¨
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Name of each exchange on which registered
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Ordinary shares, par value NIS 0.01 per share
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The NASDAQ Stock Market LLC
(The NASDAQ Global Market)
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | (ii) | |
1 | ||
1 | ||
1 | ||
1 | ||
23 | ||
37 | ||
37 | ||
49 | ||
65 | ||
70 | ||
71 | ||
73 | ||
86 | ||
86 | ||
87 | ||
87 | ||
87 | ||
87 | ||
88 | ||
88 | ||
88 | ||
89 | ||
89 | ||
89 | ||
90 | ||
90 | ||
90 | ||
91 | ||
91 | ||
91 | ||
91 |
Year ended December 31,
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||||||||||||||||||||
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2009
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2010
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2011
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2012
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2013
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|||||||||||||||
(US$ in thousands, except share and per share data)
|
||||||||||||||||||||
Consolidated Statement of Operations Data
|
||||||||||||||||||||
Revenues
|
$ | 250 | $ | 1,115 | $ | - | $ | 242 | $ | 3,549 | ||||||||||
Total operating expenses
(1)
|
7,879 | 8,769 | 11,979 | 13,583 | 18,083 | |||||||||||||||
Operating loss
|
(7,629 | ) | (7,878 | ) | (11,979 | ) | (13,542 | ) | (17,043 | ) | ||||||||||
Financial and other income (expenses), net
|
3,786 | 675 | (25 | ) | (86 | ) | 3,460 | |||||||||||||
Losses before tax expenses
|
(3,843 | ) | (7,203 | ) | (12,004 | ) | (13,628 | ) | (13,583 | ) | ||||||||||
Income tax expenses
|
- | - | - | - | (500 | ) | ||||||||||||||
Net loss
|
(3,831 | ) | (7,203 | ) | (12,004 | ) | (13,628 | ) | (14,083 | ) | ||||||||||
Realized and unrealized gain (loss) on Investment in Evogene
|
3,594 | 2,716 | (2,141 | ) | 1,103 | (739 | ) | |||||||||||||
Total comprehensive loss
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(237 | ) | (4,487 | ) | (14,145 | ) | (12,525 | ) | (14,822 | ) | ||||||||||
Basic and diluted net loss per share
|
$ | (0.13 | ) | $ | (0.22 | ) | $ | (0.35 | ) | $ | (0.38 | ) | $ | (0.36 | ) | |||||
Weighted average number of ordinary shares used in computing basic net loss per share
|
28,608,317 | 33,284,017 | 34,276,697 | 35,844,496 | 38,869,438 | |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net loss per share
|
28,608,317 | 33,284,017 | 34,276,697 | 36,249,262 | 38,869,438 |
As of December 31,
|
||||||||||||||||||||
|
2009
|
2010
|
2011
|
2012
|
2013
|
|||||||||||||||
(US$ in thousands)
|
||||||||||||||||||||
Consolidated Balance Sheet Data
|
||||||||||||||||||||
Cash and cash equivalents, short-term bank deposits, marketable securities and restricted cash
|
$ | 15,800 | $ | 22,508 | $ | 22,463 | $ | 19,685 | $ | 46,920 | ||||||||||
Receivables on account of shares and from funding arrangement
|
7,790 | 5,000 | - | - | - | |||||||||||||||
Investment in Evogene
|
3,898 | 6,227 | 4,093 | 5,196 | 4,565 | |||||||||||||||
Total assets
|
30,185 | 36,458 | 29,081 | 28,909 | 56,711 | |||||||||||||||
Deferred Revenues
|
- | - | - | - | 6,772 | |||||||||||||||
Research and development funding arrangements and others
|
- | 4,037 | 6,434 | 7,872 | 13,189 | |||||||||||||||
Accumulated deficit
|
(161,284 | ) | (168,487 | ) | (180,491 | ) | (194,119 | ) | (208,202 | ) | ||||||||||
Total shareholders' equity
|
27,398 | 28,285 | 19,581 | 17,672 | 31,888 |
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not utilizing all of our discovery capabilities
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choosing therapeutic areas with a very high degree of competition
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choosing therapeutic areas of great complexity and with very high failure rates in product development
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failing to successfully focus our discovery infrastructure to discover novel product candidates in our chosen therapeutics areas
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having insufficient relevant knowledge in our chosen therapeutic areas to select the right unmet needs or candidates, or to properly and efficiently further them in development
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the inherent risk of high program failure rate in early stage therapeutic development.
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our product candidates will be found to be therapeutically ineffective
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our product candidates will be found to be toxic or to have other unacceptable side effects
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our product candidates will not show added value compared to competing products
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our mAb targets will prove to be inappropriate targets for mAb therapeutics
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we or our collaborators will fail to receive required regulatory approvals
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we will not be able to generate product candidate differentiation between some of our product candidates
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we or our collaborators will fail to manufacture our product candidates in the quantity or quality needed for preclinical studies or clinical trials on a large scale and in a cost effective manner
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our early stage commercialization efforts may provoke competition by potential partners
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the commercialization of our product candidates may infringe third party intellectual property rights
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the development, marketing or sale of our product candidates will fail because of our inability or failure to protect or maintain our own intellectual property rights
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once a product is launched on the market, there will be little or no demand for it for a number of possible reasons including lack of acceptance by the medical community or by patients, lack of or insufficient coverage and payment by third party payors, or as a result of there being more attractive, less risky or less expensive, products available for the same use.
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warning letters
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recalls, product seizures or medical product safety alerts
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restrictions on, or prohibitions against, marketing such tests or products
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restrictions on importation of such tests or products
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suspension of review or refusal to accept or approve new or pending applications
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withdrawal of product approvals
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injunctions
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civil and criminal penalties and fines
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debarment or other exclusions from government programs.
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we may be unable to reach mutually agreeable terms and conditions with respect to potential new collaborations
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we may be unable to comply or fully comply with our obligations under collaboration agreements into which we enter, and as a result, we may not generate royalties or milestone payments from such agreements, and our ability to enter into additional agreements may be harmed
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our obligations under existing or future collaboration agreements may harm our ability to enter into additional collaboration agreements
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our collaborators have significant discretion in electing whether to pursue any of the planned activities and the manner in which it will be done, including the amount and nature of the resources to be devoted to the development and commercialization of our product candidates
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our collaborators have significant discretion in terminating the collaborations for scientific, business or other reasons
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if our collaborators breach or terminate the agreement with us, the development and commercialization of our product candidates could be adversely affected because at such time we may not have sufficient financial or other resources or capabilities to successfully develop and commercialize these therapeutics on our own or find other partners
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our collaborators may fail to design and implement appropriate preclinical and/or clinical trials
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our collaborators may fail to manufacture our product candidates needed for either clinical trials or for commercial purposes on a sufficiently large scale and/or in a cost effective manner
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our collaborators may fail to develop and market products based on our discoveries due to various regulatory restrictions
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our collaborators may fail to develop and market products based on our discoveries prior to the successful marketing of competing products by others or prior to expiry of the patents protecting such products;
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changes in a collaborator’s business strategy may negatively affect its willingness or ability to complete its obligations under its arrangement or to continue with its collaboration with us
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ownership of the intellectual property generated under our collaborations may be disputed
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our ownership of rights in any intellectual property or products that may result from our collaborations may depend on additional investment of money that we may not be able or willing to make
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prospective collaborators may pursue alternative products or technologies, by internally developing them or by preferring those of our competitors
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disagreements between us and our collaborators may lead to delays in, or termination of, the collaboration
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our collaborators may fail to develop or commercialize successfully any products based on discoveries or product candidates to which they have obtained rights from us
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our collaboration partners may be acquired by, acquire, or merge with, another pharmaceutical company, and the resulting entity may have different priorities or competitive products to the collaboration product being developed previously by our partner.
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much greater financial, technical and human resources than we have at every stage of the discovery, development, manufacture and commercialization process
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more extensive experience in preclinical testing, conducting clinical trials, obtaining regulatory approvals, and in manufacturing and marketing diagnostics and therapeutics
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more extensive experience in oncology and immunology and in the fields of mAb therapy and fusion protein therapeutics
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products that have been approved or are in late stages of development
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collaborative arrangements in our target markets with leading companies and research institutions
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difficulty managing and coordinating operations in multiple locations, which could adversely affect the progress of our research and development programs and business prospects
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local regulations or intellectual property requirements that may restrict or impair our ability to conduct pharmaceutical and biotechnology-based research and development; foreign protectionist laws and business practices that favor local competition
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laws and regulations governing U.S. immigration and entry into the United States that may restrict free movement of our employees between Israel and the United States and employment of Israeli citizens in our U.S. facilities
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fluctuations in foreign currency exchange rates that may increase the U.S. dollar cost of our operations in either country.
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the patenting of our inventions involves complex legal issues, many of which have not yet been settled
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legislative and judicial changes, or changes in the examination guidelines of governmental patent offices may negatively affect our ability to obtain molecule-based patents
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·
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in view of the finite number of human proteins, we face intense competition from other biotechnology and pharmaceutical companies who have already sought patent protection relating to proteins and protein based products, as well as therapeutic and diagnostic antibodies specifically binding these proteins, and their utility based discoveries that we may intend to develop and commercialize; such prior patents may negatively affect our ability to obtain protein-based and antibody-based patents, may hinder our ability to obtain sufficiently broad patent claims for our inventions, and/or may limit our freedom to operate
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publication of large amounts of gene and gene products data by non-commercial and commercial entities may hinder our ability to obtain sufficiently broad patent claims for our inventions
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even if we succeed in obtaining patent protection, such protection may not be sufficient to prevent third parties from using our patented inventions
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even if we succeed in obtaining patent protection, we may face FTO issues
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even if we succeed in obtaining patent protection, our patents could be partially or wholly invalidated, including by our competitors
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there are significant costs that may need to be incurred in registering and filing patents
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our data may support others in strengthening their patents
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seeking patent protection at an early stage may prevent us from providing comprehensive data supporting the patent claims and may prevent allowance of the patent or limit the scope of patent coverage
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forgo the research, development and commercialization of certain therapeutic product candidates that we discover, notwithstanding their promising scientific and commercial merits, or
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invest substantial management and financial resources to either challenge or in-license such third party intellectual property, and we cannot be sure that we will succeed in doing so on commercially reasonable terms, if at all.
