]. If such consideration is received in other-than cash, Rutgers share shall be converted to the fair cash market value of the non-cash consideration at the time of receipt by Licensee as that value is mutually agreed upon by the Parties. In the event the Parties cannot agree on fair market value, that value shall be determined by a reputable appraisal service.

 

4.5                                In the event that more than [* * *] percent ([* * *]%) of Licensee’s shares existing at the Effective Date of this Agreement, or substantially all of its assets, are sold or transferred to a Third Party prior to initiation of a Phase III clinical trial, and such sale or transfer results in a full liquidation of Licensee, Licensee will pay Rutgers upon closing of such transaction a “change of control” fee equal to [* * *] percent ([* * *]%) of the total value of the above transaction but not less than [* * *] dollars ($[* * *]). For purposes of avoiding ambiguity, Licensee’s Sublicense of its rights and obligations hereunder shall not be considered change of control.

 

5.  RUNNING ROYALTIES

 

5.1                                Licensee shall pay to Rutgers a running royalty of [* * *]% of Net Sales for the cumulative Net Sales less than [* * *] dollars ($[* * *]), [* * *]% of Net Sales for the cumulative Net Sales between $[* * *]-$[* * *] and [* * *]% over $[* * *] of Net Sales (hereinafter the “Running Royalties”) during the term of this Agreement. Sales or other transfers among Licensee, its Affiliates and sublicensees which would otherwise be subject to payment of Running Royalties under this Agreement shall be disregarded for purposes of computing Running Royalties, to the extent that Licensed Products subject to such sale or transfer are subsequently sold or transferred to a third party where a payment of Running Royalties by such third party with respect to such sale or transfer will be required. The Parties acknowledge that the foregoing percentage rate of Running Royalties rate reflects a blending of royalty rates for the grant of license rights to both the Rutgers Patent Rights and the Rutgers Technology and takes into consideration that certain Net Sales of Licensed Products may not involve the practice of the Rutgers Patent Rights, but only the use of Rutgers Technology.

 

5.2                                Licensee agrees that it shall not solicit or accept any consideration for the sale of any Licensed Product except as will be accurately reflected in Net Sales. Furthermore, Licensee agrees that it shall not enter into any transaction with an Affiliate that would circumvent its monetary or other obligations under this Agreement.

 

5.3                                Running Royalties payable to Rutgers shall be paid quarterly within [* * *] days of the end of each quarter of any given year, i.e., March 31, June 30, September 30, and December 31. Each such payment will be for unpaid Running Royalties that accrued within Licensee’s most recently completed calendar quarter plus any other unpaid Running Royalties due but not previously paid for any reason.

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5



 

5.4                                Licensee shall pay to Rutgers a Minimum Annual Royalty (“MAR”) payment equal to the amount set forth on the following schedule:

 

Year of Commercial Sale

 

Minimum Annual
Royalty

 

Year 1(Date of First Commercial Sale to December 31 of the calendar year)

 

$

[* * *]

 

Year 2,3, (January 1 to December 31 of the 2nd 3rd calendar year)

 

$

 [* * *]

 

Year 4 and annually thereafter (January 1 to December 31 of the 4th calendar year)

 

$

 [* * *]

 

 

The MAR payment shall start accruing beginning with the date of the First Commercial Sale of a Licensed Product. The MAR payment shall be payable to Rutgers by each January 31 of each year following the calendar year for which the MAR is due, and shall be credited against the earned Running Royalties owed for the applicable calendar year. As the First Commercial Sale of a Licensed Product may occur at any point during the calendar year, the first year MAR due may accordingly be pro-rated by the fractional number of full months remaining in that calendar year after the First Commercial Sale of a Licensed Product.

 

In the event the maintenance fee was paid during a calendar year prior to first Commercial Sales, the amount of the paid maintenance fee shall be credited against the MAR owed for that year. Any remaining balance would be credited towards the following year’s MAR.

 

For the purpose of clarity: the pro-rated MAR shall be calculated by multiplying the number of months remaining in the calendar year by the MAR monthly value.

 

As an example only:

 

·                   [* * *]

·                   [* * *]

·                   [* * *]

 

5.5                                All amounts due to Rutgers shall be payable in U.S. dollars. When Licensed Products are sold for monies other than U.S. dollars, the Running Royalties will first be determined in the foreign currency of the country in which such Licensed Products were sold and then converted into equivalent U.S. dollars. The exchange rate for all payments due to Rutgers will be the U.S. dollar buying rate quoted in the Wall Street Journal on the last day of the reporting period.

 

5.6                                Licensee shall be responsible for any and all taxes, fees, or other charges imposed by the government of any country outside the U.S. on any remittance due to Rutgers incurred in any such country. Licensee shall also be responsible for all bank transfer charges.

 

5.7                                If at any time legal restrictions prevent the acquisition or prompt remittance of U.S. dollars by Licensee with respect to any country where a Licensed Product is sold, Licensee shall pay Running Royalties due to Rutgers from Licensee’s other sources of U.S. dollars.

 

5.8                                Net Sales of any Licensed Product shall not be subject to more than one assessment of the scheduled Running Royalties, and such assessment shall be that which yields the highest royalty payment to Rutgers.

 

5.9                                In the event that any patent or any claim thereof included within the Rutgers Patent Rights shall be held invalid in a final decision by a court of competent jurisdiction and last resort in any country and from which no appeal has or can be taken, all obligation to pay Running Royalties based on such patent or claim or any claim patentably indistinct therefrom shall cease as of the date of such final decision with respect to such

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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country. Licensee shall not, however, be relieved from paying any Running Royalties that accrued before such decision or that are based on another patent or claim not involved in such decision or that are based on Rutgers Technology.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.  PATENT PROSECUTHON AND MAINTENANCE

 

6.1                                As of the License Effective Date, unless otherwise agreed in writing, Licensee shall assume responsibility to diligently prosecute and maintain the patent applications and patents included in the Rutgers Patent Rights using patent counsel now appointed unless otherwise agreed upon by the Parties. Such counsel shall take instructions from Licensee on matters relating to the prosecution and maintenance of such patent applications and patents within Rutgers Patent Rights. Rutgers shall remain the client of record for such patent counsel. Rutgers and Licensee agree to have the Client and Billing Agreement attached hereto as Exhibit C of the Agreement fully executed by the appropriate parties upon the execution of this Amendment. Licensee shall keep Rutgers fully informed and appraised of the continuing prosecution and maintenance of all patent applications and patents within Rutgers Patent Rights and all matters related thereto in a timely manner. Licensee and Rutgers agree to keep confidential all documentation relating to the prosecution and maintenance of the Rutgers Patent Rights. Licensee shall supply Rutgers with a copy of all patent filings and provide Rutgers with a reasonable opportunity to comment and advise on all communications received from and all submissions to any government patent office with respect to any patent application or patent within Rutgers Patent Rights and Licensee will give all due consideration to such comments and advice received from Rutgers.

 

6.2                                Licensee shall amend any patent application within Rutgers Patent Rights to include claims reasonably requested by Rutgers.

 

6.3                                As of the License Effective Date, all costs of preparing, filing, prosecuting, defending and maintaining all U.S. patent applications and/or patents within Rutgers Patent Rights, including, but not limited to, declaratory judgments, interferences, oppositions, reexaminations, reissues, as well as all corresponding foreign patent applications and patents covered by Rutgers Patent Rights in the Territory and included in the Rutgers Patent Rights during the term of the Agreement shall be borne by Licensee. Furthermore, Licensee agrees to reimburse Rutgers for all past patent-related costs estimated to be seventy one thousand eight hundred fifty five dollars ($71,855) which shall be due within thirty (30) days of the Effective Date.

 

6.4                                Licensee shall, file, prosecute, and maintain all patent applications and patents covered by Rutgers Patent Rights in the U.S. and foreign countries of the Territory so as to fully protect the Rutgers Patent Rights. Subject to Section 6.5, Licensee consents to and accepts the filing of all PCT and foreign patent applications that have already been filed as of the Effective Date. Licensee shall notify Rutgers at least three (3) months before foreign filings are due based on the filing of the corresponding U.S. application of its decision as to which foreign patents, if any, it elects to file. This notice shall be in writing and shall identify the countries selected for filing. The absence of such a notice from Licensee shall be considered by Rutgers to be an election not to request the applicable foreign rights. Licensee shall so notify Rutgers immediately upon making the decision not to file or to continue the prosecution or maintenance of any patent application or patent within Rutgers Patent Rights so that Rutgers has the opportunity to continue prosecution or maintenance of such patent application or patent within Rutgers Patent Rights at Rutgers cost and expense.

 

6.5                                Licensee’s obligation to underwrite and to pay patent costs shall continue for so long as this Agreement remains in effect, provided, however, that Licensee may terminate its obligations with respect to any given patent application or patent, including terminating its obligations on a country-by-country basis, upon three (3) months prior written notice to Rutgers. Licensee shall continue to pay all patent costs during the three (3) month notice period. Commencing on the effective date of such notice, Rutgers may continue prosecution and/or maintenance of such application(s) or patent(s) at its sole discretion and expense, and Licensee shall have no further right or licenses thereunder. Licensee shall promptly provide Rutgers with all documents and files in its possession which would be reasonably necessary to allow Rutgers to continue prosecution and/or maintenance of such application(s) or patent(s).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.6                                Rutgers shall have the right to file patent applications and maintain patents at its own expense in any country or countries in which Licensee has not elected to secure patent rights or has terminated its patent obligations, and such applications and patents shall not be subject to this Agreement and may be freely licensed by Rutgers to third parties.

 

6.7                                The failure of Licensee to timely perform all activities relating to the filing, prosecution and maintenance of patent applications and patents under the Rutgers Patent Rights, unless curable, and the timely payment of invoices to the patent counsel of record shall be considered a material breach of this Agreement.

 

6.8                                Rutgers shall cooperate with Licensee in applying for an extension of the term of any patent included within Rutgers Patent Rights if appropriate under the Drug Price Competition and Patent Term Restoration Act of 1984 as amended. Licensee shall prepare all such documents, and Rutgers agrees to execute such documents and to take such additional action as Licensee may reasonably request in connections therewith at no out-of-pocket expense.

 

7.  DILIGENCE

 

7.1                                License shall use its best efforts to develop and obtain any required governmental approvals required to test, register, manufacture, market and sell Licensed Products in all countries of the Territory in the Licensed Field within a reasonable time after the Effective Date and in quantities sufficient to meet market demand.

 

7.2                                Licensee shall be entitled to exercise prudent and reasonable business judgment in meeting its diligence obligations stipulated in this Agreement.

 

7.3                                In addition to the general diligence requirements set forth herein, Licensee shall complete the following diligence milestones within the time specified for each milestone:

 

Milestone

 

Completion Date

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

 

 

[* * *]

 

[* * *]

 

 

 

[* * *]

 

[* * *]

 

7.4                                Licensee shall provide its written business plan or a development plan if an existing company, for commercialization of Licensed Products to Rutgers no later than [* * *] days after the Effective Date. The plan shall include, without limitation, a detailed explanation of specific actions to be taken by Licensee in order to meet the diligence milestones included herein as well as such other items as may be reasonably requested by Rutgers.

 

8.  PROGRESS AND PAYMENT REPORTS

 

8.1                                Beginning [* * *] months after the Effective Date, and annually thereafter, Licensee shall submit to Rutgers a progress report covering Licensee’s activities related to the research, development, marketing introduction and testing of all Licensed Products and the obtaining of governmental approvals necessary for

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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marketing, where applicable. These progress reports shall be made for each Licensed Product in each applicable country of the Territory.

 

8.2                                The progress reports submitted shall include sufficient information to enable Rutgers to determine Licensee’s progress in fulfilling its obligations under all pertinent Articles or Sections of this Agreement. A progress report form is provided in Exhibit D for convenience of Licensee.

 

8.3                                Licensee shall have a continuing responsibility to keep Rutgers informed of the large/small entity status (as defined by the U.S. Patent and Trademark Office) of itself and its sublicensees.

 

8.4                                Licensee shall report to Rutgers the date of First Commercial Sale of each Licensed Product in each country within [* * *] days of such First Commercial Sale.

 

8.5                                After the First Commercial Sale of a Licensed Product anywhere in the world, Licensee will make annual Running Royalties reports to Rutgers on or before each February 28, of each year concurrently with Running Royalties payments due on the same date. Each such Running Royalties report will cover Licensee’s most recently completed calendar year and will show (i) unit sales, gross sales and Net Sales of each type of Licensed Product sold by Licensee, its Affiliates and sublicenses listed by country on which Running Royalties have not been paid, including a clear indication of how Net Sales were calculated; (ii) the Running Royalties payable hereunder, including a breakdown, where more than one patent is licensed hereunder, of how Running Royalties income is allocated among the patents; (iii) the method used to calculate the Running Royalties; (iv) the exchange rates used, if any; and (v) any other information relating to the foregoing reasonably requested by Rutgers. Any late payments are subject to interest charges described herein.