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q and current reports on Form 8-K
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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act
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the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information
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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction (a purchase and sale, or sale and purchase, of the issuer’s equity securities within less than six months).
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global macroeconomic developments
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our success (or lack thereof) in entering into collaboration agreements and achieving certain research and developmental milestones thereunder
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our need to raise additional capital and our success or failure in doing so
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achievement or denial of regulatory approvals by us or our competitors
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announcements of technological innovations or new commercial products by our competitors
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developments concerning proprietary rights, including patents
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developments concerning our existing or new collaborations
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regulatory developments in the United States, Israel and other countries
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delay or failure by us or our partners in initiating, completing or analyzing pre-clinical or clinical trials or the unsatisfactory design or results of such trials
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period to period fluctuations in our results of operations
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changes in financial estimates by securities analysts
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changes in senior management or the board of directors
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our ability (or lack thereof) to disclose the commercial terms of, or progress under, our collaborations;
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our ability (or lack thereof) to show and accurately predict revenues
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transactions with respect to our ordinary shares by insiders or institutional investors.
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A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
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|
·
|
mAb Target Discovery
: This platform relies on both the LEADS and MED infrastructure platforms and utilizes query algorithms focused on the discovery of targets suitable for mAb technology based on statistical analysis of expression data provided by these platforms. Compugen’s mAb Target Discovery capability has been expanded beyond the initial focus on various solid tumors such as lung, ovarian, breast, colorectal and hematological cancers. New field extension modules have been added, which are now enabling the discovery of drug targets involved in drug response, metastatic stage cancer, and additional cancers such as melanoma, renal, liver, and pancreatic.
|
|
·
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Protein Family Members
Discovery Platform
: This platform incorporates both LEADS and MED infrastructure capabilities for the discovery of novel protein members belonging to various known and clinically important protein families. Since most traditional approaches for identifying such novel members are largely based on sequence homology, we first identify other types of characteristics that are shared between known members of the family of interest, and then the specialized algorithms select proteins from the LEADS proteome that share these characteristics and therefore could potentially be unknown family members.
|
|
·
|
Antibody-Drug Conjugate Cancer Therapy Discovery Platform
:
Compugen’s discovery infrastructure was expanded by incorporating additional algorithms that enable prediction of membrane proteins having the potential to internalize, that are both expressed on cancer cells and have low expression on healthy cells, in order to allow the ADC drug to selectively attack the tumor and spare healthy tissues. It was additionally enhanced to identify targets associated with advanced cancer stages and poor clinical outcome, in order to provide potential superior first-in-class treatment to patient populations with limited therapeutic options.
|
|
·
|
Predictive Structural Biology Discovery Platform
: This platform leverages previously developed platforms, in particular the PPI blockers platform, and enhances them, to enable the identification of functional interactions sites within proteins of interest, thus increasing the probability of identifying and/or optimizing functional monoclonal antibodies that modulate targets of interest in cancer and immunology
|
|
·
|
completion of preclinical laboratory tests and animal studies in compliance with the FDA’s Good Laboratory Practices or other applicable regulations;
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·
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submission to the FDA of an IND, which must become effective before human clinical trials may begin;
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·
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performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practices, or GCPs, to establish the safety and efficacy of the proposed drug for its intended use;
|
|
·
|
submission to the FDA of a new drug application, or NDA if the drug is a small molecule, or a biologics license application, or BLA, if the drug is a biologic;
|
|
·
|
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug or biologic is produced to assess compliance with current Good Manufacturing Practice, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
|
|
·
|
FDA review and approval of the NDA or BLA.
|
•
|
Phase 1:
The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some products, usually for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.
|
|
•
|
Phase 2:
Involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
|
|
•
|
Phase 3:
Involves studies undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide an adequate basis for product labeling and approval.
|
|
Year ended December 31,
|
|||||||||||
|
2011
|
2012
|
2013
|
|||||||||
(US$ in thousands, except share and per share data)
|
||||||||||||
Consolidated Statements of Operations Data
|
||||||||||||
Revenues
|
$ | - | $ | 242 | $ | 3,549 | ||||||
Cost of revenues
|
- | 201 | 2,509 | |||||||||
Gross profit
|
- | 41 | 1,040 | |||||||||
Research and development expenses, net
|
6,778 | 9,442 | 12,275 | |||||||||
Marketing and business development expenses
|
610 | 684 | 962 | |||||||||
General and administrative expenses
|
4,591 | 3,457 | 4,846 | |||||||||
Total operating expenses
(*)
|
11,979 | 13,583 | 18,083 | |||||||||
Operating loss
|
(11,979 | ) | (13,542 | ) | (17,043 | ) | ||||||
Financial income (loss), net
|
(25 | ) | (86 | ) | 3,460 | |||||||
Loss before income tax
|
(12,004 | ) | (13,628 | ) | (15,583 | ) | ||||||
Income tax expenses
|
- | - | (500 | ) | ||||||||
Net loss
|
$ | (12,004 | ) | $ | (13,628 | ) | $ | (14,083 | ) | |||
Realized and unrealized gain (loss) on Investment in Evogene
|
(2,141 | ) | 1,103 | (739 | ) | |||||||
Total comprehensive loss
|
$ | (14,145 | ) | $ | (12,525 | ) | $ | (14,822 | ) | |||
Basic and diluted net loss per share
|
$ | (0.35 | ) | $ | (0.38 | ) | $ | (0.36 | ) | |||
Weighted average number of shares used in computing basic net loss per share
|
34,276,697 | 35,844,496 | 38,869,438 | |||||||||
Weighted average number of shares used in computing diluted net loss per share
|
34,276,697 | 36,249,262 | 38,869,438 |
As of December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
(US$ in thousands)
|
||||||||||||
Consolidated Balance Sheet Data:
|
||||||||||||
Cash and cash equivalents, short-term bank deposits and restricted cash
|
$ | 22,463 | $ | 19,685 | $ | 46,920 | ||||||
Investment in Evogene
|
4,093 | 5,196 | 4,565 | |||||||||
Trade receivables, other accounts receivable and pre-paid expenses
|
546 | 690 | 1,731 | |||||||||
Total assets
|
29,081 | 28,909 | 56,711 | |||||||||
Research and development funding arrangements and others
|
6,434 | 7,872 | 13,189 | |||||||||
Deferred revenues
|
- | - | 6,772 | |||||||||
Accumulated deficit
|
(180,491 | ) | (194,119 | ) | (208,202 | ) | ||||||
Total shareholders' equity
|
19,581 | 17,672 | 31,888 |
|
·
|
Until June 30, 2015, Baize has the right to receive 10% of the cash consideration received by Compugen or its affiliates from third parties, less certain pass-through amounts, with respect to the Combined Program Initial Candidates (“Amended Initial Participation Rights”). The Combined Program Initial Candidates include (i) the five designated product candidates from the Original Pipeline Funding Agreement and (ii) all mAb product candidates to be developed against the eight specified Targets from the Original mAb Funding Agreement, as amended on July 24, 2012.
|
|
·
|
Not later than June 30, 2015 or, if later, 30 days following the receipt by Baize from Compugen of the annual report for 2014 containing a status report with respect to the Combined Program Initial Candidates Baize must select five product candidates from the Combined Program Initial Candidates, as “Selected Products". Combined Program Initial Candidates not selected by Baize as one of the five Selected Products shall no longer be subject to the Amended Pipeline Funding Agreement.
|
|
·
|
Beginning July 1, 2015 through December 31, 2030, Baize has the right to receive 10% of the cash consideration received by Compugen or its affiliates from third parties, less certain pass-through amounts, with respect to the five Selected Products (the “Amended Final Participation Rights”, together with the Amended Initial Participation Rights – the "Amended Participation Rights").
|
|
·
|
Baize has the right at any time until June 30, 2015 to elect to exchange the Amended Participation Rights for a number of our ordinary shares (the “Exchange Shares”) to be calculated as the quotient of (i) $13 million less 50% of any cash consideration paid to Baize as Amended Participation Rights, divided by (ii) the average closing price of the Company’s ordinary shares during the twenty (20) trading days prior to the Actual Exchange Date (as defined below) (the “Exchange Price”); provided however that the Exchange Price shall not be lower than $3.00 per share, and shall not exceed $12.00 per share. The Actual Exchange Date is to be selected by Baize and set forth in written notice of exercise delivered to Compugen a
nd shall not be earlier than 61 trading days after delivery of such notice, nor later than the 62nd trading day after June 30, 2015.
|
|
·
|
The Original Warrant granted to Baize to purchase up to 500,000 of the Company’s ordinary shares under the Original Pipeline Funding Agreement has been terminated, and Compugen has issued Baize a new warrant to purchase up to 500,000 of the Company’s ordinary shares, exercisable at $7.50 per share through June 30, 2015.
|
|
·
|
cash held in our bank accounts
|
|
·
|
cash generated from the sale and issuance of ordinary shares under the Cantor Sales Agreement
|
|
·
|
the non-refundable upfront payment from the Bayer agreement
|
|
·
|
proceeds from the Original mAb Funding Agreement with Baize
|
|
·
|
exercise of employee stock options
|
|
·
|
sales of Evogene shares
|
We used these funds primarily to finance our business operations.
|
Payments due by period
(US$ in thousands)
|
||||||||||||||||||||
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||||||||
Operating Lease Obligations
(1)
|
$ | 3,170 | $ | 856 | $ | 1,514 | $ | 800 | $ | - | ||||||||||
Purchasing Obligations (2) | 927 | 927 | - | - | - | |||||||||||||||
Accrued Severance Pay, net
|
312 | - | - | - | 312 | |||||||||||||||
Total
|
$ | 4,409 | $ | 1,783 | $ | 1,514 | $ | 800 | $ | 312 |
ITEM 6.
|
DIRECTORS, SENIOR MANA
G
EMENT AND EMPLOYEES
|
Name
|
Age
|
Positions
|
||
Prof. Yair Aharonowitz
(1)(2)
|
73
|
Director
|
||
Prof. Ruth Arnon
|
79
|
Director
|
||
Anat Cohen-Dayag, Ph.D.
|
46
|
President and Chief Executive Officer, Director
|
||
Martin S. Gerstel
|
72
|
Chairman of the board of directors
|
||
Dov Hershberg
|
74
|
Director
|
||
Arie Ovadia, Ph.D.
(1)(2)
|
64
|
Director (Chairman of the Audit Committee)
|
||
Prof. Joshua Shemer
(1)(2)
|
66
|
Director (Chairman of the Compensation Committee)
|
||
Dikla Czaczkes Axselbrad
|
40
|
Chief Financial Officer
|
||
John Hunter
|
51
|
Vice President Antibody Research and Development
|
December 31, 2013
|
December 31, 2012
|
December 31, 2011
|
||||||||||
Research & Development
|
42 | *38 | 28 | |||||||||
Administration, Accounting and Operations
|
13 | *12 | 10 | |||||||||
Marketing and Business Development
|
2 | 2 | 1 | |||||||||
Total
|
57 | 52 | 39 | |||||||||
* includes one employee on a part-time basis
|
Beneficial Owner
|
Amount Owned
|
Percent of Class
|
||||||
Martin S. Gerstel
(1)
|
2,499,604 | 5.9 | % | |||||
Anat Cohen-Dayag
(2)
|
606,435 | 1.4 | % | |||||
All current directors and Office
Holders as a group (14 persons)
(3)
|
3,859,624 | 8.9 | % |
(1)
|
Includes (i) 119,240 shares held by Mr. Gerstel, (ii) 500,000 shares held by Shomar Corporation, an affiliate of Mr. Gerstel, (iii) 619,033 shares held by Merrill Lynch IRA for Martin S. Gerstel, of which Mr. Gerstel is the beneficiary, and (iv) 615,495 shares held in a trust for which Mr. Gerstel is trustee and a member his immediate family is the beneficiary. Also includes 645,836 shares subject to options that are currently exercisable or that become exercisable within 60 days after January 31, 2014 with a weighted average exercise price of $1.48 per share and which expire between January 2019 and July 2022.
|
(2)
|
Consists of 606,435 shares subject to options that are exercisable within 60 days after January 31, 2014 with a weighted average exercise price of $3.08 per share, and which expire between March 2016 and July 2021.
|
(3)
|
See Notes 1 and 2 above, Also includes (i) a total of 748,585 shares subject to options that are beneficially owned by directors and other Office Holders that are exercisable within 60 days after January 31, 2014 with a weighted average exercise price of $2.90 per share and which expire between December 2014 and February 2023 and (ii) a total of 5,000 ordinary shares held by directors.
|
Beneficial Owner
|
Number of Ordinary Shares Beneficially Owned
|
Percent of Ownership
|
||||||
Martin Gerstel
(2)
|
2,499,604 | 5.9 | % |
|
(1)
|
Includes (i) 119,240 shares held by Mr. Gerstel, (ii) 500,000 shares held by Shomar Corporation, an affiliate of Mr. Gerstel, (iii) 619,033 shares held by Merrill Lynch IRA for Martin S. Gerstel, of which Mr. Gerstel is the beneficiary, and (iv) 615,495 shares held in a trust for which Mr. Gerstel is trustee and a member his immediate family is the beneficiary. Also includes 645,836 shares subject to options that are currently exercisable or that become exercisable within 60 days after January 31, 2014 with a weighted average exercise price of $1.48 per share and which expire between January 2019 and July 2022.
|
Ordinary Shares
Owned as of
February 29, 2012
|
Ordinary Shares
Owned as of
February 28, 2013
|
Ordinary Shares
Owned as of
February 28, 2014
|
||||||||||||||||||||||
Number of shares
|
Percentage of ownership
|
Number of shares
|
Percentage of ownership
|
Number of shares
|
Percentage of ownership
|
|||||||||||||||||||
Martin Gerstel
|
2,260,015 | 6.3 | % | 2,385,015 | 6.3 | % | 2,499,604 | 5.9 | % | |||||||||||||||
Clearbridge Advisors LLC
(2)
|
2,211,586 | 6.2 | % | 1,273,245 | 3.6 | % | (1) | (1) | ||||||||||||||||
Morgan Stanley
(3)
|
1,912,327 | 5.4 | % | (1) | (1) | (1) | (1) |
|
(1)
|
Number and percentage of shares outstanding as of such date is unknown, but is less than 5%.
|
|
(2)
|
Percentage of shares outstanding as of February 29, 2012 is based solely on a Schedule 13G/A filed with the SEC on February 14, 2012. Percentage of shares outstanding as of February 28, 2013 is based solely on a Schedule 13G/A filed with the SEC on February 14, 2013.
|
|
(3)
|
Percentage of shares outstanding as of February 29, 2012 is based solely on a Schedule 13G/A filed with the SEC on February 10, 2012.
|
57.
|
Indemnity and Insurance
|
57.1
|
Insurance. Subject to the provisions of the Companies Law, the Company may enter into contracts to insure the liabilities of its Office Holders for any liabilities or expenses incurred by or imposed upon them arising from or as a result of any act (or omission) carried out by them as Office Holders of the Company, to the fullest extent permitted by law, including in respect of any liability imposed on any Office Holder with respect to any of the following:
|
(a)
|
A breach of the duty of care owed to the Company or to any other person;
|
(b)
|
A breach of the duty of loyalty owed to the Company, provided that, the Office Holder acted in good faith and had reasonable grounds to assume that such act would not prejudice the interests of the Company;
|
(c)
|
Monetary liabilities or obligations imposed on him in favor of another person;
|
(d)
|
A payment which the Office Holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Israel Securities Law, 5728-1968 (the "
Securities Law
") and expenses that the Office Holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable litigation expenses, including attorney's fees, or in connection with Article D of Chapter Four of Part Nine of the Companies Law;
|
(e)
|
Expenses incurred by the Office Holder in connection with a proceeding under Chapter G'1, of the Israel Restrictive Trade Practices Law, 5748-1988 (the "
Restrictive Trade Law
"), including reasonable litigation expenses, including attorney's fees.
|
57.2
|
Indemnification. Subject to the provisions of the Companies Law, the Company may indemnify any of its Office Holders for all liabilities and expenses incurred by them arising from or as a result of any act (or omission) carried out by them as Office Holders of the Company and which is indemnifiable pursuant to applicable law, to the fullest extent permitted by law, including, as follows:
|
(a)
|
retrospectively; and
|
(b)
|
undertake in advance to indemnify the Office Holders to the fullest extent permitted by law, including, as follows:
|
(i)
|
for any monetary liabilities or obligations imposed on the Office Holder in favor of another person pursuant to a court judgment, including a compromise judgment or an arbitrator's decision approved by a court;
|
(ii)
|
for any payments which the Office Holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law and expenses the Office Holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable litigation expenses, including attorney's fees, or in connection with Article D of Chapter Four of Part Nine of the Companies Law;
|
(iii)
|
for reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder in consequence of an investigation or proceeding instituted against the Office Holder by an authority that is authorized to conduct such investigation or proceeding, and which was concluded without filing of an indictment against the Office Holder and without imposing on the Office Holder a financial obligation in lieu of criminal proceedings, or which was concluded without filing of an indictment against the Office Holder but with imposing on such Office Holder a financial obligation in lieu of criminal proceedings in respect of an offense that does not require proof of criminal intent or in connection with a financial sanction;
|
(iv)
|
for reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder or which the Office Holder is ordered to pay by a court, in a proceeding filed against the Office Holder by the Company or on its behalf or by another person, or in a criminal action of which the Office Holder is acquitted, or in a criminal action in which the Office Holder is convicted of an offense that does not require proof of criminal intent.
|
(v)
|
for expenses incurred by the Office Holder in connection with a proceeding under Chapter G'1, of the Restrictive Trade Law, including reasonable litigation expenses, including attorney's fees.
|
(vi)
|
for any other liability, obligation or expense indemnifiable or which may from time to time be indemnifiable by law.
|
57.3
|
Exemption of Office Holders. Subject to the provisions of the Companies Law, the Company may, to the fullest extent permitted by law, exempt and release its Office Holders, including in advance, from and against all or part of such Office Holders’ liability for monetary or other damages due to, or arising or resulting from, a breach of their duty of care to the Company. The Directors of the Company are released and exempt from any and all liability as aforesaid to the fullest extent permitted by law with respect to any such breach, which has been or may be committed.
|
57.4
|
The provisions of this Article 57 are not intended, and shall not be interpreted so as to restrict the Company, in any manner, in respect of the procurement of insurance and/or indemnification and/or exculpation, in favor of any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder.