 

8.6                                If no sales of Licensed Products have been made during any reporting period, a written statement to this effect shall be made by Licensee.

 

8.7                                With each Running Royalties report, Licensee shall also include a written statement setting forth any additional payment or other consideration due to Rutgers during the applicable calendar quarter pursuant to the terms of this Agreement and setting forth in reasonable detail the basis for the payment and the manner in which the payment was calculated.

 

8.8                                Licensee acknowledges that Rutgers considers the reports required as well as the timely delivery thereof to Rutgers to be of material value and importance to Rutgers, and in the event of a termination of the Agreement, Licensee will provide Rutgers with a final progress report within [* * *] days of the termination date.

 

9.  BOOKS AND RECORDS

 

9.1                                Licensee shall keep and cause its Affiliates and sublicensees to keep books and records in accordance with generally accepted accounting principles, consistently and accurately showing all transactions and information relating to this Agreement. Such books and records shall be preserved for at least [* * *] years from the date of the entry to which they pertain and shall be open to inspection by representatives or agents of Rutgers at reasonable times.

 

9.2                                The fees and expenses of Rutgers’ representatives performing such an examination shall be borne by Rutgers. However, if an error in any payment of more than [* * *] percent ([* * *]%) of such payment due is discovered, or if as a result of the examination it is determined that Licensee is in material breach of any of its

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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obligations under this Agreement, then the fees and expenses of these representatives shall be borne by Licensee, and Licensee shall promptly reimburse Rutgers for reasonably documented audit expenses as well as all overdue payment and interest charges.

 

10.  TERM OF THE AGREEMENT

 

10.1                         Unless otherwise terminated by operation of law or by acts of the Parties in accordance with the provisions of this Agreement, this Agreement shall be in force from the Effective Date and shall remain in effect in each country of the Territory until the expiration of the last-to-expire patent licensed under this Agreement in such country or ten (10) years from the date of First Commercial Sale of a Licensed Product in such country, whichever is later.

 

10.2                         Any termination or expiration of this Agreement shall not affect the rights and obligations set forth in the following Articles and/or Sections:

 

Article 5-

RUNNING ROYALTIES (with the exception of Section 5.4 Minimum Annual (Running) Royalties payments)

Article 9-

BOOKS AND RECORDS

Article 11-

TERMINATION FOR CAUSE BY EITHER PARTY

Article 12-

VOLUNTARYTERMINATION BY LICENSEE

Article 13-

DISPOSITION OF LICENSED PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION

Article 14-

USE OF NAMES AND TRADEMARKS

Article 15-

LIMITED WARRANTY, DISCLAIMERS AND LICENSEE REPRESENTATIONS

Article 17-

INDEMNIFICATION AND INSURANCE

Article 18-

NOTICES

Article 20

LATE PAYMENTS

Article 22-

GOVERNING LAW AND DISPUTE RESOLUTION

Article 25-

CONFIDENTIALITY

Section 2.2-

(Licensee effort to invalidate patent)

Section 3.5-

(survival of sublicense after Agreement termination)

Section 3.6-

(liability of Licensee for sublicensee breaches)

Section 8.5-

(quarterly royalty reports)

Section 8.7-

(report of other consideration due Rutgers)

Section 8.8-

(final progress report after Agreement termination)

Section 10.2-

(surviving Agreement provisions)

Section 10.3-

(no rescinding of actions or release of liability upon Agreement termination)

Section 16.6-

(compliance with patent marking laws)

Section 26.6-

(reformation of invalid Agreement provisions)

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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10.3                         Any termination or expiration under this Agreement shall not relieve either Party of any obligation or liability accrued hereunder prior to such termination or expiration or impair any accrued rights of either Party. In addition, any termination or expiration shall not rescind anything done by Licensee or any payments made to Rutgers hereunder prior to the time such termination or expiration becomes effective or affect in any manner any Rights of Rutgers arising prior to such termination or expiration.

 

11.  TERMINATION FOR CAUSE BY EITHER PARTY

 

11.1                         If one Party should breach or fail to perform any provision of this Agreement, then the other Party may give written notice of such default (Notice of Default) to the breaching Party. If the breaching Party should fail to cure such default within [* * *] days of notice thereof, the non-breaching Party shall have the right to terminate this Agreement and the licenses herein by a second written notice (“Notice of Termination”) to the breaching Party unless there is a good faith dispute about whether the other Party is in default. If a Notice of Termination is sent to breaching Party, this Agreement shall automatically terminate on the effective date of such notice. By way of illustration but not limitation, terminable breaches shall include the following: (i) failure to make any payment when due, (ii) breaches of any warranties, (iii) breaches of confidentiality obligations, (iv) breach of diligence obligations, and (v) failure to provide reports in an accurate and timely manner.

 

12.  VOLUNTARY TERMINATION BY LICENSEE

 

12.1                         Licensee shall have the right at any time to terminate this Agreement in its entirety by giving [* * *] days advance notice thereof in writing to Rutgers. If such termination is within the first [* * *] years of this Agreement, Licensee shall pay Rutgers an early termination fee of [* * *] dollars ($[* * *]).

 

13.  DISPOSITION OF LICENSED PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION

 

13.1                         Upon termination of this Agreement by either Party (i) Licensee shall have the privilege of disposing of all previously made or partially made Licensed Products (Licensee may complete partially made Licensed Products) within a period of [* * *] days after the initial Notice of Termination given pursuant to paragraph 11.1 or 12.1 hereunder, provided, however, that the disposition of such Licensed Products shall be subject to the terms of this Agreement including, but not limited to, the payment of Running Royalties at the rate and at the time provided herein and the rendering of reports thereon, and (ii) Licensee shall promptly return, and shall cause its Affiliates and sublicensees to return, to Rutgers all property belonging to Rutgers including without limitation Rutgers Technology, if any, that has been provided to Licensee or its Affiliates or sublicensees hereunder, and all copies and facsimiles thereof and derivatives therefrom (except that Licensee may retain one copy of written material for record purposes only, provided such material is not used by Licensee for any other purpose and is not disclosed to others). Upon termination by either Party of this Agreement, Licensee agrees, at the request of Rutgers, to negotiate in good faith and on commercially reasonable terms a grant of license rights in the Licensed Field, with right of sublicense, to Rutgers or Rutgers designee of all information, know-how, trade secrets, patents and invention, relating to License Products, including without limitation, any changes or additions to Licensed Products or new methods for making or new uses for Licensed Products, to the extent that any of the foregoing are owned or controlled by Licensee or its Affiliates.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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14.  USE OF NAMES AND TRADEMARKS

 

14.1                         Nothing contained in this Agreement shall be construed as granting any right to Licensee, its Affiliates or sublicensees to use in advertising, publicity, or other promotional activities or otherwise any name, trade name, trademark, or other designation of Rutgers or any of its units (including contraction, abbreviation or adaption of any of the foregoing). Unless required by law or consented to in advance in writing by Rutgers, the use by Licensee of the name, “Rutgers, The State University of New Jersey” or any campus or unit of Rutgers is expressly prohibited.

 

15.  LIMITED WARRANTY AND DISCLAIMERS AND LICENSEE REPRESENTATIONS

 

15.1                         Rutgers warrants to Licensee that it has the lawful right to grant this license.

 

15.2                         This license and the associated Invention, Patent Rights and Rutgers Technology are provided “AS IS” and, except as provided in Section 15.1 herein, WITHOUT WARRANTY OF PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WITHOUT ANY OTHER WARRANTY WHETHER EXPRESS OR IMPLIED. RUTGERS MAKES NO REPRESENTATION AND DISCLAIMS ANY WARRANTY, WHETHER EXPRESS OR IMPLIED, THAT THE LICENSED PRODUCTS OR ANY OTHER USE OF THE RUTGERS PATENT RIGHTS AND/OR RUTGERS TECHNOLOGY WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.

 

15.3                         IN NO EVENT SHALL RUTGERS BE LIABLE FOR ANY INCIDENTAL, DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS, RESULTING FROM EXERCISE OF THIS LICENSE BY OR ON BEHALF OF LICENSEE, ITS AFFILIATES OR SUBLICENSEES OR MANUFACTURE, SALE, OR USE OF THE INVENTION, LICENSED PRODUCTS, RUTGERS PATENT RIGHTS OR RUTGERS TECHNOLOGY LICENSED HEREUNDER.

 

15.4                         Nothing in this Agreement shall be construed as:

 

15.4.1               a warranty or representation by Rutgers as to the validity or scope of any Rutgers Patent Rights; or

 

15.4.2               a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents or other intellectual property rights; or

 

15.4.3               an obligation to bring or prosecute actions or suits against third parties except as provided in Article 16 herein; or

 

15.4.4               conferring by implication, estoppel or otherwise any license or rights under any patents or other intellectual property of Rutgers other than Rutgers Patent Rights and Rutgers Technology, regardless of whether such patents are dominant or subordinate to Rutgers Patent Rights; or

 

15.4.5               an obligation to furnish any know-how not provided in Rutgers Technology licensed hereunder.

 

15.4.6               a warranty or representation of the freedom to operate and the validity, scope and territorial extent of the Rutgers Patent Rights.

 

15.5                         By execution of this Agreement, Licensee represents and covenants that (i) Licensee has been given an opportunity to conduct sufficient due diligence with respect to all items and issues pertaining to this Agreement and (ii) Licensee has adequate knowledge and expertise, or has utilized knowledgeable consultants, to adequately conduct the due diligence. Licensee further represents and covenants that it is a duly organized,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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valid entity of the form indicated in the preamble to this Agreement, and is in good standing under the laws of its jurisdiction of organization as indicated in the preamble of this Agreement, and has all necessary corporate or other appropriate power and authority to execute and perform its obligations hereunder.

 

16.  INFRINGEMENT AND PATENT MARKING

 

16.1                         Rutgers and Licensee are responsible for notifying each other promptly of any infringement of Rutgers Patent Rights that may come to their attention. The Parties shall consult one another in a timely manner concerning any appropriate response thereto.

 

16.2                         Licensee shall have the right, but not the obligation to prosecute such infringement at its own expense, and, if it elects to prosecute, shall begin such prosecution within a reasonable time after aforesaid consultation between the Parties. Licensee shall not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Rutgers without Rutgers written permission. Financial recoveries from any such litigation will first be applied to reimburse Licensee for its litigation expenditures with the balance being split [* * *] percent ([* * *]%) to Licensee and [* * *] percent ([* * *]%) to Rutgers.

 

16.3                         Licensee’s rights in Section 16.2 shall be subject to the continuing right of Rutgers to intervene at Rutgers own expense and join Licensee in any claim or suit for infringement of the Rutgers Patent Rights. Any consideration received by Licensee in settlement of any claim or suit shall be shared between Rutgers and Licensee in proportion with their share of the litigation expenses in such infringement action, but Rutgers shall in no event receive less than the percentage share it is entitled to under Section 16.2.

 

16.4                         If Licensee fails to prosecute such infringement, Rutgers shall have the right, but not the obligation, to prosecute such infringement at its own expense. In such event, financial recoveries from any such litigation will first be applied to reimburse Rutgers and Licensee for its litigation expenditures with the balance being split [* * *] percent ([* * *]%) to Rutgers and [* * *] percent ([* * *]%) to Licensee.

 

16.5                         Each Party agrees to cooperate with the other in litigation proceedings instituted hereunder but at the expense of the Party on account of whom suit is brought for out-of-pocket expenses.

 

16.6                         Licensee its Affiliates and its sublicensees shall comply with all U.S. and foreign laws with respect to patent marking of Licensed Products.

 

16.7                         If in a suit initiated by Licensee, Rutgers is involuntarily joined other than by Licensee, then Licensee will pay any costs incurred by Rutgers arising out of such suit, including any legal fees of counsel that Rutgers selects and retains to represent it in the suit.

 

16.8                         If Rutgers is subjected to third party discovery related to the Rutgers Patent Rights or Licensed Products licensed to Licensee hereunder arising out of actions by Licensee, Licensee will pay Rutgers’ documented out of pocket expenses with respect to same.