|
57.5
|
The Company may, as aforesaid, indemnify, insure and exempt from liability any Office Holder to the fullest extent permitted by applicable law. Accordingly: (i) any amendment to the Companies Law, the Securities Law, the Restrictive Trade Law or any other applicable law expanding the ability of the Company to indemnify, insure or exempt from liability any Office Holder, or expanding the right of any Office Holder to be indemnified, insured or exempted from liability, beyond or in addition to the provisions of these Articles, shall, to the fullest extent possible, automatically and immediately apply to the Office Holders of the Company and be deemed as included in these Articles to the fullest extent permitted by applicable law; and (ii) any amendment to the Companies Law, the Securities Law, the Restrictive Trade Law or any other applicable law adversely affecting the ability of the Company to indemnify, insure or exempt from liability any Office Holder or adversely affecting the right of any Office Holder to be indemnified, insured or exempted from liability as provided for in these Articles shall have no effect post factum and shall not affect the Company's obligations or ability to indemnify, insure or exempt from liability an Office Holder for any act (or omission) carried out prior to such amendment, unless otherwise provided by applicable law.
|
(1)
|
enter into a contract to insure the liability of an Office Holder of the company by reason of acts or omissions carried out by him or her as an Office Holder of the company for:
|
(a)
|
the breach of his or her duty of care to the company or to any other person;
|
(b)
|
the breach of his or her duty of loyalty to the company, provided that, he or she acted in good faith and had reasonable grounds to assume that the act would not prejudice the interests of the company; and
|
(c)
|
monetary liabilities which may be imposed upon him or her in favor of another person.
|
(2)
|
indemnify an Office Holder of the company for the following liabilities or expenses that may be imposed upon him or her or that he or she may incur as a result of acts or omissions carried out by him or her as an Office Holder of the company, for:
|
(a)
|
monetary liabilities imposed upon him or her in favor of another person pursuant to a court judgment, including a compromise judgment or an arbitrator’s decision approved by a court;
|
(b)
|
reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder in consequence of an investigation or proceeding instituted against him or her by an authority that is authorized to conduct such investigation or proceeding, and which was concluded without filing of an indictment against him or her and without imposing on him or her a monetary liability in lieu of a criminal proceeding, or which was concluded without filing of an indictment against him or her but with imposing on him or her a monetary liability in lieu of a criminal proceeding in respect of an offense that does not require proof of criminal intent or in connection with a financial sanction;
In this subsection: (i) a proceeding that concluded without filing of an indictment in a matter in respect of which a criminal investigation was initiated shall mean the relevant case against him or her being closed in accordance with the provisions of Section 62 of the Israeli Criminal Procedure Law, 5742-1982, or by virtue of a stay of proceedings by the Attorney General in accordance with the provisions of Section 231 of the Israeli Criminal Procedure Law, 5742-1982; and (ii) “a monetary liability in lieu of a criminal proceeding” means a monetary liability imposed by law as an alternative to a criminal proceeding, including an administrative fine in accordance with the Israeli Administrative Crimes Law, 5746-1985, a fine for an offense that is considered an offense in respect of which a fine may be imposed, in accordance with the provisions of the Israeli Criminal Procedure Law, 5742-1982, a financial sanction or a penalty; and
|
(c)
|
reasonable litigation expenses, including attorney’s fees, incurred by the Office Holder or which the Office Holder is ordered to pay by a court, in a proceeding filed against him or her by the company or on its behalf or by another person, or in a criminal action of which he or she was acquitted, or in a criminal action in which he or she was convicted of an offense that does not require proof of criminal intent.
|
(3)
|
exempt an Office Holder, in advance, from and against all or part of his or her liability for damages due to a breach of his or her duty of care to it, provided that a company may not exempt a director in advance from his or her liability to it due to a breach of his or her duty of care with respect to a ‘Distribution’ (as defined in Section 1 of the Companies Law).
|
·
|
a breach of his or her duty of loyalty, other than, in respect of indemnification and insurance, to the extent described in Section 1(b) above;
|
·
|
a breach of his or her duty of care that was done intentionally or recklessly, unless the breach was done only in negligence;
|
·
|
an act or omission done with the intent to unlawfully realize personal gain; or
|
·
|
a fine, forfeit,
financial
sanction or penalty imposed upon him or her.
|
Year Ended
|
High
|
Low
|
||||||
December 31, 2009
|
$ | 5.86 | $ | 0.39 | ||||
December 31, 2010
|
$ | 5.32 | $ | 3.04 | ||||
December 31, 2011
|
$ | 5.80 | $ | 3.32 | ||||
December 31, 2012
|
$ | 6.47 | $ | 2.96 | ||||
December 31, 2013
|
$ | 11.92 | $ | 4.56 |
Quarter Ended
|
||||||||
March 31, 2012
|
$ | 6.47 | $ | 4.96 | ||||
June 30, 2012
|
$ | 6.19 | $ | 3.33 | ||||
September 30, 2012
|
$ | 4.50 | $ | 2.96 | ||||
December 31, 2012
|
$ | 5.86 | $ | 3.53 | ||||
March 31, 2013
|
$ | 6.32 | $ | 4.84 | ||||
June 30, 2013
|
$ | 6.60 | $ | 4.56 | ||||
September 30, 2013
|
$ | 10.60 | $ | 5.04 | ||||
December 31, 2013
|
$ | 11.92 | $ | 7.92 |
Month Ended
|
||||||||
August 31, 2013
|
$ | 10.60 | $ | 5.21 | ||||
September 30, 2013
|
$ | 10.31 | $ | 8.75 | ||||
October 31, 2013
|
$ | 11.92 | $ | 9.20 | ||||
November 30, 2013
|
$ | 10.86 | $ | 9.45 | ||||
December 31, 2013
|
$ | 10.33 | $ | 7.92 | ||||
January 31, 2014
|
$ | 11.47 | $ | 8.76 |
Year Ended
|
High*
|
Low*
|
||||||
December 31, 2009
|
$ | 6.06 | $ | 0.42 | ||||
December 31, 2010
|
$ | 5.64 | $ | 3.08 | ||||
December 31, 2011
|
$ | 5.92 | $ | 3.27 | ||||
December 31, 2012
|
$ | 6.35 | $ | 3.03 | ||||
December 31, 2013
|
$ | 11.79 | $ | 4.57 |
Quarter Ended
|
||||||||
March 31, 2012
|
$ | 6.25 | $ | 4.95 | ||||
June 30, 2012
|
$ | 6.35 | $ | 3.30 | ||||
September 30, 2012
|
$ | 4.47 | $ | 3.03 | ||||
December 31, 2012
|
$ | 5.81 | $ | 3.59 | ||||
March 31, 2013
|
$ | 6.31 | $ | 4.87 | ||||
June 30, 2013
|
$ | 6.52 | $ | 4.57 | ||||
September 30, 2013
|
$ | 10.57 | $ | 5.18 | ||||
December 31, 2013
|
$ | 11.79 | $ | 7.98 |
Month Ended
|
||||||||
August 31, 2013
|
$ | 10.57 | $ | 5.34 | ||||
September 30, 2013
|
$ | 10.33 | $ | 8.88 | ||||
October 31, 2013
|
$ | 11.79 | $ | 9.26 | ||||
November 30, 2013
|
$ | 10.96 | $ | 9.45 | ||||
December 31, 2013
|
$ | 10.34 | $ | 7.98 | ||||
January 31, 2014
|
$ | 11.55 | $ | 8.79 |
|
·
|
information regarding the business advisability of a given action brought for the Office Holder’s approval or performed by the Office Holder by virtue of his or her position; and
|
|
·
|
all other information of importance pertaining to the aforesaid actions.
|
|
·
|
refrain from any act involving a conflict of interest between the fulfillment of his or her position in the company and the fulfillment of any other position or his or her personal affairs;
|
|
·
|
refrain from any act that is competitive with the business of the company;
|
|
·
|
refrain from exploiting any business opportunity of the company with the aim of obtaining a personal gain for himself or herself or for others; and
|
|
·
|
disclose to the company all information and provide it with all documents relating to the company’s affairs which the Office Holder obtained due to his or her position in the company.
|
|
·
|
at least 75% of our gross income is passive income, or
|
|
·
|
at least 50% of the value (determined on a quarterly basis) of our assets is attributable to assets,
|
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
(a)
|
updating the insurance, indemnification and exemption provisions to reflect recent changes in Israeli law by allowing the Company to insure and indemnify directors and other Office Holders for certain legal fees and expenses and certain payments incurred or imposed in administrative proceedings, as well as allowing insurance, indemnification and release of the Company’s directors and other Office Holders to the fullest extent permitted by law;
|
(b)
|
allowing the Company to convene a general meeting of shareholders without sending notice to the shareholders but rather by publicizing the convening of general meetings in a manner reasonably determined by the Company;
|
(c)
|
clarifying certain notice and publication procedures;
|
(d)
|
clarifying that the board of directors has the authority (without the need to receive shareholder approval) to determine the remuneration of the Company’s independent auditors, as commonly practiced by companies in Israel and in the United States;
|
(e)
|
clarifying that all resolutions of shareholders, except with respect to those matters which require a special majority under the Companies Law, but including with respect to those matters which require a special majority under the Companies Law due only to the Company’s status as a company that was incorporated prior to the effective date of the Companies Law, require a simple majority of the voting power present and voting at any general meeting of shareholders, as the Company has conducted itself to date;
|
(f)
|
providing that certain related party transactions may be approved by committees of the board of directors if so authorized by the board of directors; and
|
(g)
|
implementing certain other non-substantive changes to the Articles, including correcting certain linguistic inconsistencies and ambiguities.