 

17.  INDEMNIFICATION AND INSURANCE

 

17.1                         To the maximum extent permitted by applicable law, none of Rutgers, its governors, trustees, officers, employees, students, agents and the Inventor(s) (each an “Indemnified Person”) shall have any liability or responsibility whatsoever to Licensee and any sublicensee or any other person or Entity for or on account of (and Licensee agrees and covenants, and agrees to cause each of its sublicensees to agree and covenant not to

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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sue any Indemnified Person in connection with) any injury, loss, or damage of any kind or nature, sustained by, or any damage assessed or asserted against, or any other liability incurred by or imposed upon, Licensee, any of its sublicensees or any other person or Entity, whether direct, indirect, special, punitive, incidental, consequential or otherwise arising under any legal theory (and further excluding without limitation any existing or anticipated profits or opportunities for profits lost by Licensee or any sublicensee) arising out of or in connection with or resulting from (i) the production, use or sale of the Licensed Products by Licensee or sublicensees; (ii) the use of any Rutgers Patent Rights or Rutgers Technology by Licensee or any sublicensee; (iii) any advertising or other promotional activities with respect to either of the foregoing; or (iv) the production, use, or sale of any product, process or service, identified, characterized or otherwise developed by Licensee or any sublicensee with the aid or use of the Rutgers Patent Right or Rutgers Technology, unless such liability or responsibility is due to willful misconduct or gross negligence by an Indemnified Person. Licensee shall indemnify and hold each Indemnified Person harmless against all claims, demands, losses, damages or penalties (including, but not limited to, attorneys’ fees) made against any Indemnified Person with respect to items (i) through (iv) above, whether or not such claims are groundless or without merit or basis.

 

17.1                         From and after the earlier date of dosing of Licensed Product in a clinical trial or First Commercial Sale of a Licensed Product, Licensee shall maintain commercially issued policies of insurance, or a program of self-insurance if such program is approved in advance in writing by an authorized representative of Rutgers, which provide coverage and limits as required by statute or as necessary to prudently insure the activities and operations of Licensee, including, but not limited to, its ability to satisfy its obligations pursuant to Section 17.1 herein. The commercial general liability insurance policy, or liability self-insurance program, shall protect the interests of Rutgers and provide coverage limits of not less than [* * *] dollars ($[* * *]) combined single limits as respects premises, operations, contractual liability and, if applicable, liability arising out of products and/or completed operations. Licensee shall provide Rutgers with certificates of insurance for commercially insured policies. Licensee shall ensure that its sublicensees maintain the same insurance coverage as Licensee is required to maintain hereunder.

 

It is expressly agreed that the insurance or self-insurance are minimum requirements which shall not in any way limit the liability of Licensee and shall be primary coverage. Any insurance or self-insurance program maintained by Rutgers shall be excess and noncontributory.

 

17.2                         Rutgers shall promptly notify Licensee in writing of any claim or suit brought against Rutgers in respect of which Rutgers intends to invoke the provisions of Article 17. Licensee shall keep Rutgers informed on a current basis of its defense of any claims pursuant to Article 17.

 

18.  NOTICES

 

18.1                         Any notice or payment required to be given to either Party shall be deemed to have been properly given and to be effective (i) on the date of delivery if delivered in person, (ii) five (5) days after mailing if mailed by first-class certified mail, postage paid and deposited in the U.S. mail, to the respective addresses given below, or to such other address as it shall designate by written notice given to the other Party, (iii) on the date of delivery if delivered by express delivery service or (iv) or as otherwise agreed upon in writing by the Parties.

 

In the case of Licensee:                                                                 Biohaven Pharmaceutical Holding Company, Ltd.

c/o Maples Corporate Services (BVI) Limited

P.O. Box 173

Kingston Chambers

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Road Town

Tortola, British Virgin Islands

Attn: Vladimir Coric, CEO

 

In the case of Rutgers:                                                                       Rutgers, The State University of New Jersey

Office of Research Commercialization

Attention: Executive Director

33 Knightsbridge Road - 2 East, Piscataway, NJ 08854

Email: as at the Rutgers website https://otc.rutgers.edu/about/staff-listing

 

Either Party may change its official address upon written notice to the other Party.

 

19.  ASSIGNABILITY

 

19.1                         This Agreement is binding upon and shall inure to the benefit of Rutgers, its successors and assigns, but shall be personal to Licensee and assignable by Licensee only with the written consent of Rutgers, except a sale of all of the assets of Licensee related to this Agreement shall not be deemed an assignment.

 

20.  LATE PAYMENTS

 

20.1                         In the event any amounts due Rutgers hereunder, including but not limited to Running Royalties payments and patent cost reimbursements, are not received when due, Licensee shall pay to Rutgers interest charges at a rate of [* * *] percent per annum, compounded monthly, or the highest rate permitted by law, if less than [* * *] percent. Such interest shall be calculated from the date payment was due until actually received by Rutgers.

 

21.  WAIVER

 

21.1                         A waiver by a Party of a breach or violation of any provision of this Agreement by the other Party shall not be deemed a waiver of any subsequent breach or default of that provision by the other Party.

 

22.  GOVERNING LAWS AND DISPUTE RESOLUTION

 

22.1                         THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS, but the scope and validity of any patent or patent application shall be governed by the applicable laws of the country of such patent or patent application.

 

22.2                         The Parties to this Agreement agree to work toward resolution of any disputes in a cooperative manner beginning on the earlier of (i) the date of notice of request by one Party to the other for such dispute resolution or (ii) the effective date of the notice of breach of the terms of the Agreement given by one Party to the other Party. In the event that a resolution to a dispute cannot be reached within forty days (40) after the initial notice of request, a mutually agreed upon third party will be asked to review the dispute and recommend a non-binding opinion. In the event the Parties cannot agree on such third party after at least ten (10) days of good faith negotiations, they shall have the right to seek appointment of a neutral and independent third party arbitrator by a nationally-recognized non-profit dispute resolution organization such as the International Institute for Conflict Prevention and Resolution or the American Arbitration Association, or by any court of competent jurisdiction in accordance with the court’s power to appoint arbitrators. Each Party shall pay one

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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half of any arbitrator or court fess. Neither Party shall be bound to accept any recommended non-binding opinion. In addition, neither Party shall be bound under the terms of this section for more than one hundred twenty (120) days after the earlier to occur of the effective date of the initial notice of request for dispute resolution or the effective date of notice of breach of the Agreement by one Party to the other Party, except as may be agreed to in writing by the Parties.

 

22.3                         The Parties hereby submit to the exclusive jurisdiction of and venue in the courts located in the State of New Jersey with respect to any and all disputes concerning the subject of this Agreement that are litigated.

 

23.  FOREIGN GOVERNMENT APPROVAL OR REGISTRATION

 

23.1                         If this Agreement, any associated transaction, or any Licensed Product is required by the law of any nation to be either approved or registered with any governmental agency, Licensee shall assume all legal obligations to do so and the costs in connection therewith.

 

24.  EXPORT CONTROL LAWS

 

24.1                         Licensee shall observe all applicable U.S. and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.

 

25.  CONFIDENTIALITY

 

25.1                         Licensee (i) shall not use any Confidential Information except for the sole purpose of performing this Agreement, (ii) shall safeguard the same against disclosure to others with the same degree of care as it exercises with its own information of a similar nature, and (iii) shall not disclose or permit the disclosure of Confidential Information to others (except to its employees, agents or consultants who are bound to Licensee and Rutgers by a like obligation of confidentiality) without the express written permission of Rutgers, except that Licensee shall not be prevented from using or disclosing any Confidential Information:

 

·                   which Licensee can demonstrate by written records was previously known to it; or

·                   which is now, or becomes in the future, information generally available to the public in the form supplied, other than through acts or omissions of Licensee; or

·                   which is lawfully obtained by Licensee from sources independent of Rutgers who were entitled to provide such information to Licensee; or

·                   which is required by law to be disclosed; or

·                   which is Rutgers Technology and which is necessary or useful in order for Licensee to develop, make, use and sell Licensed Products as intended by the Parties, provided Licensee exercises best efforts to make any such disclosures under a confidentiality agreement to the extent feasible.

 

The obligations of Licensee under this Section 25 shall remain in effect during the term of this Agreement and for [* * *] years from the date of termination or expiration of this Agreement.

 

26.  MISCELLANEOUS

 

26.1                         The headings of the articles are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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26.2                         This Agreement will not be binding upon the Parties until it has been signed below on behalf of each Party by a duly authorized representative.

 

26.3                         No amendment or modification hereof shall be valid or binding upon the Parties unless made in writing and signed on behalf of each Party by a duly authorized representative.

 

26.4                         This Agreement embodies the entire understanding of the Parties and shall supersede all previous and contemporaneous communications, representations or understandings, either oral or written, between the Parties relating to the subject matter hereof.

 

26.5                         Licensee shall not enter into any agreements relating to this Agreement with the Inventors or other Rutgers employees or students in contravention of the legal rights or policies of Rutgers.

 

26.6                         In case any of the provisions contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, (i) such invalidity, illegality or unenforceability shall not affect any other provisions hereof, (ii) the particular provision, to the extent permitted by law, shall be reasonably construed and equitably reformed to be valid and enforceable and if the provision at issue is a commercial term, it shall be equitably reformed so as to maintain the overall economic benefits of the Agreement as originally agreed upon by the Parties, and (iii) this Agreement shall be construed as if such invalid or illegal or unenforceable provisions had never been contained herein.

 

26.7                         Rutgers shall have the right to terminate this Agreement forthwith by giving written notice of termination to Licensee at any time upon or after (i) the filing by Licensee of a petition of bankruptcy or insolvency, or (ii) any adjudication that Licensee is bankrupt or insolvent, or (iii) the filing by Licensee of any petition or answer seeking judicial reorganization, readjustment or arrangement of the business of Licensee under any law relating to bankruptcy or insolvency, or (iv) the appointment of a receiver for all or substantially all of the property of Licensee, or (v) the making of any assignment or attempted assignment for the benefit of creditors, or (vi) the institution of any proceeding or passage of any resolution for the liquidation or winding up of Licensee’s business or for termination of its corporate life.

 

26.8                         Neither Licensee nor its Affiliates or sublicensees shall originate any publicity, news release or other public announcement, written or oral, relating to this Agreement or the existence of an arrangement between the Parties, except as required by law, without the prior written approval of Rutgers, which approval shall not be unreasonably withheld.

 

26.9                         This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Electronic and facsimile versions of this Agreement, including the signatures thereon, are acceptable for execution and record purposes and shall bind the Parties.

 

26.10                  Nothing herein shall be deemed to constitute one Party as the agent or representative of the other Party or both Parties as joint ventures or partners. Each Party is an independent contractor.

 

27.  INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT

 

27.1                         In the event either Party receives notice pertaining to any patent included within Rutgers Patent Rights pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, hereinafter, “the Act”), as amended, including but not necessarily limited to notices pursuant to Sections 101

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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and 103 of the Act from persons who have filed an Abbreviated New Drug Application (“ANDA”) or a “paper” New Drug Application (“paper NDA”), or in the case of an infringement of Rutgers Patent Rights as defined in Section 271(e) of Title 35 of the United States Code, such Party shall notify the other Party promptly but in no event later than ten (10) days after receipt of such notice.

 

27.2                         If Licensee wishes action to be taken against such infringement, as provided in the Act, Licensee shall request such action by written notice to Rutgers. Within thirty (30) days of receiving said request, Rutgers will give written notice to Licensee of its election to commence suit on its own account or refuse to commence such suit. Licensee may thereafter bring suit for patent infringement as provided by the Act if and only if Rutgers refuses to commence suit and if the infringement occurred during the period that Licensee had exclusive rights in the United States under this Agreement. However, in the event Licensee elects to bring suit in accordance with this paragraph, Rutgers may thereafter join such suit at its own expense.

 

27.3                         The relevant provisions of Article 16 shall likewise apply to any legal action brought under this Article 27.

 

27.4                         Rutgers hereby authorizes Licensee to include in any NDA for a Licensed Product a list of patents included within Rutgers Patent Rights identifying Rutgers as patent owner.