|
2013
|
2012
|
|||||||
Audit Fees
|
$ | 106,000 | $ | 104,000 | ||||
Audit Related Fees
|
$ | - | $ | - | ||||
Tax Fees
|
$ | 17,000 | $ | 15,000 | ||||
All Other Fees
|
$ | 10,000 | $ | 51,000 | ||||
Total
|
$ | 133,000 | $ | 170,000 |
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMI
TTE
ES
|
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
ITEM 19. EXHI
BIT
S
|
Exhibit Number
|
Description
|
1.1
|
Articles of Association of Compugen, as amended (incorporated by reference to Exhibit 1.1 to Compugen’s report on Form 6-K filed with the SEC on September 23, 2014 (File No. 000-30902)).
|
1.2
|
Memorandum of Association of Compugen, as registered on January 29, 1993 (incorporated by reference to Exhibit 1.2 to Compugen’s annual report on Form 20-F for the year ended December 31, 2012, filed with the SEC on March 21, 2013 (File No. 000-30902)).
|
4.1
|
Funding Agreement entered into on December 29, 2010 between Compugen and Baize Investments (Israel) Ltd. (incorporated by reference to Exhibit 10.1 to Compugen’s annual report on Form 20-F for the year ended December 31, 2010 filed with the SEC on March 21, 2011 (File No. 000-30902)).
|
4.2
|
Funding Agreement entered into on December 20, 2011 between Compugen and Baize Investments (Israel) Ltd. (incorporated by reference to Exhibit 1 to Compugen’s Form 6-K filed with the SEC on December 22, 2011 (File No. 000-30902)).
|
4.2.1
|
Amendment, dated July 24, 2012, to the Funding Agreement entered into on December 20, 2011 between Compugen and Baize Investments (Israel) Ltd. (incorporated by reference to Exhibit 10.1 to Compugen’s Form 6-K filed with the SEC on July 25, 2012 (File No. 000-30902)).
|
4.2.2
|
Amendment No. 2, dated December 27, 2012, to the Funding Agreement entered into on December 20, 2011 between Compugen and Baize Investments (Israel) Ltd. (incorporated by reference to Exhibit 10.1 to Compugen’s Form 6-K filed with the SEC on December 27, 2012 (File No. 000-30902)).
|
4.2.3@
|
Amendment to Funding Agreement, dated April 21, 2013, between Compugen and Baize Investments (Israel) Ltd. (incorporated by reference to Exhibit 10.1 to Compugen’s 6-K filed with the SEC on August 2, 2013 (File No. 000-30902)).
|
4.3
|
Unprotected Lease Agreement, dated April 21, 1998, by and between Ofer Miretsky (Shikun Dan) Ltd. and Compugen Ltd., as amended by addenda dated December 16, 2002, March 5, 2003, May 2004, August 31, 2005, April 23, 2006, August 2009, April 30, 2012 and May 14, 2012 (incorporated by reference to Exhibit 4.3 to Compugen’s annual report on Form 20-F for the year ended December 31, 2012, filed with the SEC on March 21, 2013 (File No. 000-30902)).
|
4.4
|
Sublease, dated March 1, 2012, by and between Kalobios Pharmaceuticals, Inc. and Compugen USA, Inc. (incorporated by reference to Exhibit 4.4 to Compugen’s annual report on Form 20-F for the year ended December 31, 2012, filed with the SEC on March 21, 2013 (File No. 000-30902)).
|
4.5
|
Compugen Ltd. Share Option Plan (2000) (incorporated by reference to Exhibit 10.17 to Compugen’s Registration Statement on Form F-1 filed on August 2, 2000 (File No. 333-12316)).
|
4.6
|
Compugen Ltd. 2010 Share Incentive Plan (incorporated by reference to Exhibit 1.2 to Compugen’s annual report on Form 20-F for the year ended December 31, 2012, filed with the SEC on March 21, 2013 (File No. 000-30902)).
|
4.7*@
|
Research and Development Collaboration and License Agreement, dated August 5, 2013, by and between Compugen Ltd. and BayerPharma AG.
|
4.8*
|
Lease, dated December 12, 2013, by and between Britannia Pointe Grand Limited Partnership and Compugen USA, Inc.
|
4.9
|
Form of Indemnification Undertaking and Exemption and Release between Compugen Ltd. and its directors and office holders (incorporated by reference to Exhibit C to Exhibit 99.3 to Compugen’s 6-K filed with the SEC on August 2, 2013 (File No. 000-30902)).
|
8.1*
|
Subsidiaries.
|
12.1*
|
Certification by Principal Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2*
|
Certification by Principal Financial and Accounting Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1*
|
Certification by Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
15.1*
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global.
|
101*#
|
The following financial information from Compugen Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011; (ii) Consolidated Balance Sheets at December 31, 2013 and 2012; (iii) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011; and (v) Notes to Consolidated Financial Statements.
|
*
|
Filed herewith.
|
@
|
Confidential portions of this document have been filed separately with the SEC pursuant to a request for confidential treatment.
|
#
|
Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
|
COMPUGEN LTD.
|
|||
|
By:
|
/s/ Dr. Anat Cohen-Dayag | |
Name: Dr. Anat Cohen-Dayag | |||
Title: President and Chief Executive Officer, Director | |||
Date: February 18, 2014
|
Page
|
|
F- 2
|
|
F- 3 - F- 4
|
|
F- 5 - F- 6
|
|
F- 7
|
|
F- 8
|
|
F- 9 - F- 10
|
|
F- 11 - F- 44
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com
|
/s/ Kost Forer Gabbay & Kasierer
|
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
February 18
, 2014
|
A Member of Ernst & Young Global
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
Tel:
972 (3)6232525
Fax: 972 (3)5622555
www.ey.com
|
/s/ Kost Forer Gabbay & Kasierer
|
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
February 18
, 2014
|
A Member of Ernst & Young Global
|
December 31,
|
|||||||||||
Note
|
2013
|
2012
|
|||||||||
ASSETS
|
|||||||||||
CURRENT ASSETS:
|
|||||||||||
Cash and cash equivalents
|
3 | $ | 28,751 | $ | 16,374 | ||||||
Restricted cash
|
8b | 154 | 96 | ||||||||
Short-term bank deposits
|
18,015 | 3,215 | |||||||||
Investment in Evogene
|
4,565 | 5,196 | |||||||||
Other accounts receivable and prepaid expenses
|
4, 8d | 1,731 | 690 | ||||||||
Total
current assets
|
53,216 | 25,571 | |||||||||
NON-CURRENT INVESTMENTS:
|
|||||||||||
Severance pay fund
|
2,129 | 1,728 | |||||||||
Total
non- current investments
|
2,129 | 1,728 | |||||||||
NON-CURRENT PREPAID EXPENSES
|
8d | 158 | 360 | ||||||||
PROPERTY AND EQUIPMENT, NET
|
5 | 1,208 | 1,250 | ||||||||
Total
assets
|
$ | 56,711 | $ | 28,909 |
December 31,
|
|||||||||||
Note
|
2013
|
2012
|
|||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Trade payables
|
$ | 693 | $ | 443 | |||||||
Deferred revenue
|
2k | 5,318 | - | ||||||||
Other accounts payable and accrued expenses
|
6 | 1,728 | 941 | ||||||||
Total
current liabilities
|
7,739 | 1,384 | |||||||||
NON- CURRENT LIABILITIES:
|
|||||||||||
Research and development funding arrangements and others
|
7 | 13,189 | 7,872 | ||||||||
Deferred revenue
|
2k | 1,454 | - | ||||||||
Accrued severance pay
|
2,441 | 1,981 | |||||||||
Total
non-current liabilities
|
17,084 | 9,853 | |||||||||
COMMITMENTS AND CONTINGENT LIABILITIES
|
8 | ||||||||||
SHAREHOLDERS' EQUITY:
|
9 | ||||||||||
Share capital:
|
|||||||||||
Ordinary shares of NIS 0.01 par value: 100,000,000
shares authorized at December 31, 2013 and 2012;
41,002,113 and 36,590,478 shares issued and
outstanding at December 31, 2013 and 2012, respectively
|
111 | 99 | |||||||||
Additional paid-in capital
|
235,351 | 206,325 | |||||||||
Accumulated other comprehensive income
|
4,628 | 5,367 | |||||||||
Accumulated deficit
|
(208,202 | ) | (194,119 | ) | |||||||
Total
shareholders' equity
|
31,888 | 17,672 | |||||||||
Total
liabilities and shareholders' equity
|
$ | 56,711 | $ | 28,909 |
Year ended December 31,
|
|||||||||||||||
Note
|
2013
|
2012
|
2011
|
||||||||||||
Revenue
|
12, 14 | $ | 3,549 | $ | 242 | $ | - | ||||||||
Cost of revenue
|
2,509 | 201 | - | ||||||||||||
Gross profit
|
1,040 | 41 | - | ||||||||||||
Operating expenses:
|
|||||||||||||||
Research and development expenses, net
|
7b, 8c | 12,275 | 9,442 | 6,778 | |||||||||||
Marketing and business development expenses
|
962 | 684 | 610 | ||||||||||||
General and administrative expenses
|
4,846 | 3,457 | 4,591 | ||||||||||||
Total
operating expenses
|
18,083 | 13,583 | 11,979 | ||||||||||||
Operating loss
|
(17,043 | ) | (13,542 | ) | (11,979 | ) | |||||||||
Financial income (loss), net
|
13 | 3,460 | (86 | ) | (25 | ) | |||||||||
Loss before tax expenses
|
(13,583 | ) | (13,628 | ) | (12,004 | ) | |||||||||
Income taxes
|
10g | (500 | ) | - | - | ||||||||||
Net loss
|
$ | (14,083 | ) | $ | (13,628 | ) | $ | (12,004 | ) | ||||||
Unrealized gain (loss) arising during the period on Investment in Evogene
|
$ | 2,972 | $ | 1,103 | $ | (1,902 | ) | ||||||||