 

IN WITNESS WHEREOF, both Rutgers and Licensee have executed this Agreement by their duly authorized representative effective as of the date written above.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Biohaven Pharmaceutical

 

Rutgers, The e University of New Jersey

Holding Company Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Vladimir Coric

 

By:

/s/ S. David Kimball

 

 

 

 

(Signature)

Name

Vladimir Coric

 

Name:

S. David Kimball, Ph.D.

 

 

 

 

 

Title

Chief Executive Officer

 

Associate Vice President,

 

 

 

Office of Research Commercialization

 

 

 

 

 

Date

September 7, 2016

 

Date

September 1, 2016

 

 

 

 

 

 

 

 

 

 

Signature page for:

Exclusive License Agreement

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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EXHIBIT A

 

1.                                       Rutgers Patent Rights

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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EXHIBIT B

 

Progress Report Template

 

General Progress Report

 

1.               Summary of work completed, including key scientific results, market analysis

 

2.               Summary of work in progress, including product development and testing and progress in obtaining government approvals

 

3.               Current schedule of anticipated key events or milestones.

 

4.               Market plans for introduction of Licensed Products in the Territory

 

5.               Summary of resources (dollar value) spent in the reporting period for research, development, and marketing of Licensed Products

 

6.               Activities in obtaining sublicensees and activities of sublicensees where applicable

 

7.               Financial statements as of the end of the previous calendar quarter

 

8.               Any other information that may be useful to Rutgers and our relationship

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Exhibit C

 

Client and Billing Agreement

 

Rutgers, the State University of New Jersey, a specially chartered New Jersey Educational Institution, with offices at 33 Knightsbridge Road - 2 East, Piscataway, NJ 08854 (“RUTGERS”) and Biohaven Pharmaceutical Holding Co. Ltd, a corporation having a principal place of business at an address of c/o Maples Corporate Services (BVI) Limited, P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands, ( “COMPANY”), have agreed to use the law firm of Fox Rothschild, with offices at 997 Lenox Drive Bldg 3, Lawrenceville, NJ 08648 (“FIRM”) to prepare, file and prosecute the patent applications listed in Exhibit A attached hereto and to maintain the Rutgers Patent Rights that issue thereon (“Rutgers Patent Rights”).

 

WHEREAS, COMPANY is the licensee of RUTGERS’ interest in the Rutgers Patent Rights; and

 

WHEREAS, RUTGERS and COMPANY desire to have the FIRM perform the legal services related to obtaining and maintaining the Rutgers Patent Rights in accordance with this Agreement; and

 

WHEREAS, FIRM desires to perform the legal services related to obtaining and maintaining the Rutgers Patent Rights; and

 

NOW THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained, the parties hereto agree as follows:

 

1.                                       RUTGERS shall, at all times hereunder, remain the client of record of the FIRM. FIRM shall interact directly with COMPANY on all patent prosecution matters related to the Rutgers Patent Rights and will copy RUTGERS on all correspondence. COMPANY or the FIRM shall supply Rutgers with a copy of all patent filings and provide Rutgers with a reasonable opportunity to comment and advise on all communications received from and all submissions to any government patent office with respect to any patent application or patent within the Rutgers Patent Rights and give all due consideration to such comments and advice received from Rutgers. RUTGERS will be notified by the FIRM prior to the FIRM taking any substantive actions with regard to the Rutgers Patent Rights and RUTGERS will have final approval on proceeding with such actions including the right to countermand. RUTGERS shall have [* * *] from the date of receipt of notice from the FIRM to provide or decline its approval of such actions or to provide comments thereon. If RUTGERS does not respond to the FIRM within such [* * *] period, the FIRM may proceed based on comments from the COMPANY. In addition, as prosecution proceeds, FIRM will promptly notify RUTGERS if there is any change in inventorship from the originally filed application. COMPANY shall follow the termination provisions of the license agreement between COMPANY and RUTGERS prior to allowing the abandonment or lapse of any of the Rutgers Patent Rights.

 

2.                                       RUTGERS understands and acknowledges that this agreement allows FIRM to disclose to COMPANY information otherwise protected by the attorney-client and/or work product privileges, which privileges shall be maintained and protected under the “common interest” doctrine. RUTGERS agrees that FIRM may make such disclosures to COMPANY in discharge of its obligations herein.

 

3.                                       In addition, COMPANY agrees that to the extent it decides to terminate or withdraw from this agreement as to any patent within Rutgers Patent Rights, FIRM may continue to represent RUTGERS in the efforts to secure and maintain the Rutgers Patent Rights, including taking positions that may be adverse to COMPANY, without bringing affirmative claims against COMPANY.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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4.                                       COMPANY is responsible for the payment of all charges and fees incurred by FIRM related to the prosecution and maintenance of the Rutgers Patent Rights, including but not limited to, patent maintenance fees. FIRM will invoice COMPANY and COMPANY shall pay FIRM directly for all charges. RUTGERS will be copied on all invoices and payments. COMPANY will be responsible for paying all invoices from the FIRM within [* * *] days of receipt. Failure to pay the FIRM within [* * *] days shall result in the COMPANY being Delinquent on such payments. FIRM must inform RUTGERS within [* * *] days if the licensee is Delinquent on payment. Otherwise, RUTGERS will not be responsible for payment of Delinquent charges and fees for which timely notice was not received.

 

5.                                       This agreement represents the complete understanding of each of the undersigned parties as to the client and billing arrangements defined herein. All additions or deletions of individual Rutgers Patent Rights or applications filed in the U.S. or foreign counterparts thereof are considered to be within the terms of this client and billing agreement.

 

6.                                       Notices and copies of all correspondence should be sent either by e-mail or in writing to the following:

 

To COMPANY:

 

Biohaven Pharmaceutical Holding Company, Ltd.

c/o Maples Corporate Services (BVI) Limited

P.O. Box 173

Kingston Chambers Road Town

Tortola, British Virgin Islands

e-mail address: [* * *]

 

To RUTGERS:

 

Rutgers, the State University of New Jersey

Office of the Vice President for Research and Economic Development

33 Knightsbridge Road - 2 East, Piscataway, NJ 08854

e-mail address: http://orc,rutgers.edu/about/staff-listing

 

To FIRM:

 

Attorney Name: Peter Butch

Law Firm Address: 997 Lenox Dr, Bldg 3, Lawrenceville NJ 08648

e-mail address: Butch, Peter J. (PButch@foxrothschild.com)

 

7.                                       The parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The parties further waive any right to challenge the admissibility of authenticity of this document in a court of law based solely on the absence of an original signature.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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ACCEPTED AND AGREED TO:

 

 

 

RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY

 

 

 

 

By:

 

 

 

 

 

Name:

S. David Kimball, Ph.D.

 

 

 

 

Title:

Assoc. VP, Office of Research Commercialization

 

 

 

 

Date:

 

 

 

 

 

 

 

COMPANY

 

 

 

 

Name:

Biohaven Pharmaceutical Holding Co. Ltd

 

 

 

 

By:

 

 

 

 

 

Name:

Vlad Coric; M.D.

 

 

 

 

Title:

CEO

 

 

 

 

Date:

 

 

 

 

 

 

 

LAW FIRM:

 

 

 

 

Name:

For Rothschild

 

 

 

 

By:

 

 

 

 

 

Name:

Peter Butch, J.D.

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

Signature page for Client & Billing Exhibit B for Exec. Licenses

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Exhibit 10.8

 

 CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this Agreement ”) is entered into as of August 30, 2016, by and between BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD ., a BVI business company incorporated under the laws of the British Virgin Islands (“ Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION , a national banking association ( Bank ”).

 

RECITALS

 

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I
CREDIT TERMS

 

SECTION 1.1       TERM LOAN.

 

(a)           Term Loan . Subject to the terms and conditions of this Agreement, Bank hereby agrees to make a loan to Borrower in the principal amount of Five Million Dollars ($5,000,000) (“ Term Loan ”), the proceeds of which shall be used for general corporate purposes. Borrower’s obligation to repay the Term Loan shall be evidenced by a promissory note dated as of the date hereof, as modified from time to time (“ Perm Note ”), all terms of which are incorporated herein by this reference.

 

(b)           Repayment . Principal and interest on the Term Loan shall be repaid in accordance with the provisions of the Term Note.

 

(c)           Prepayment . Borrower may prepay principal on the Term Loan solely in accordance with the provisions of the Term Note.

 

SECTION 1.2       INTEREST/FEES.

 

(a)           Interest . The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith. The promissory notes or other instruments or documents executed in connection with the credit(s) subject to this Agreement may calculate interest at a rate equal to the sum of an index rate of interest plus a margin rate of interest. In the event any index rate of interest would be less than zero percent (0.0%), then the index rate of interest shall be deemed to be zero percent (0.0%) and the applicable promissory note or other instrument or document shall bear interest at a rate equal to the margin rate of interest.

 

(b)           Computation and Payment . interest shall be computed on the basis set forth in each promissory note or other instrument or document required hereby. Interest shall be payable

 

1



 

at the times and place set forth in each promissory note or other instrument or document required hereby.

 

SECTION 1.3       COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by debiting Borrower’s deposit account number xxxxxxxxxx with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

 

SECTION 1.4       GUARANTIES. The payment and performance of all indebtedness and other obligations of Borrower to Bank hereunder and under the Term Note shall be guaranteed by John W. Childs (the “ Original Guarantor ”), as evidenced by and subject to the terms of a guaranty in form and substance satisfactory to Bank.

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES

 

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.

 

SECTION 2.1       LEGAL STATUS. Borrower is: (a) a BVI business company, duly organized and existing and in good standing under the laws of the British Virgin Islands, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower; and (b) not the target of any trade or economic sanctions promulgated by the United Nations or the governments of the United States, the United Kingdom, the European Union, or any other jurisdiction in which the Borrower is located or operates (collectively, “ Sanctions ”).

 

SECTION 2.2       AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “ Loan Documents ”) have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms. Borrower has full power and authority to execute and deliver this Agreement and all other Loan Documents to which it is a party and to perform its obligations under this Agreement and all such other Loan Documents.

 

SECTION 2.3       NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the organizational and governing documents of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

 

2



 

SECTION 2.4       LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5       CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement of Borrower dated December 31, 2015, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied. Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.

 

SECTION 2.6       INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year in any country, state district or other jurisdiction.

 

SECTION 2.7       NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower.

 

SECTION 2.8       PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

 

SECTION 2.9       [Intentionally Omitted.]

 

SECTION 2.10     OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

 

SECTION 2.11     ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal

 

3



 

or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

 

SECTION 2.12     NO APPROVALS. No approval, consent or authorization of, order, registration or license by, filing with, giving notice to, or taking any other action by or in respect of any governmental or regulatory authority or central bank or other fiscal, monetary or other authority is required in connection with the execution and delivery of,- or performance of Borrower’s obligations under, this Agreement or any other Loan Document or for the validity, enforceability or admissibility in evidence of this Agreement or any other Loan Document.

 

SECTION 2.13     ENFORCEMENT. In the event a final judgment of any court in the United States is obtained with respect to this Agreement or any other Loan Document after service of process in the manner specified in this Agreement, the same would be enforced by the courts of the British Virgin Islands. Without limiting the generality of the representation and warranty set forth in the Section above titled “AUTHORIZATION AND VALIDITY”, Borrower further represents and warrants that the submission pursuant to this Agreement to any court of competent jurisdiction in the State of New York is valid and enforceable under the laws of the British Virgin Islands. All references in this Agreement to the “United States” shall mean the United States of America.

 

SECTION 2.14     STAMP TAX. It is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement nor any other Loan Document that any stamp, registration or similar tax or charge be paid in any relevant jurisdiction on or in relation to this Agreement nor any other Loan Document.

 

SECTION 2.15     NO IMMUNITY. Borrower is subject to suit in the British Virgin Islands and neither Borrower nor Borrower’s property has any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, set-off or counterclaim, the jurisdiction of any competent court and service of process, attachment or execution in the British Virgin Islands with respect to its obligations, liabilities. or any other matter under or arising out of or in connection with this Agreement or any other Loan Document, and to the extent that Borrower or Borrower’s property may have or may hereafter become entitled to any such right of immunity it has effectively waived such right under this Agreement. The waiver by Borrower described in the immediately preceding sentence is a legal, valid and binding obligation of Borrower. The performance of Borrower’s obligations under this Agreement and any other Loan Document by Borrower constitutes private and commercial acts rather than governmental or public acts.

 

SECTION 2.16     FORMATION DOCUMENTS. Borrower has heretofore delivered to Bank a full and complete copy of Borrower’s Memorandum and Articles of Association and of any other document pursuant: to which Borrower is incorporated and/or which governs Borrower’s continued existence, as in effect as of the date hereof.

 

SECTION 2.17     FOREIGN EXCHANGE. There are no legal, administrative or regulatory requirements or restrictions which would limit the availability or transfer of foreign

 

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exchange for the payment by Borrower to Bank of amounts due under this Agreement or any other Loan Document.

 

ARTICLE III
CONDITIONS

 

SECTION 3.1       CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s satisfaction of all of the following conditions:

 

(a)           Approval of Bank Counsel . All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel.

 

(b)           Documentation . Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:

 

(i)                                      This Agreement and each promissory note or other instrument or document required hereby.

 

(ii)                                   The Continuing Guaranty executed by John W. Childs in favor of Bank.

 

(iii)                                An opinion of Locke Lord LLP, NY counsel to Borrower,

 

(iv)                               An opinion of Walkers, BVI counsel to Bank.

 

(v)                                  A certificate of a director of Borrower dated the date hereof, certifying (A) as to the (i) certificate of incorporation, (ii) memorandum and articles of association, (iii) register of directors, (iv) register of members, (v) register of charges, (vi) certificate of good standing (dated no earlier than one month prior to the date hereof) and (vii) registered agent’s certificate (dated no earlier than one month prior to the date hereof) of Borrower (B) the resolutions of the directors of Borrower and (C) the incumbency (including specimen signatures) of the directors and officers of Borrower.

 

(vi)                               Such other documents as Bank may require under any other Section of this Agreement.

 

(c)           Financial Condition . There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such Party Obligor, if any.

 

(d)           Arrangement Fee . Borrower shall pay to Bank a non-refundable arrangement fee for the Term Loan equal to $150,000, which fee shall be due and payable in full on the date of this Agreement.

 

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ARTICLE IV
AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1       PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

 

SECTION 4.2       ACCOUNTING RECORDS. Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower.

 

SECTION 4.3       FINANCIAL STATEMENTS. Provide to Bank, in form and detail satisfactory to Bank, such -financial statements and other information as reasonably requested by Bank from time to time.

 

SECTION 4.4       COMPLIANCE.   Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence; comply with the requirements of all laws, rules, regulations and orders of any jurisdiction in which the Borrower is located or doing business, or otherwise is applicable to Borrower, including, without limitation, (a) all Sanctions, (b) all laws and regulations that relate to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto, (c) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (d) the U.K. Bribery Act of 2010, as amended, and (e) any other applicable anti-bribery or anti-corruption laws and regulations.

 

SECTION 4.5       INSURANCE. Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, public liability, flood, and, if required, hurricane, windstorm, seismic property damage and workers’ compensation, with all such insurance carried in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect, together with a lender’s loss payee endorsement for all such insurance naming Bank as a lender loss payee. Such insurance may be obtained from an insurer or through an insurance agent of Borrower’s choice, provided that any insurer chosen by Borrower is acceptable to Bank on such reasonable grounds as may be permitted under applicable law.

 

SECTION 4.6       FACILITIES. Keep all properties useful or necessary to Borrower’s business in good repair and condition, ordinary wear and tear excepted, and from time to time

 

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make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

 

SECTION 4.7       TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

 

SECTION 4.8       LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower which, if adversely determined, could have a material adverse effect on the Borrower.

 

SECTION 4.9       NOTICE TO BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; or (c) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s property.

 

SECTION 4.10     AGENT FOR SERVICE OF PROCESS. No later than September 13, 2016, provide Bank with written evidence in form and substance satisfactory to Bank of the acceptance by CT Corporation of its appointment by Borrower as agent for service of process for the period from the date of this Agreement to August 30, 2018 (and the payment in full of all fees in respect thereof).

 

ARTICLE V
NEGATIVE COVENANTS

 

Borrower further covenants that so long as any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank’s prior written consent use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof, or directly or indirectly use any such proceeds for the purpose of (a) providing financing or otherwise funding any targets of Sanctions; or (b) providing financing or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause Bank or any of Bank’s affiliates to be in breach of any Sanction.

 

ARTICLE VI
EVENTS OF DEFAULT

 

SECTION 6.1       The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:

 

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(a)           Borrower shall fail to pay (i) when due any principal when the same becomes due and payable, or (ii) within ten (10) days after notice from Bank that any interest, fees or other amounts were not paid when due, in each case under clauses (i) and (ii), under any of the Loan Documents; it being acknowledged and agreed that Bank will provide notice to Borrower and Original Guarantor of the failure to pay any interest, fees or other amounts when due and payable.

 

(b)           Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

 

(c)           Any default in the performance of or compliance with (i) Section 4.10 hereof or (ii) any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence.

 

(d)           Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a “ Third Party Obligor ”) has incurred any debt or other liability to any person or entity, including Bank; provided, solely with respect to the Original Guarantor, such debt or other liability is in excess of $50,000,000.

 

(e)           Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, administrative receiver, manager, supervisor, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“ Bankruptcy Code ”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall he entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

 

(f)            any event occurs with respect to Borrower which under the laws of any jurisdiction is analogous to any of the events described in Section 6.1(e), provided that the applicable grace period, if any, which shall apply shall be the one applicable to the relevant proceeding which most closely corresponds to the proceeding described in Section 6.1(e).

 

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(g)           The filing of a notice of judgment lien against Borrower or any Third Party Obligor provided, solely with respect to the Original Guarantor, such judgment lien secures a judgment in excess of $50,000,000; or the recording of any abstract or transcript of judgment against Borrower or any Third Party Obligor in any county or recording district in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor, provided, solely with respect to the Original Guarantor, such judgment is in excess of $50,000,000; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor.

 

(h)           [Intentionally Omitted],

 

(i)            The death or incapacity of Borrower or any Third Party Obligor if an individual. The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any Third Party Obligor if a partnership. The dissolution or liquidation of Borrower or any Third Party Obligor if a company, corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor.

 

(j)            Any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the shares, members’ equity or other ownership interest (other than a limited partnership interest).

 

(k)           The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank’s prior written consent, of all or any part of or interest in any real property collateral required hereby.

 

SECTION 6.2       REMEDIES. Upon the occurrence of any Event of Default: (a) all principal, unpaid interest outstanding and other indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice (except as expressly provided in any mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on any real property collateral) become immediately due and payable without presentment, demand, protest or any notices of any kind, including without limitation, notice of nonperformance, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

 

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ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1       NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

 

SECTION 7.2       NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

 

BORROWER:

BioHaven Pharmaceuticals Holding Company Ltd.

 

c/o J.W. Childs Associates, L.P.

 

500 Totten Pond Road, 6th Floor

 

Waltham, MA 02451

 

Phone: 617-753-1115

 

BANK:

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

125 High Street,

 

14th Floor

 

Boston, MA 02110

 

Attn:

Rebecca A. F. Stevenson

 

Vice President & Relationship Manager

 

Phone:

617-574-6351

 

or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

 

SECTION 7.3       COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable and documented attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel to the extent permissible), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, whether or not suit is brought, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing

 

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incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity. Notwithstanding anything in this Agreement to the contrary, reasonable attorneys’ fees shall not exceed the amount permitted by law. Whenever in this Agreement and the other Loan Documents Borrower is obligated to pay for the attorneys’ fees of Bank, or the phrase “reasonable attorneys’ fees” or a similar phrase is used, it shall be Borrower’s obligation to pay the attorneys’ fees actually incurred or allocated, at standard hourly rates, without regard to any statutory interpretation, which shall not apply, Borrower hereby waiving the application of any such statute.

 

SECTION 7.4       SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank’s prior written consent. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents, provided, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (such consent not to be unreasonably withheld or delayed). In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, if any, or any collateral required hereunder.

 

SECTION 7.5       ENTIRE AGREEMENT; AMENDMENT. To the full extent permitted by law, this Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This Agreement may be amended or modified only in writing signed by each party hereto.

 

SECTION 7.6       NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

 

SECTION 7.7       TIME. Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

 

SECTION 7.8       SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

SECTION 7.9       COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

 

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SECTION 7.10     GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of New York (such State, Commonwealth or District is referred to herein as the “ State ”), but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.

 

SECTION 7.11     BUSINESS PURPOSE. Borrower represents and warrants that each credit subject hereto is made for (a) a business, commercial, investment, agricultural or other similar purpose, (b) the purpose of acquiring or carrying on a business, professional or commercial activity, or (c) the purpose of acquiring any real or personal property as an investment and not primarily for a personal, family or household use.

 

SECTION 7.12     RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared any credit subject hereto to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower’s obligations and liabilities under the Loan Documents (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect. Bank may exercise this remedy regardless of the adequacy of any collateral for the obligations of Borrower to Bank and whether or not the Bank is otherwise fully secured. Borrower hereby grants to Bank a security interest in all deposits and accounts maintained with Bank to secure the payment of all obligations and liabilities of Borrower to Bank under the Loan Documents.

 

SECTION 7.13     ARBITRATION.

 

(a)           Arbitration . The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

 

(b)           Governing Rules . Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“ AAA ”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA,

 

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or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000,00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “ Rules ”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

 

(c)           No Waiver of Provisional Remedies, Self-Help and Foreclosure . The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

(d)           Arbitrator Qualifications and Powers . Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either ease with a minimum of ten years’ experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

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(e)           Discovery . In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.

 

(f)            Class Proceedings and Consolidations . No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

(g)           Payment Of Arbitration Costs And Fees . The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)           Miscellaneous . To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

 

(i)            Small Claims Court . Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

 

SECTION 7.14     NO IMMUNITY. To the extent that Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, Borrower hereby irrevocably waives such immunity and, without limiting the generality of the foregoing, agrees that the waivers set forth in this Section shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and arc intended to be irrevocable for purposes of such act, or any act that replaces it. The foregoing waiver is intended to be effective to the fullest extent now or hereafter permitted by the applicable law of any jurisdiction in which any suit, action or proceeding with respect to this Agreement or any other Loan Document may be commenced.

 

SECTION 7.15     PAYMENTS. Any payments made to Bank by Borrower pursuant to this Agreement or any other Loan Document shall be free and clear of any deductions or withholdings for or on account of any taxes, levies, imposts, duties or other charges of whatever nature imposed by any government, political subdivision, bank or taxing authority. Borrower

 

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shall pay to Bank such amounts as may be necessary in order that every payment made by Borrower hereunder, after Borrower makes any required deductions or withholding for or on account of any taxes, levies, imposts, duties or other charges of whatever nature imposed by any government, political subdivision, bank or taxing authority, shall not be less than the payment otherwise required hereunder. For avoidance of doubt, Borrower acknowledges and agrees that Borrower’s obligations under this paragraph shall survive the repayment of all obligations of Borrower to Bank under this Agreement and the other Loan Documents.

 

SECTION 7.16     WITHHOLDING. Without limiting Bank’s rights under any of the other provisions of this Agreement or any other Loan Document, in the event any taxes, levies, imposts, duties or other charges of whatever nature are assessed against Bank in connection with payments to Bank by Borrower hereunder or otherwise in connection with this Agreement or any other Loan Document, then Borrower shall pay when due, and indemnify and hold Bank harmless from, such charges, without reducing the net amount of such payments to be made to Bank below that amount which Bank would have received had such taxes or charges not been assessed. Borrower shall furnish to Bank a receipt evidencing payment of any such taxes or charges promptly after such payment, and the tax return or other report filed with respect to any such taxes or charges promptly after such filing, and, in any event, shall provide each such receipt and each such return or report within ten (10) days after receipt of Bank’s request therefor from time to time. For avoidance of doubt, Borrower acknowledges and agrees that Borrower’s obligations under this paragraph shall survive the repayment of all obligations of Borrower to Bank under this Agreement and the other Loan Documents.

 

SECTION 7.17     DOCUMENTARY TAXES. Borrower agrees to pay, and to indemnify and hold Bank harmless from, any present or future claim or liability for any registration, stamp, documentary, court or similar taxes, fees or charges, or any penalties or interest with respect thereto, which may be assessed, levied or collected by the British Virgin Islands, any state, province, district or other political subdivision of the British Virgin Islands, any other country or other jurisdiction in which Borrower now or in the future maintains any property or assets, or any governmental agency of any of the foregoing, or otherwise in connection with the execution, notarization, formalization, issuance, delivery, filing, registration or enforcement of this Agreement or any other Loan Document. If Bank requests, Borrower shall furnish to Bank a receipt evidencing payment of any such taxes or other amounts, and the tax returns or other reports filed with respect to such taxes or other amounts, within thirty (30) days after receipt of such request. For avoidance of doubt, Borrower acknowledges and agrees that Borrower’s obligations under this paragraph shall survive the repayment of all obligations of Borrower to Bank under this Agreement and the other Loan Documents.

 

SECTION 7.18     REGISTRATION. If requested by Bank at any time, Borrower shall cause this Agreement or any other Loan Document to be registered, notarized or otherwise formalized to the extent at any time required by the applicable laws of the British Virgin Islands, the applicable laws of any state, province, district or other political subdivision of the British Virgin Islands, or the applicable laws of any other country or other jurisdiction in which Borrower now or in the future maintains any property or assets, and Borrower agrees to pay, and indemnify and hold Bank harmless from, any liability for any stamp taxes or any registration, documentation or other types of fees, charges, taxes or fines in connection with any such registration, notarization or formalization. Borrower shall provide Bank with evidence of such

 

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registration within thirty (30) days after Bank’s request for such evidence, which evidence shall be in form and substance satisfactory to Bank. For avoidance of doubt, Borrower acknowledges and agrees that Borrower’s obligations under this paragraph shall survive the repayment of all obligations of Borrower to Bank under this Agreement and the other Loan Documents.