Realized gain (loss) arising during the period on Investment in Evogene
|
$ | (3,711 | ) | $ | - | $ | (239 | ) | |||||||
Total comprehensive loss
|
$ | (14,822 | ) | $ | (12,525 | ) | $ | (14,145 | ) | ||||||
Basic net loss per share
|
$ | (0.36 | ) | $ | (0.38 | ) | $ | (0.35 | ) | ||||||
Weighted average number of ordinary shares used in computing basic net loss per share
|
38,869,438 | 35,844,496 | 34,276,697 | ||||||||||||
Diluted net loss per share
|
$ | (0.36 | ) | $ | (0.38 | ) | $ | (0.35 | ) | ||||||
Weighted average number of ordinary shares used in computing diluted net loss per share
|
38,869,438 | 36,249,262 | 34,276,697 |
Ordinary
shares
|
Additional
paid-in
|
Accumulated other comprehensive
|
Accumulated
|
Total shareholders'
|
||||||||||||||||||||
Number
|
Amount
|
capital
|
income
|
deficit
|
equity
|
|||||||||||||||||||
Balance as of January 1, 2011
|
33,915,545 | $ | 92 | $ | 190,275 | $ | 6,405 | $ | (168,487 | ) | $ | 28,285 | ||||||||||||
Employee options exercised
|
792,077 | 2 | 2,039 | - | - | 2,041 | ||||||||||||||||||
Stock-based compensation relating to options and warrants issued to non-employees
|
- | - | 457 | - | - | 457 | ||||||||||||||||||
Stock-based compensation relating to options issued to employees and directors
|
- | - | 2,943 | - | - | 2,943 | ||||||||||||||||||
Other comprehensive loss
|
- | - | - | (2,141 | ) | - | (2,141 | ) | ||||||||||||||||
Net loss
|
- | - | - | - | (12,004 | ) | (12,004 | ) | ||||||||||||||||
Balance as of December 31, 2011
|
34,707,622 | 94 | 195,714 | 4,264 | (180,491 | ) | 19,581 | |||||||||||||||||
Employee options exercised
|
696,988 | 2 | 1,878 | - | - | 1,880 | ||||||||||||||||||
Issuance of shares
|
1,185,868 | 3 | 6,264 | - | - | 6,267 | ||||||||||||||||||
Stock-based compensation relating to options and warrants issued to non-employees
|
- | - | 145 | - | - | 145 | ||||||||||||||||||
Stock-based compensation relating to options issued to employees and directors
|
- | - | 2,324 | - | - | 2,324 | ||||||||||||||||||
Other comprehensive income
|
- | - | - | 1,103 | - | 1,103 | ||||||||||||||||||
Net loss
|
- | - | - | - | (13,628 | ) | (13,628 | ) | ||||||||||||||||
Balance as of December 31, 2012
|
36,590,478 | $ | 99 | $ | 206,325 | $ | 5,367 | $ | (194,119 | ) | $ | 17,672 | ||||||||||||
Employee options exercised
|
1,786,473 | 5 | 5,626 | - | - | 5,631 | ||||||||||||||||||
Issuance of shares
|
2,625,162 | 7 | 19,697 | - | - | 19,704 | ||||||||||||||||||
Stock-based compensation relating to options and warrants issued to non-employees
|
- | - | 164 | - | - | 164 | ||||||||||||||||||
Stock-based compensation relating to options issued to employees and directors
|
- | - | 3,379 | - | - | 3,379 | ||||||||||||||||||
Classification of liability with respect to outstanding options to non-employee to equity
|
- | - | 160 | - | - | 160 | ||||||||||||||||||
Other comprehensive loss
|
- | - | - | (739 | ) | - | (739 | ) | ||||||||||||||||
Net loss
|
- | - | - | - | (14,083 | ) | (14,083 | ) | ||||||||||||||||
Balance as of December 31, 2013
|
41,002,113 | $ | 111 | $ | 235,351 | $ | 4,628 | $ | (208,202 | ) | $ | 31,888 |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net loss
|
$ | (14,083 | ) | $ | (13,628 | ) | $ | (12,004 | ) | |||
Adjustments required to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Non-cash stock-based compensation
|
3,543 | 2,469 | 3,400 | |||||||||
Depreciation
|
370 | 299 | 179 | |||||||||
Severance pay, net
|
59 | 75 | (7 | ) | ||||||||
Gain from sale of Evogene shares
|
(3,711 | ) | - | (239 | ) | |||||||
Change in fair value of exchange option and embedded derivatives within research and development funding arrangements
|
811 | 588 | 113 | |||||||||
Amortization of the Research and Development Component within research and development funding arrangement
|
(230 | ) | (130 | ) | - | |||||||
Change in the fair value of liability with respect to outstanding options to non-employee
|
(104 | ) | (20 | ) | - | |||||||
Decrease (increase) in trade receivables and other accounts receivable and prepaid expenses
|
(1,105 | ) | (112 | ) | 43 | |||||||
Decrease (increase) in long-term prepaid expenses
|
202 | (301 | ) | - | ||||||||
Increase (decrease) in trade payables and other accounts payable and accrued expenses
|
1,037 | (86 | ) | (734 | ) | |||||||
Increase in deferred revenue
|
6,772 | - | - | |||||||||
Net cash used in operating activities
|
(6,439 | ) | (10,846 | ) | (9,249 | ) | ||||||
Cash flows from investing activities:
|
||||||||||||
Proceeds from maturity of short-term bank deposits
|
3,215 | 16,525 | 14,524 | |||||||||
Investment in short-term bank deposits
|
(18,015 | ) | (3,215 | ) | (16,525 | ) | ||||||
Changes in restricted cash
|
(50 | ) | - | 592 | ||||||||
Purchase of property and equipment
|
(328 | ) | (1,005 | ) | (96 | ) | ||||||
Decrease (increase) in long-term lease deposits
|
- | (42 | ) | 47 | ||||||||
Proceeds from sale of investment in Evogene
|
3,603 | - | 232 | |||||||||
Net cash provided by (used in) investing activities
|
(11,575 | ) | 12,263 | (1,226 | ) |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from issuance of ordinary shares, net
|
19,760 | 6,211 | - | |||||||||
Proceeds from research and development funding arrangements
|
5,000 | 1,000 | 7,000 | |||||||||
Proceeds from exercise of options
|
5,631 | 1,900 | 2,021 | |||||||||
Net cash provided by financing activities
|
30,391 | 9,111 | 9,021 | |||||||||
Increase (decrease) in cash and cash equivalents
|
12,377 | 10,528 | (1,454 | ) | ||||||||
Cash and cash equivalents at the beginning of the year
|
16,374 | 5,846 | 7,300 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 28,751 | $ | 16,374 | $ | 5,846 | ||||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||||||
Receivables on account of shares
|
$ | - | $ | 56 | $ | 20 | ||||||
Purchase of property and equipment
|
$ |
-
|
$ | 47 | $ | - |
Cash paid (received) during the year for:
|
||||||||||||
Income taxes
|
$ | 500 | $ | - | $ | - | ||||||
Interest payments from bank short-term deposits and cash equivalents
|
$ | (112 | ) | $ | (297 | ) | $ | (351 | ) |
NOTE 1:-
|
GENERAL
|
|
a.
|
Compugen Ltd. (the "Company") is a drug discovery company utilizing a broadly applicable proprietary infrastructure for the in silico (by computer) prediction and selection of human focused on therapeutic product candidates, which are then advanced in its Pipeline Program. The initial fields of focus selected by us are monoclonal antibodies and therapeutic proteins to address major unmet needs in the fields of oncology and immunology. Beginning in late 2010, the Company established the Pipeline Program, consisting of targets and product candidates for applications in oncology and immunology, based largely on novel immune checkpoint regulator candidates discovered by the Company. The Company's business model includes entering into collaborations covering the further development and commercialization of product candidates at various stages from its Pipeline Program and various forms of research and discovery agreements, in both cases providing Compugen with potential milestone payments and royalties on product sales or other forms of revenue sharing.
The Company's headquarters are located in Israel, with research and development facilities in Israel and California through its wholly-owned U.S. subsidiary, Compugen USA, Inc. ("Compugen Inc.").
|
|
b.
|
In March 2012, the Company renewed Compugen Inc. activity by establishing a new monoclonal antibody (mAb) research and development operation in South San Francisco, California for the development of oncology and immunology mAb drug candidates against the Company's identified targets.
|
|
c.
|
Following a shelf registration on Form F-3 filed and declared effective in January 2011, the Company signed in August 2011 an agreement with an underwriter, to issue and sell up to 6,000,000 ordinary shares under an At-the-Market equity offering ("ATM") program with gross proceeds not to exceed $ 40,000. During the year ended December 31, 2013 and 2012 the Company had raised approximately $ 19,704 and $ 6,267, net of issuance expenses, under this program from the issuance of 2,625,162 and 1,185,868 of its Ordinary shares, respectively.
|
|
Subsequent to December 31, 2013 the Company has raised additional gross proceeds of $ 3,919 through the sale of 363,090 Ordinary shares under the ATM program. On January 21, 2014, the registration statement on Form F-3 under which the Company had been selling ordinary shares pursuant to the agreement with the underwriter terminated.
|
|
d.
|
The Company established together with Merck KGaA ("Merck") and Merck Holdings Netherlands B.V. ("Merck Holdings") on June 25, 2012 ("Initial Date"), a start-up company, Neviah Genomics ("Neviah"), focused on the discovery and development of novel biomarkers for the prediction of drug-induced toxicity. According to the agreement with Merck and Merck Holdings, Neviah is expected to receive its initial funding from Merck Holdings in three installments subject to milestones as defined in the agreement. According to the agreement, concurrent with the establishment of Neviah, the Company licensed to Neviah biomarker candidates and in consideration received an equity ownership and a right for future royalties from potential successful commercialization of the product candidates.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
Pursuant to the collaboration agreement between the parties, Neviah shall pay the Company royalties on net sales (as defined in the agreement) of a licensed product ("Licensed Product"), until the later of (a) the date on which such Licensed Product ceases to be covered by a claim in the country in which such Licensed Product is made and in the country in which such Licensed Product is sold; and (b) fifteen years following the date of the first commercial sale of such Licensed Product in such country.
|
|
In addition, Neviah will pay Compugen a certain amount of all sublicense income arising by Neviah from any Licensed Product.
|
|
Based on ASC 845, "Nonmonetary Transactions", ("ASC 845"), the Company has elected the carryover basis at the Initial Date of the biomarker candidates in consideration of a non-controlling ownership interest in Neviah.
|
|
The Company does not have control over Neviah, however the Company has significant influence over Neviah. Therefore, subject to ASC 323, "Investments-Equity Method and Joint Ventures", ("ASC 323"), the Company accounts for its investment in Neviah under the equity method. For the period since its establishment until December 31, 2013 Neviah has accumulated losses and because the Company has no commitment to fund Neviah's operation, no investment account was recorded in the Company's consolidated financial statements.
|
|
In addition, according to the agreement, the Company is providing research and development services to Neviah in consideration for a fee as defined in the agreement (see also Note 14).
|
|
e.
|
In August 2004, the Company spun off its computational chemistry activity into a wholly-owned subsidiary, Keddem BioScience Ltd. ("Keddem") which was, until mid-2007, in the phase of validating its technology and building the extensive infrastructure required to implement it. In 2007, Keddem operations were terminated and it became a dormant entity.
|
|
On November 19, 2012 ("Effective Date"), the Company signed an agreement with a private U.S.-based investment company pursuant to which up to $ 15,000 in milestone related equity financing will be made available to Keddem. Under the agreement, the new investor will obtain a majority equity interest in Keddem, with the Company maintaining a minority interest and certain future preferential access rights to utilize the Keddem technology with the Company's discovered drug targets.
|
|
As of December 31, 2013 and based on initial investment of $ 3,000, the holding rights of the Company in Keddem's ordinary share were reduced to less than 50% interest.
|
|
As part of the above transaction, warrants have been granted to the Company to purchase from Keddem up to 83,333 ordinary shares of a nominal value of NIS 0.01 each, at an exercise price which might be adjusted subject to terms set forth in the warrant agreement, during the exercise period which expires on the ten-year anniversary of the Effective Date. As of December 31, 2013 the Company did not exercise any of the above warrants.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
Based on ASC 845 the Company has elected the carryover basis for its investment in Keddem. Since the Company does not have control over Keddem, and subject to ASC 323, the Company accounts for its investment in Keddem under the equity method. For the period since Effective Date until December 31, 2013 Keddem has accumulated losses and because the Company has no commitment to fund Keddem's operation, no investment account was recorded in the Company's consolidated financial statements.
|
|
f.
|
On August 5, 2013, the Company entered into a Research and Development Collaboration and License Agreement ("Agreement") with Bayer Pharma AG (“Bayer”) for the research, development, and commercialization of antibody-based therapeutics for antibody based therapeutics against two novel, Compugen-discovered immune checkpoint regulators.
|
|
Under the terms of the Agreement, the Company received an upfront payment of $ 10,000, and is eligible to receive an aggregate of over $ 500,000 in potential milestone payments for both programs, not including aggregate preclinical milestone payments of up to $ 30,000 during the research programs. Additionally, the Company is eligible to receive mid to high single digit royalties on global net sales of any approved products under the collaboration.
|
|
Under the Agreement, the Company and Bayer will jointly pursue a preclinical research program with respect to each of the two immune checkpoint regulators. A joint steering committee consisting of an equal number of representatives from each party will be responsible for overseeing and directing each such research program pursuant to agreed upon work-plans. Each party will be responsible for the costs and expenses incurred by it in performing its designated activities under the work-plans during the research programs. Following each such research program, Bayer will have full control over further clinical development of any cancer therapeutic product candidates targeting the Company-discovered immune checkpoint regulators and will have worldwide commercialization rights for any approved products.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP").
|
|
a.
|
Use of estimates:
|
|
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
|
|
b.
|
Financial statements in U.S. dollars:
|
|
The functional currency of the Company is the U.S. dollar, as the Company's management believes that the U.S. dollar is the primary currency of the economic environment in which the Company and Compugen Inc. have operated and expect to continue to operate in the foreseeable future. The majority of the Company's revenues and 2013 financing transactions were made outside Israel in U.S. dollars. The majority of the Company operations are currently conducted in Israel and most of the expenses in Israel are currently paid in new Israeli shekels ("NIS").
|
|
Transactions and balances denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with ASC No. 830, "Foreign Currency Matters". All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statement of loss as financial income or expenses, as appropriate.
|
|
c.
|
Basis of consolidation:
|
|
The consolidated financial statements include the accounts of the Company and Compugen Inc. intercompany transactions and balances have been eliminated upon consolidation.
|
|
d.
|
Cash and cash equivalents:
|
|
The Company and Compugen Inc. consider all highly liquid investments that are convertible to cash with original maturities of three months or less at their acquisition date as cash equivalents.
|
|
e.
|
Restricted cash:
|
|
Restricted cash is an interest bearing saving account which is used as a security for the Company's Israeli facilities leasehold bank guarantee and credit card security for its U.S. subsidiary.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
f.
|
Short-term bank deposits:
|
|
Bank deposits with maturities of more than three months but less than one year are included in short-term bank deposits. Such short-term bank deposits are stated at cost which approximates market values.
|
|
Bank deposits in U.S. dollars for the years ended December 31, 2013 and 2012 bear an annual average interest rate of 0.63% and 1.32%, respectively.
|
|
Bank deposits in NIS for the years ended December 31, 2013 and 2012 bear an annual average interest rate of 0% and 2.40%, respectively.
|
|
g.
|
Marketable securities:
|
|
The Company accounts for its investment in Evogene in accordance with ASC No. 320, "Investments - Debt and Equity Securities".
|
|
Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date.
|
|
The Company classifies its investment in Evogene as available-for-sale securities which are carried at fair value, with the unrealized gains and losses, net of tax, reported in "accumulated other comprehensive income (loss)" in shareholders' equity. Realized gains and losses on sale of investments are included in "financial income (loss), net" and are derived using the specific identification method for determining the cost of securities.
|
|
The Company recognizes an impairment charge when a decline in the fair value of its investments in debt securities is below the cost basis of such securities and is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company's intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis.
|
|
The Company periodically reviews its marketable securities for impairment. If the Company concludes that any of these investments are impaired, the Company determines whether such impairment is "other-than-temporary" as defined under ASC 320-10-35. On April 1, 2009, the Company adopted a new guidance, ASC 320-10-65-1, "Recognition and Presentation of Other-Than-Temporary Impairments", that changed the impairment and presentation model for debt securities. Under the amended impairment model, an other-than-temporary impairment loss is recognized in earnings if the entity has the intent to sell the debt security, or if it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, if an entity does not expect to sell a debt security, it still needs to evaluate expected cash flows to be received and determines if a credit loss exists. In the event of a credit loss, only the amount of impairment associated with the credit loss is recognized currently in earnings. During 2013, 2012 and 2011, no other-than-temporary impairment was recorded.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
As of December 31, 2013, the Company holds 232,292 shares representing less than 1% of Evogene outstanding Ordinary shares.
|
|
h.
|
Non-current prepaid expenses:
|
|
Non-current prepaid expenses consist of non-current lease deposits as security for the Compugen Inc.'s facility lease, motor vehicles leases and non-refundable payments for research and developments services (see also Note 8d).
|
|
i.
|
Property and equipment, net:
|
|
Property and equipment are stated at cost, net of related investment grants and accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
|
%
|
|||
Computers, software and related equipment
|
33 | ||
Laboratory equipment and office furniture
|
6 - 30 (mainly 30)
|
||
Leasehold improvements
|
shorter of the term of the lease or useful life
|
|
j.
|
Impairment of long-lived assets:
|
|
The long-lived assets of the Company and Compugen Inc. are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment", whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset with the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years 2013, 2012 and 2011, no impairment losses have been identified.
|
|
k.
|
Revenue recognition:
|
|
The Company generates revenue mainly from its Research and Development Collaboration and License Agreement.
|
|
The Company recognizes revenue in accordance with ASC 605-25, "Multiple-Element Arrangements" pursuant to which each required deliverable is evaluated to determine whether it qualifies as a separate unit of accounting based on whether the deliverable has “stand-alone value” to Bayer. The arrangement’s consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price of each deliverable which is not contingent based on its vendor specific objective evidence (''VSOE'') if available, third party evidence (''TPE'') if VSOE is not available, or estimated selling price (''ESP'') if neither VSOE nor TPE is available.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
Under the related Agreement as referred to under Note 1f, the Company considered the novel product candidates license and the related research and development services as single unit of accounting since the license has no value to Bayer on a stand-alone basis. As a consequence, an amount of $ 6,711 out of the Agreement non-refundable upfront payment has been deferred and is being recognized based on the proportionate performance of research and development services under the Agreement will be performed, in accordance with ASC 605-10, "Revenue Recognition" (See also Note 12).
|
|
Contingent payments related to milestones achievement and royalties will be recognized immediately upon the accomplishment of futures events, in accordance with ASC 605-28.