 

SECTION 7.19     JURISDICTION AND SERVICE OF PROCESS. Any suit, action or proceeding against Borrower with respect to this Agreement or any other Loan Document shall be brought in any court of competent jurisdiction in the State of New York, except to the extent any arbitration provisions of this Agreement apply to the subject matter of such suit, action or proceeding and require resolution by an arbitrator or arbitrators. Borrower hereby submits to the jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. Borrower hereby irrevocably consents to the service of process in any suit, action or proceeding in any court of competent jurisdiction by the mailing by certified mail of copies thereof by U.S. airmail, postage prepaid, to Borrower at the address set forth in Section 7.2, above. The parties agree that a final judgment in any such action or proceeding, including, without limitation, the confirmation of any award rendered in an arbitration proceeding pursuant to any arbitration provisions of this Agreement, shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Borrower hereby irrevocably waives any objection which Borrower now has or may hereafter acquire to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court of competent jurisdiction in the State of New York, and any objection on the ground that any such action or proceeding has been brought in an inconvenient forum. Nothing contained herein shall be deemed to limit the right or ability of Bank to serve any writs, processes or summonses in any other manner permitted under applicable law or to obtain jurisdiction over Borrower in such other jurisdictions and in such other manner as may be permitted under applicable law.

 

SECTION 7.20     JUDGMENT CURRENCY. Notwithstanding any judgment rendered against Borrower in a currency other than United States Dollars, whether in connection with a judicial proceeding or arbitration proceeding, Borrower shall not be relieved of any obligation with respect to any amount owed by Borrower to Bank under this Agreement or any other Loan Document except to the extent of the amount in United States Dollars which, in accordance with normal banking procedures, Bank is able to acquire with such amount of such other currency on the Banking Day (a day when Bank is open for business in New York, New York) following receipt of such amount by Bank. If the amount in United States Dollars so acquired is less than -the amount due to Bank, then Borrower agrees to indemnify Bank by paying the difference between such amounts in United States Dollars. If the amount in United States Dollars so acquired is more than the amount due to Bank, then Bank agrees to remit such excess to Borrower. The payment of any additional amount so required of Borrower under this Section shall constitute a separate and independent obligation of Borrower, notwithstanding any award of judgment.

 

[Intentionally Left Blank - Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be executed as of the day and year first written above.

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

[Signature Page to Credit Agreement — Biohaven]

 



 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

By:

 

 

Name:

 

 

Title:

 

[Signature Page to Credit Agreement — Biohaven]

 




Exhibit 10.9

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

2014 EQUITY INCENTIVE PLAN

 

Section 1

Title

 

This Plan shall be known as the Biohaven Pharmaceutical Holding Company Ltd. 2014 Equity Incentive Plan.

 

Section 2

Purpose

 

The purpose of the Plan is to advance the interests of the Company by providing key employees and certain other persons with opportunities to participate in the ownership of the Company and its future growth through (a) the grant of options which qualify as “incentive stock options” under Section 422(b) of the Code; (b) the grant of options which do not qualify as ISOs and (c) other stock based awards.

 

Section 3

Definitions

 

As used in the Plan, the following capitalized words shall have the meanings indicated:

 

3.1          “Award” means, individually or collectively, a grant under the Plan of Options or Restricted Shares, or any other equity-based Award made pursuant to Section 9 below.

 

3.2          “Award Agreement” means the written agreement setting forth the terms and provisions applicable to an Award granted under the Plan, including any Option or Restricted Share agreement.

 

3.3          “Board” means the Board of Directors of the Company.

 

3.4          “Code” means the Internal Revenue Code of 1986, as amended.

 

3.5          “Committee” means the Compensation Committee of Board.

 

3.6          “Common Shares” means the Company’s common shares of no par value each.

 

3.7          “Company” means Biohaven Pharmaceutical Holding Company Ltd., a BVI business company incorporated and existing under the laws of the Territory of the British Virgin Islands, any successor thereto and any parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Code.

 

3.8          “Disability” means “disability,” as such term is defined in Section 22(e)(3) of the Code.

 

3.9          “Disqualifying Disposition” means any disposition (within the meaning of Section 424(c) of the Code) of Shares acquired upon the exercise of an ISO before the later of (a) two years after the Participant was granted the ISO or (b) one year after the Participant acquired the Shares by exercising the ISO.

 

3.10        “Fair Market Value” means, with respect to a Share as of any date of determination, in the discretion of the Committee, (i) the average (on that date) of the high and low prices of the Common Shares on the principal national securities exchange on which the Common Shares are traded, if the Common Shares are then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Shares on the NASDAQ Stock Market, if the Common Shares is not then traded on a national securities exchange; or (iii) the closing bid price (or average of bid prices) last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Shares is

 



 

not reported on the NASDAQ Stock Market; or (iv) if Shares are not publicly traded, the fair market value of such Share as determined by the Board in good faith  based on the reasonable application of a reasonable valuation method not inconsistent with Section 409A of the Code.

 

3.11        “Grant Date” means the effective date of an Award as specified by the Committee and set forth in the applicable Award Agreement.

 

3.12        “Incentive Share Option” or “ISO” means an option to purchase Shares awarded to a Participant under Section 7 of the Plan that is intended to meet the requirements of Section 422 of the Code.

 

3.13        “Initial Public Offering” means the first public offering of the Company’s equity securities registered under the Securities Act, or any successor statute, or such other event as a result of which outstanding equity securities of the Company (or any successor entity) shall be publicly traded.

 

3.14        “Non-Qualified Option” or “NQO” means an option to purchase Shares awarded to a Participant under Section 7 of the Plan that is not intended to be an ISO.

 

3.15        “Option” means an ISO or an NQO.

 

3.16        “Participant” means an individual or entity selected by the Committee to receive an Award under the Plan.

 

3.17        “Plan” means the Biohaven Pharmaceutical Holding Company Ltd. 2014 Equity Incentive Plan set forth in this document and as hereafter amended from time to time in accordance with Section 12.

 

3.18        “Restricted Shares” means Shares awarded to a Participant under Section 8 of the Plan pursuant to an Award that entitles the Participant to acquire Shares for a purchase price (which may be zero if permissible under applicable law), subject to such conditions as the Committee may determine to be appropriate, including a Company right during a specified period or periods to repurchase the Shares at their original purchase price (or to require forfeiture of the Shares if the purchase price was zero and if permissible under applicable law) upon conditions specified in connection with the Award.

 

3.19        “Securities Act” means the Securities Act of 1933, as amended.

 

3.20        “Shares” means the Common Shares.

 

Section 4

Administration

 

4.1          Administrator .  The Plan shall be administered by the Committee, or if there is no Committee, by the Board. All references in this Plan to the “Committee” shall mean the Board if no Committee has been appointed.

 

4.2          Duties of Administrator .  Subject to ratification of the grant or authorization of each Award by the Committee (if so required by applicable state law), and subject to the terms of the Plan, the Committee shall have the authority to (i) determine to whom (from among the class of persons eligible under Section 5 to receive Awards) Awards shall be granted; (ii) determine the time or times at which Awards shall be granted; (iii) determine the purchase price of Shares subject to each Award, (iv) determine whether each Option granted shall be an ISO or a NQO; (v) determine the time or times when each Award shall become exercisable and the duration of the exercise period; (vi) determine any other

 

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provisions applicable to the Award and the Common Shares issuable upon exercise thereof; (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it; and (viii) make all other determinations necessary or advisable for administration of the Plan.  The interpretation and construction by the Committee of any provisions of the Plan or of any Award granted under it shall be final and conclusive unless otherwise determined by the Committee.  The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem advisable.  No member of the Board or the Committee nor any officer, director, employee or agent of the Company shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

 

Section 5

Eligibility

 

The Committee may grant Awards to those employees, officers, directors, consultants and advisors whom the Committee, in its sole discretion, identifies as being in a position which enables such individuals to contribute to the continued growth, development and future financial success of the Company.  A director, officer or other person who is not also an employee of the Company shall not be eligible to receive an ISO.  The granting of any Award to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Awards.

 

Section 6

Shares Reserved For Awards

 

6.1          Aggregate Number of Shares Available for Awards .  Subject to adjustment as provided in Section 10, the maximum number of Shares to be reserved for issuance under the Plan as Awards, including Incentive Share Options, shall be 4,000 Shares.  Any or all of the Shares subject to Awards under the Plan may be authorized but unissued Shares, or issued Shares that have been or shall have been reacquired by the Company, as the Board may from time to time determine.

 

6.2          Lapsed, Forfeited or Expired Awards .  If any Award granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject to such Award shall again be available for grants of Awards under the Plan unless the Plan shall have been terminated.

 

Section 7

Share Options

 

7.1          Grant of Options .  Subject to the limitations of the Plan, the Committee may, after consultation with and consideration of the recommendations of management and the Board as the Committee deems desirable, select those individuals to be granted Options and determine the time when each such Option shall be granted and such other terms of each Option.  The Committee shall clearly designate and identify each Option at the time it is granted as either an ISO or a Non-Qualified Option, as the case may be.  The Grant Date of an Option under the Plan will be the date specified by the Committee at the time it grants the Option; provided, however , that such date shall not be prior to the date on which the Committee acts to approve the grant.  ISOs may be granted only to persons who are employees of the Company on the Grant Date.  The Company shall have no liability to a Participant or to any other party if an Option (or any portion thereof) that is intended to be an ISO is determined not to be an ISO (including, without limitation, due to the determination that the exercise price per share of the Option was less than the Fair Market Value per share as of the Grant Date).  The Committee may grant both ISOs and NQOs to the same employee, and the exercise of one such Option does not in any way affect the employee’s right to exercise the other.  Each recipient of an Option shall execute an option agreement in such form not

 

3



 

inconsistent with the Plan as may be approved by the Board of Directors from time to time.  Such Option agreements may differ among recipients.

 

7.2          Exercise Price .  Unless the Committee determines otherwise, the exercise price specified in the Option Agreement relating to each Option granted under the Plan shall be not less than one hundred percent (100%) of the Fair Market Value on the Grant Date.  In the case of an ISO, the exercise price of an ISO shall be not less than 100% of the Fair Market Value on the Grant Date; provided, however , that if on the Grant Date, the Participant owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any parent or subsidiary, the exercise price per share specified in the agreement relating to such ISO shall not be less than one hundred ten percent (110%) of the Fair Market Value per Common Share on the Grant Date.

 

7.3          Exercise of Options .  Options shall become exercisable at such time or times as shall be determined by the Committee at or after the Grant Date.  The Committee may at any time accelerate the exercisability of all or any portion of any Option.

 

7.4          Method of Exercise .  An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address, or to such transfer agent as the Company shall designate.  Such notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefore either (a) in United States dollars in cash or by check, (b) subject to the Committee’s discretion at the time of exercise, by the Optionee’s full recourse promissory note in a form approved by the Committee, provided, however , that the interest rate borne by such note shall not be less than the lowest applicable federal rate, as defined in Section 1274(d) of the Code, (c) subject to the Committee’s discretion, if the class of Common Shares is registered under the Securities Exchange Act of 1934 at such time, delivery of a properly executed exercise notice together with irrevocable instructions to a broker to deliver to the Company promptly the amount of the proceeds of the sale of all or a portion of the Option Shares or of a loan from the broker to the Optionee required to pay the exercise price, (d) by tender to the Company of Common Shares owned by the Optionee, having a Fair Market Value on the date of tender not less than the exercise price, (e) by retention of shares from the Award being exercised having a Fair Market Value on the date of exercise not less than the exercise price, or (f) at the discretion of the Committee, by any combination of the above.

 

7.5          Option Term .  The term of each Option shall be fixed by the Committee and shall be specified in the agreement pursuant to which an Option is issued; provided, however , that no Option shall be exercisable more than ten (10) years after the Option’s Grant Date, provided, further , that if an ISO is granted to an Participant who, together with persons whose share ownership is attributed to the Participant pursuant to Section 424(d) of the Code, owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company, the ISO may not be exercised after the expiration of five (5) years from the Grant Date.

 

7.6.         Annual Limit on Incentive Share Options .  Each eligible employee may be granted Options treated as ISOs only to the extent that, in the aggregate under this Plan and all incentive share option plans of the Company, ISOs do not become exercisable for the first time by such employee during any calendar year with respect to shares having a Fair Market Value (determined at the time the ISOs were granted) in excess of $100,000. The Company shall designate any Options granted in excess of such limitation as NQOs appropriately granted under this Plan or any incentive share option plan of the Company, or under any combination thereof, provided that such options otherwise meet the applicable plan’s requirements relating to NQOs.