|
|
Furthermore, the Company also generated revenue from research and development services for another client. The related revenue is being recognized according to the proportional performance method (See also Note 15).
|
|
l.
|
Research and development expenses, net:
|
|
Research and development expenses are charged to the statement of comprehensive loss as incurred.
|
|
Royalty and non-royalty bearing grants from the Office of the Chief Scientist of the Israel Ministry of Industry, Trade & Labor ("OCS") and the Bi-national Industrial Research ("BIRD") for funding approved research and development projects, are recognized at the time the Company is entitled to such grants, on the basis of the research and development expenses incurred. Such grants are presented as a reduction from research and development expenses in the consolidated statements of comprehensive loss.
|
|
The Research and Development component are recognized at the time the Company received the payments under research and development arrangement, which calculated as residual between the payments received and the embedded derivatives, are amortized over the period in which the development is being provided in connection with the relevant designated product candidates. Such component is deducted from research and development expenses in the consolidated statements of comprehensive loss (see also Note 7b).
|
|
m.
|
Severance pay:
|
|
The Company's liability for severance pay for its Israeli employees is calculated pursuant to Israeli Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date , and is in large part covered by regular deposits with recognized pension funds, deposits with severance pay funds and purchases of insurance policies The value of these policies is recorded as an asset in the Company's balance sheet.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
Pursuant to Section 14 of the Israeli Severance Pay Law , certain of the Company's liabilities for employee rights upon retirement are covered by regular contributions to defined contribution plans so that upon termination of employment of the relevant employees, the Company is only required to release the payments made by the Company to such funds on account of severance and by doing so are deemed to have complied with all of the Company's severance payment obligations relating to the service of applicable employees with respect to the period during which the provisions of such section apply. |
|
Severance expenses for the years ended December 31, 2013, 2012 and 2011 amounted to approximately $ 294, $ 252 and $ 257, respectively.
|
|
n.
|
Stock-based compensation:
|
|
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation - Stock Compensation", ("ASC 718"), which requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of comprehensive loss.
|
|
The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures.
|
|
The Company selected the Black-Scholes-Merton ("Black-Scholes") option-pricing model (except as mentioned in Note 9f) as the most appropriate fair value method for the majority of its share-options awards and values share based on the market value of the underlying shares at the date of grant. The option-pricing model requires a number of assumptions, of which the most significant are the expected share price volatility and the expected option term. Expected volatility was calculated based on actual historical share price movements over a term that is equivalent to the expected term of granted options. The expected term of options granted is based on historical experience and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
The Company applies ASC 505-50, "Equity-Based Payments to Non-Employees" ("ASC 505") with respect to options and warrants issued to non-employees which requires the use of option valuation models to measure the fair value of the options and warrants at the measurement date.
|
|
o.
|
Concentration of credit risks:
|
|
Financial instruments that potentially subject the Company and Compugen Inc. to concentration of credit risk consist principally of cash and cash equivalents, short-term bank deposits, marketable securities and non-current lease deposits.
|
|
Cash and cash equivalents are invested in U.S. dollar deposits with major banks in Israel. Generally, these deposits may be redeemed upon demand and bear minimal risk. The Company has no significant off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
|
|
p.
|
Net loss per share:
|
|
Basic net loss per share is calculated based on the weighted average number of Ordinary shares outstanding during each year. Diluted net loss per share is calculated based on the weighted average number of Ordinary shares outstanding during each year, plus dilutive potential in accordance with ASC 260, "Earnings per Share."
|
|
All outstanding share options, warrants and shares under the exchange option under the second research and development funding arrangement, as amended (see also Note 8) have been excluded from the calculation of the diluted net loss per share because all such securities are anti-dilutive for all periods presented. As of December 31, 2013, 2012 and 2011 the total weighted average number of shares related to outstanding options excluded from the calculations of diluted net loss per share was 6,271,819, 6,170,554 and 5,722,251, respectively. The total weighted average number of shares related to warrants under the research and development funding arrangements excluded from the calculations of diluted net loss per share was 500,000 for the years ended December 31, 2013, 2012 and 2011. As of December 31, 2013 and 2012 the total weighted average number of shares related to the exchange option under the amended research and development funding arrangement excluded from the calculations of diluted net loss per share was 2,157,293, and 613,350, respectively.
|
|
q.
|
Income taxes:
|
|
The Company accounts for income taxes in accordance with ASC No. 740, "Income Taxes", ("ASC 740") which prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. As of December 31, 2013 and 2012, a full valuation allowance was provided by the Company.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. As of December 31, 2013 and 2012 no liability for unrecognized tax benefits was recorded as a result of ASC 740.
|
|
r.
|
Fair value of financial instruments:
|
|
The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), pursuant to which fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
|
|
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
|
|
The hierarchy is broken down into three levels based on the inputs as follows:
|
|
Level 1 -
|
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
|
|
Level 2 -
|
Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
|
Level 3 -
|
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
|
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
(Cont.)
|
|
The carrying amounts of cash and cash equivalents, restricted cash, short-term bank deposits
,
other accounts receivable, trade payables, and other accounts payable and accrued payables approximate their fair values due to the short-term maturities of such instruments.
|
|
The Company measures its investment in Evogene, embedded derivatives with respect to research and development funding arrangements and the liability with respect to outstanding options to non-employee at fair value (see also Note 11).
|
|
s.
|
Derivative instruments:
|
|
As of the balance sheet date, none of the Company's derivatives qualify for hedge accounting under ASC 815, "Derivatives and Hedging" ("ASC 815"). As a result all derivatives are recognized on the balance sheet at their fair value, with changes in the fair value carried to the statement of loss and included in financial income (loss), net.
|
|
In the year ended December 31, 2013 and 2012, the Company did not record net gain or loss from derivatives transactions compared with net gain in the year ended December 31, 2011 in the amount of $ 134.
|
|
t.
|
Investment in affiliates:
|
|
The Company accounts for its investment in affiliated companies under the equity method in accordance with ASC 323, "Investments-Equity Method".For the purpose of these financial statements, an affiliated company is a company held to the extent of 20% or more, or a company less than 20% held, in which the Company can exercise significant influence over operating and financial policy of the affiliate.
|
|
u.
|
Comprehensive income:
|
|
The Company accounts for comprehensive income in accordance with ASC topic 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders.
|
|
v.
|
Reclassification:
|
|
Certain amounts in prior years consolidated balance sheets and consolidated statements of comprehensive loss have been reclassified to conform to the current year presentation. In 2011, the fair value of liability with respect to outstanding options to a non-employee related to Research and Development funding arrangement was presented as a current liability while in 2012 it was decided to reclassify it and present it as a non-current liability. In addition, in 2011, gain from sales of marketable securities was presented other income, net which was reclassified and presented as financial income (loss), net in the same year.
|
NOTE 3:-
|
CASH AND CASH EQUIVALENTS
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Bank deposits in U.S. dollars (bearing an annual average
interest rate of 0.22% and 1.19% for 2013 and 2012, respectively)
|
$ | 24,731 | $ | 9,091 | ||||
Bank deposits in NIS (bearing an annual average interest
rate of 1.32% and 2.19% for 2013 and 2012, respectively)
|
1,441 | 6,575 | ||||||
Cash in banks
|
2,579 | 708 | ||||||
$ | 28,751 | $ | 16,374 |
NOTE 4:-
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Prepaid expenses
|
492 | 516 | ||||||
Government authorities
|
1,172 | 60 | ||||||
Accrued interest
|
57 | 26 | ||||||
Other
|
10 | 88 | ||||||
$ | 1,731 | $ | 690 |
NOTE 5:-
|
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Cost:
|
||||||||
Computers, software and related equipment
|
$ | 5,139 | $ | 5,023 | ||||
Laboratory equipment and office furniture
|
4,219 | 4,032 | ||||||
Leasehold improvements
|
668 | 643 | ||||||
10,026 | 9,698 | |||||||
Accumulated depreciation:
|
||||||||
Computers, software and related equipment
|
4,978 | 4,885 | ||||||
Laboratory equipment and office furniture
|
3,281 | 3,060 | ||||||
Leasehold improvements
|
559 | 503 | ||||||
8,818 | 8,448 | |||||||
Depreciated cost
|
$ | 1,208 | $ | 1,250 |
NOTE 6:-
|
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Employees and related accruals
|
$ | 626 | $ | 442 | ||||
Consultants and board of directors members
|
314 | 298 | ||||||
Accrual for OCS royalties payment
|
120 | - | ||||||
Accrued expenses
|
663 | 148 | ||||||
Other
|
5 | 53 | ||||||
$ | 1,728 | $ | 941 |
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS
|
|
The following table summarizes the balances recorded on the Company's financial statements with respect to the research and development funding arrangements:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Embedded Derivatives (a) (b)
|
$ | 12,431 | $ | 6,864 | ||||
mAb Participation Interest (b)
|
758 | 744 | ||||||
Liability with respect to outstanding options to non-employee (c)
|
- | 264 | ||||||
$ | 13,189 | $ | 7,872 |
|
a.
|
On December 29, 2010 (the "Issuance Date") the Company signed a funding arrangement (the “Pipeline Funding Arrangement”) with an investor in partial support of its research and development activities with respect to novel therapeutic product candidates. According to the Pipeline Funding Arrangement the Company received $ 5,000 in consideration of:
|
|
(1)
|
Warrants to purchase 500,000 Ordinary shares at a fixed exercise price of $ 6.00 per share until June 30, 2013 ("Detachable Warrants") and,
|
|
(2)
|
An entitlement to receive a portion of future income received by Compugen related to possible commercialization and post-marketing fees related to certain
designated product candidates ("Participation Rights").
|
|
(3)
|
An option to exchange its Participation Rights for