 

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7.7          Termination of Employment, Death and Disability

 

7.7.1       ISO .  Unless otherwise specified in the agreement relating to such ISO, if a Participant ceases to be employed by the Company (including retirement) other than by reason of death or Disability, no further installments of his or her ISOs shall become exercisable, and his or her ISOs shall terminate on the earliest of (a) immediately upon termination of the Participant’s employment with the Company (or an Affiliate) by the Company (or such Affiliate) for Cause (as hereinafter defined), (b) thirty (30) days after the date of termination of the Participant’s employment with the Company (or an Affiliate) by the Participant or by the Company (or such Affiliate) other than for Cause, provided , however , if such termination occurs by reason of death or Disability, such period shall be extended to one (1) year following the date of such event, and (c) their specified expiration dates, except to the extent that such ISOs (or unexercised installments thereof) have been converted into Non-Qualified Options pursuant to Section 7.9 hereof.

 

7.7.2       Non-Qualified Option . Unless otherwise specified in the agreement relating to such NQO, if a Participant ceases to provide services to the Company (or an Affiliate) other than by reason of death or Disability, no further installments of his or her NSQs shall become exercisable, and his or her NQOs shall terminate on the earliest of (a) immediately upon the termination of the Participant’s provision of services to the Company (or an Affiliate) by the Company (or such Affiliate) for Cause (as hereinafter defined), (b) thirty (30) days after the date of termination of the Participant’s provision of services to the Company (or an Affiliate) by the Participant or by the Company (or such Affiliate) other than for Cause, provided, however, if such termination occurs by reason of death or Disability, such period shall be extended to one (1) year following the date of such event, and (c) their specified expiration dates.

 

7.7.3       Leave of Absence .  For purposes of this Section, an employment or service relationship between the Company and the Participant shall be deemed to exist during any period during which the Participant is employed by or providing services to the Company.  Whether an authorized leave of absence or an absence due to military or government service shall constitute termination of the employment or service relationship between the Company and the Participant shall be determined by the Board.

 

7.7.4       For purposes of this Section 7.7, the term “Cause” shall have the meaning set forth in the employment agreement in effect between the Participant and the Company at the time of the grant and if there is no such employment agreement, shall mean (a) any material breach by the Participant of any agreement to which the optionee and the Company are both parties, (b) any act (other than retirement) or omission to act by the Participant which may have a material and adverse effect on the Company’s business or on the Participant’s ability to perform services for the Company, including, without limitation, the commission of any crime (other than minor traffic violations), or (c) any material misconduct or material neglect of duties by the optionee in connection with the business or affairs of the Company.

 

7.8          Transferability of Options .  Except as otherwise provided in an Award Agreement pertaining to NQOs, no Option shall be assignable or transferable by the grantee except by will or by the laws of descent and distribution nor shall an Option be subject to attachment, execution or similar process.  Except as set forth in the previous sentence and except as otherwise provided in an Award Agreement pertaining to NQOs, during the lifetime of a grantee, each Option shall be exercisable only by such grantee.  In the event of (a) any attempt by the Participant to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided in this Plan, or (b) the levy of any attachment,

 

5



 

execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Participant and it shall thereupon become null and void.

 

7.9          Conversion of ISOs to Non-Qualified Options .  The Committee, at the written request or with the written consent of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company at the time of such conversion.  Such actions may include, but shall not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such ISOs.  At the time of such conversion, the Committee (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan.  Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Committee takes appropriate action.

 

7.10        Cancellation of Options .  Except as otherwise expressly provided in the agreement pursuant to which an Option is issued, the Committee may, in its sole discretion, in cases involving a serious breach of conduct by an employee or former employee, or activity of a former employee in competition with the business of the Company, cancel any Option, whether vested or not, in whole or in part.  Such cancellation shall be effective as of the date specified by the Committee.

 

Section 8

Restricted Shares

 

8.1          Grant of Restricted Shares .  The Committee may award shares of Restricted Shares and determine the purchase price, if any, therefor, the duration of the restricted period during which the shares are subject to forfeiture or restrictions on transferability, if any, the conditions, if any, under which the Shares may be forfeited to or repurchased by the Company and any other terms and conditions of the Awards.  The Committee may modify or waive any restrictions, terms and conditions with respect to any Restricted Shares. Restricted Shares may be issued for such consideration, if any, as is determined by the Committee, subject to applicable law.  Each recipient of a grant of Restricted Shares shall execute an agreement in such form not inconsistent with the Plan as may be approved by the Board.  Such agreements may differ among recipients of Restricted Shares.

 

8.2          Transferability . Except as set forth in the applicable Award Agreement, Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered. Furthermore, the Award of Restricted Shares may be made subject to a repurchase right or right of first refusal, with respect to the Restricted Shares, in favor of the Company and certain shareholders of the Company upon the occurrence of certain specified events.

 

8.3          Evidence of Award .  Restricted Shares shall be evidenced in such manner as the Committee may determine. Any certificates issued in respect of Restricted Shares shall be registered in the name of the Participant and, unless otherwise determined by the Committee, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the restricted period(s), the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant.

 

8.4          Shareholder Rights . A Participant shall have all the rights of a shareholder with respect to Restricted Shares awarded, including voting and dividend rights, unless otherwise provided in the Award Agreement.

 

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Section 9

Other Share-Based Awards

 

The Committee shall have the right to grant other Awards based upon the Common Shares having such terms and conditions as the Committee may determine, including, without limitation, the grant of Common Shares based upon certain conditions, the grant of securities convertible into Common Shares and the grant of share appreciation rights.

 

Section 10

Adjustments Upon Changes in Capitalization and “Terminating Transaction” Events

 

10.1        Upon the occurrence of any of the following events, a Participant’s rights with respect to Awards granted to such participant hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in the Award Agreement:

 

10.1.1     Recapitalization or Reorganization .  Subject to Section 10.1.2 below, if, as a result of any recapitalization, reorganization, reclassification, share dividend, share split, reverse share split or other similar change in the Company’s authorized or issued shares, the outstanding shares of Common Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such Shares or other securities, or, if, as a result of any merger, consolidation or sale of all or substantially all of the assets of the Company, the outstanding shares of Common Shares are converted into or exchanged for a different number or kind of securities of the Company or any successor entity (or a parent or subsidiary thereof), the Committee shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, (ii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price per share subject to each outstanding Award, if any, and (iv) the exercise price and/or exchange price for each share subject to any then outstanding Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Options) as to which such Options remain exercisable. The adjustment by the Committee shall be final, binding and conclusive. No fractional Common Shares shall be issued under the Plan resulting from any such adjustment, but the Committee in its discretion may make a cash payment in lieu of fractional shares.  The Committee may also adjust the number of Common Shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration material changes in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of share or property or any other event if it is determined by the Committee that such adjustment is appropriate to avoid distortion in the operation of the Plan, provided that no such adjustment shall be made in the case of an Incentive Share Option, without the consent of the grantee, if it would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the Code.

 

10.1.2     Change in Control .  Notwithstanding any other provision of the Plan, but subject to the provisions of any particular Award Agreement, in the event of any Change in Control (as defined below) of the Company, and in anticipation thereof if required by the circumstances, the Committee may, in its discretion, at the time an Award is made or at any time thereafter, provide that all outstanding unvested Options immediately vest and become exercisable and any restrictions applicable to any Restricted Shares terminate and lapse immediately prior to the consummation of any Change in Control.  Further, the Committee, in its sole discretion (and in

 

7



 

addition to or in lieu of any actions permitted to be taken by the Company under the terms of any particular Award Agreement), may, on either an overall or a Participant by Participant basis, (i) upon written notice, provide that any outstanding Options must be exercised, to the extent then exercisable, within a specified number of days after the date of such notice, at the end of which period such Options shall terminate, (ii) if there is a surviving or acquiring entity, and subject to the consummation of such Change in Control, cause that entity or an affiliate of that entity to grant replacement Awards having such terms and conditions as the Committee determines to be appropriate in its sole discretion, upon which replacement the replaced Options or Restricted Shares shall be terminated or cancelled, as the case may be, (iii) terminate any outstanding Options and make such payments, if any, therefor (or cause the surviving or acquiring entity to make such payments, if any, therefor) as the Committee determines to be appropriate in its sole discretion (including, without limitation, with respect to only the then exercisable portion of such Options based on the Fair Market Value of the underlying Shares as determined by the Board in good faith), upon which termination such Options shall immediately cease to have any further force or effect, (iv) repurchase (or cause the surviving or acquiring entity to purchase) any Restricted Shares for such amounts, if any, as the Board determines to be appropriate in its sole discretion (including, without limitation, an amount with respect to only the vested portion of such Shares (i.e., the portion that is not then subject to forfeiture or repurchase at a price less than their value), based on the Fair Market Value of such vested portion as determined by the Board in good faith), upon which purchase the holder of such Common Shares shall surrender such Common Shares to the purchaser, or (v) take any combination (or none) of the foregoing actions.  For purposes of this Plan, a “Change in Control” shall mean a single transaction or series of related transactions, other than an Initial Public Offering, pursuant to which a person or persons unaffiliated with the Company, other than existing shareholders of the Company, (i) acquires shares of the Company possessing the voting power to elect a majority of the Board, (ii) consummates a merger, amalgamation or consolidation with the Company as a result of which the shareholders of the Company who own common shares or other voting securities prior to such transaction(s) shall own, directly or indirectly, less than fifty percent (50%) of the voting securities of the surviving entity, or (iii) acquire all or substantially all of the assets of the Company.

 

10.1.3     Dissolution or Liquidation .  In the event of the proposed dissolution or liquidation of the Company, each Award will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Committee.

 

10.2        Assumption of Options Upon Certain Events .  In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Committee may grant Awards under the Plan in substitution for stock and stock based awards issued by such entity or affiliate thereof.  The Company may direct that substitute Awards be granted on such terms and conditions as the Board considers appropriate in the circumstances.  In the event of a business combination or other transaction of the type detailed in Section 10.1.2, any securities, cash or other property received in exchange for Restricted Shares shall continue to be governed by the provisions of any Award Agreement pursuant to which they were issued, including any provision regarding vesting, and such securities, cash, or other property may be held in escrow on such terms as the Board may direct, to insure compliance with the terms of any such Award Agreement.

 

10.3        No Effect .  Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company.

 

8



 

10.4        Appropriate Adjustments .  Upon the happening of any of the events described in Section 10.1 above, the class and aggregate number of shares set forth in Section 6 hereof that are subject to Options which previously have been or subsequently may be granted under the Plan shall also be appropriately adjusted to reflect the events described in such subparagraphs.  The Committee or the Board shall determine the specific adjustments to be made under this Section 10 and, subject to Section 4, its determination shall be conclusive.

 

Section 11

General Provisions Applicable to Awards

 

11.1        Withholding. Requirements and Arrangements The Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required to be withheld in respect of any Award no later than the date of the event creating the tax liability.  In the Board’s discretion, such tax obligations may be paid in whole or in part in Shares, including shares retained from the exercise of the Option creating the tax obligation, valued at the Fair Market Value of the Shares on the date of delivery to the Company.  The Company and any of its affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

 

11.2        No Effect on Employment . The Plan shall not give rise to any right on the part of any Participant to continue in the employ of the Company. The loss of existing or potential profit in Awards granted under the Plan shall not constitute an element of damages in the event of termination of the relationship of a Participant even if the termination is in violation of an obligation of the Company to the Participant by contract or otherwise.

 

11.3        No Rights as Shareholder .  Subject to the provisions of the Plan and the applicable Award Agreement, no Participant shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until he or she becomes the holder thereof.

 

11.4        Lock-Up Agreement . The Company may, in its discretion, require in connection with an Initial Public Offering, that a Participant agree that any Share may not be sold, offered for sale, or otherwise disposed of for a period of time as determined by the Committee, provided at least a majority of the Company’s Board of Directors and officers who hold Shares of Options at such time are similarly bound.

 

11.5        Governing Law . The Plan and all rights under the Plan shall be construed in accordance with and governed by the internal laws of the British Virgin Islands, without giving effect to the principles of the conflicts of laws thereof.

 

11.6        Effective Date .  This Plan shall become effective upon approval by the shareholders in accordance with applicable law.  Subject to such approval by the shareholders and to the requirement that no Shares may be issued hereunder prior to such approval, Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board.

 

Section 12

Amendment and Termination

 

12.1        Amendment, Suspension, Termination of the Plan .  The Board may amend, suspend or terminate the Plan in whole or in part at any time and for any reason; provided, however , that any amendment of the Plan which is necessary to comply with any applicable tax or regulatory requirement, shall be subject to the approval of the Company’s shareholders. Shareholder approval shall not be required for any other amendment of the Plan.  No amendment, suspension or termination of the Plan

 

9



 

shall materially adversely affect the rights of a Participant, without such Participant’s consent, with respect to any Award previously made.  Unless terminated earlier by the Board, the Plan shall terminate on the tenth anniversary of the Plan’s date of adoption by the Board.  In no event shall any Awards be made under the Plan after such expiration date, but Awards previously granted may extend beyond such date.

 

12.2        Amendment, Suspension, Termination of an Award. The Committee may modify, amend or terminate any outstanding Award, including, without limitation, substituting therefor another Award of the same or a different type and changing the date of exercise or realization; provided, however , that the Participant’s consent to such action shall be required unless the Committee determines that the action, taking into account any related action, would not materially adversely affect the Participant.

 

Adopted as of the    day ofNovember, 2014

 

 

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

 

By:

 

 

 

Title:

 

DATE APPROVED BY BOARD OF DIRECTORS:  November   , 2014

 

10




Exhibit 10.10

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

2014 EQUITY INCENTIVE PLAN

 

Share Option Agreement

 

This Share Option Agreement (this “ Agreement ”), dated as of the Grant Date, is between Biohaven Pharmaceutical Holding Company Ltd., a corporation formed under the laws of the Territory of the British Virgin Islands (the “ Company ”), and [           ] (the “ Optionee ”).

 

The Company hereby grants to the Optionee the following option (the “ Option ”) to purchase Common Shares of the Company in accordance with the terms and conditions of this Agreement and the Biohaven Pharmaceutical Holding Company Ltd. 2014 Equity Incentive Plan (the “ Plan ”):

 

Total Number of Shares Subject to this Option:

 

 

 

 

 

Type of Option (ISO or an NQO):

 

NQO

 

 

 

Exercise Price per Share:

 

$9.2911

 

 

 

Grant Date:

 

December 15, 2016

 

 

 

Vesting Schedule:

 

25% on date of grant, 25% next 3 anniversaries of grant provided that all unvested options shall be immediately 100% vested upon a Change of Control of the Company

 

 

 

Vesting Commencement Date:

 

December 15, 2016

 

 

 

Number of Vested Shares on Grant Date:

 

 

Vesting Period:

 

3 years

Number of Shares Vesting at end of each Vesting Period:

 

 

 

 

 

Expiration Date:

 

December 14, 2026

 

1.                                       Plan . This Agreement, which constitutes an Award Agreement under the Plan, is granted pursuant to and is governed by the Plan, the terms and conditions of which are incorporated into this Agreement by reference. To the extent there is any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan shall control. Unless the context otherwise requires, capitalized terms used herein without definitions shall have the respective meanings assigned to them in the Plan.  By signing this Agreement, the Optionee acknowledges receipt of a copy of the Plan.

 

2.                                       Grant of Option . On the terms and conditions set forth in this Agreement, the Company grants to the Optionee on the Grant Date this Option to purchase, at the Exercise Price Per Share set forth above, the Total Number of Shares Subject to this Option, as set forth above.

 

3.                                       Type of Option .  This Option is intended to qualify either as an ISO or an NQO, as set forth above.  If this Option is intended to qualify as an ISO, it is agreed that the Exercise Price per Share

 



 

is at least 100% of the Fair Market Value per Share on the Grant Date (110% of Fair Market Value if Section 7.2 of the Plan applies).

 

4.                                       Exercisability Schedule .  The Optionee may exercise this Option for such number of Shares as have become exercisable pursuant to the Vesting Schedule set forth above; provided that upon each vesting date the Optionee is employed with the Company or is otherwise providing services to the Company.

 

5.                                       Exercise of Option . Prior to the Expiration Date (or such earlier date as set forth in Section 6 below), the Optionee may exercise this Option by delivering a Notice of Share Option Exercise in the form attached hereto as Exhibit A (the “ Notice ”), signed by the Optionee, and received by the Company at its principal office, accompanied by this Agreement and payment in full in the manner provided in the Plan.  The Optionee may purchase less than the number of Shares covered hereby, provided that no partial exercise of this Option may be for any fractional Share or for fewer than ten (10) whole Shares.  The Optionee (or any other person entitled to exercise this Option) shall not be entitled to any rights as a Shareholder of the Company with respect to any Shares issuable upon exercise of this Option until such Shares shall have been registered on the register of members of the Company in the name of the Optionee (or such other person).

 

6.                                       Exercise of Option After Termination of Employment .

 

a.                                       Termination of service .  Except as otherwise determined by the Board, or as may otherwise be expressly provided in any employment agreement between the Company and the Optionee, upon the termination of the service of the Optionee to the Company (or to an Affiliate of the Company), this Option shall expire on the earliest of the following occasions:

 

i.                                           the date that is three (3) months after the voluntary termination of the Optionee’s service or the termination of the Optionee’s service by the Company (or by an Affiliate of the Company) other than for cause;

 

ii.                                        the date of the termination of the Optionee’s service by the Company (or by an Affiliate of the Company) for Cause;

 

iii.                                     the date one (1) year after the termination of the Optionee’s service by reason of Disability;

 

iv.                                    the date one (1) year after the termination of the Optionee’s service by reason of the Optionee’s death; or

 

v.                                       the specified Expiration Date of the Option, as set forth above.

 

vi.                                    Any portion of this Option that is not exercisable on the date of termination of the Optionee’s service with the Company, for any reason, shall terminate immediately and automatically be null and void and of no further force and effect.

 

7.                                       Notice of Premature Disposition .  If this Option is intended to qualify as an ISO, as provided on the first page of this Agreement, then if, within two (2) years from the Grant Date or within one (1) year after the issuance of Shares to the Optionee upon exercise of this Option, the Optionee makes a disposition (as defined in Section 424(c) of the Code) of any Shares, the Optionee shall notify the Treasurer of the Company within ten (10) days after such disposition.

 

8.                                       Restrictions on Transfer .  The Optionee shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise except by will or the laws of descent and distribution, and during the lifetime of the Optionee, this Option shall be exercisable only by the Optionee.

 



 

9.                                       Withholding .  No Shares shall be issued pursuant to the exercise of this Option unless and until the Optionee pays to the Company or makes provision satisfactory to the Company for payment of any federal, state or local withholding taxes required by law to be withheld in respect of this Option.

 

10.                                Shareholders Agreement . The Optionee has received a copy of, and agrees to become a party to, the Shareholders Agreement, subject to all of the terms and provisions of the Shareholders Agreement as a “Holder.” The Optionee shall deliver to the Company a copy of the Joinder Agreement to the Shareholders Agreement attached hereto as Exhibit B (the “ Joinder ”) concurrently with the delivery of the Notice.

 

11.                                Market “Stand-off” Agreement .  The Optionee hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of its Common Shares or any other equity securities (including, but not limited to, this Optinon) under the Securities Act on a registration statement on Form S-1 (or F-1) or Form S-3 (or F-3), and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, or such other period, not to exceed seventeen (17) days after the expiration of the 180 day period, as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports, and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any option held by Optionee, any Common Shares, or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Shares held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of any option held by Optionee, any Common Shares, or other securities, in cash, or otherwise.  The foregoing provisions of this Section 11 shall apply only to the intial public offering and shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Optionee or the immediate family of the Optionee, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Optionee only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Shares (after giving effect to conversion into Common Shares of all outstanding Preferred Shares).  The underwriters in connection with such registration are intended third-party beneficiaries of this Section 11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.  The Optionee further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 11 or that are necessary to give further effect thereto.  Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Optionees subject to such agreements, based on the number of shares subject to such agreements. For the avoidance of doubt, this Section 11 shall be of no force or effect upon the execution and delivery by the Optionee of the Joinder to the Company in accordance with Section 10.

 

12.                                Amendment . The Board may at any time or times amend the Plan or this Agreement for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which at the time may be permitted by law.  No termination, amendment of the Plan or amendment of this Agreement shall, without the Optionee’s consent, materially adversely affect the Optionee’s rights under this Agreement.

 



 

13.                                Notices .  All notices, requests, consents and other communications shall be in writing and be deemed given when delivered personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage prepaid.  Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below, or to such other address or addresses as may have been furnished by such party in writing to the other.

 

14.                                Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the Brisih Virgin Islands without regard to conflict of law principles.

 

15.                                WAIVER OF JURY TRIAL . EACH PARTY HERETO IRREVOCABLY AND KNOWINGLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO, INCLUDING, WITHOUT LIMITATION, ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT. EACH PARTY HERETO AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

 

16.                                Entire Agreement . This Agreement and the Plan constitutes the full and entire understanding and agreement between the parties with regard the subject hereof and supersedes in their entirety all other or prior agreements between or among the Company and the Optionee regarding the subjects hereof.

 

17.                                CONSENT TO JURISDICTION .

 

a.                                       EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE TERRITORY OF THE BRITISH VIRGIN ISLANDS, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT LIMITATION, ANY PROCEEDING RELATING TO ANCILLARY MEASURES IN AID OF ARBITRATION, PROVISIONAL REMEDIES AND INTERIM RELIEF, OR ANY PROCEEDING TO ENFORCE ANY ARBITRAL DECISION OR AWARD.

 

b.                                       EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION OR OTHER PROCEEDING IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE COURTS OF THE TERRITORY OF THE BRITISH VIRGIN ISLANDS AND COVENANTS THAT IT SHALL NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH IN THIS SECTION OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

c.                                        EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS.  IN ADDITION, EACH OF THE PARTIES CONSENTS TO THE SERVICE OF PROCESS BY

 



 

PERSONAL SERVICE OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED HEREUNDER.

 

18.                                Counterparts .  For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

 

[Signature Page Follows]

 



 

The undersigned executed this Agreement as of the date set forth above.

 

OPTIONEE

 

Biohaven Pharmaceutical Holding Company

Ltd.

 

 

 

 

 

 

 

 

By:

 

Print Name

 

 

Print Name:

Vladimir Coric

Address:

 

 

Title:

Chief Executive Officer and Director

 

 

E-Mail:

 

 

 

[Signature Page to Stock Option Agreement]

 



 

Exhibit A

 

NOTICE OF SHARE OPTION EXERCISE

 

[DATE]

 

[   ]

[INSERT ADDRESS]

Attention: Treasurer

 

Dear Sir or Madam

 

Pursuant to the terms of the share option agreement between myself and Biohaven Pharmaceutical Holding Company Ltd. (the “ Company ”) dated                  (the “ Agreement ”), under the Company’s 2014 Equity Incentive Plan, I, [Insert Name]                                    , hereby [Circle One] partially/fully exercise such Option by including herein payment in the amount of $           representing the purchase price for [Fill in number of Underlying Shares]                 Shares.  I have chosen the following form(s) of payment:

 

o

1.

Cash

 

 

 

 

 

o

2.

Certified or bank check payable to [   ]

 

 

 

 

 

o

3.

Other (as described in the Plan (please describe))

 

 

.

 

In connection with my exercise of the Option as set forth above, I hereby represent and warrant to the Company as follows:

 

(i)                                      I am purchasing the Shares for my own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act, or any rule or regulation under the Securities Act.

 

(ii)                                   I have had such an opportunity as I have deemed adequate to obtain from the Company such information as is necessary to permit me to evaluate the merits and risks of my investment in the Company and have consulted with my own advisers with respect to my investment in the Company.

 

(iii)                                I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

 

(iv)                               I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Option Shares for an indefinite period of time.

 

(v)                                  I understand that the Shares have not be registered under the Securities Act (it being understood that the Shares are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or “blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration statement under the Securities Act of 1933 and under any applicable state securities or “blue sky” laws (or exemptions from the registration requirements thereof).  I further acknowledge that certificates representing Shares will bear restrictive legends reflecting the foregoing.

 



 

(vi)                               I understand and agree that the Shares when issued will continue to be subject to the Plan.

 

 

Sincerely yours,

 

 

 

 

 

Name

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 



 

Exhibit B

 

JOINDER SIGNATURE PAGE

 

The undersigned, by execution below, hereby agrees to become party to the Amended and Restated Biohaven Pharmaceutical Holding Company Ltd. Shareholders’ Agreement (as amended from time to time, the “ Shareholders Agreement ”), dated as of October 31, 2016, in the capacity as a “Holder” and agrees to be bound by the terms and conditions of said Shareholders’ Agreement in such capacity as of the date below.

 

 

HOLDER :

 

 

Dated:

 

 

 

 

 

 

 

 

Agreed and Acknowledged:

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 




Exhibit 21.1

 

SUBSIDIARIES OF BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

Name

 

Jurisdiction of Incorporation

Biohaven Pharmaceuticals, Inc.

 

Delaware

Biohaven Pharmaceutical Product No.1000 Ltd

 

British Virgin Islands

Biohaven Pharmaceutical Product No.2000 Ltd

 

British Virgin Islands

 




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Exhibit 23.1


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the use in this Registration Statement on Form S-1 of Biohaven Pharmaceutical Holding Company Ltd. of our report dated April 3, 2017 relating to the financial statements, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
April 7, 2017




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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM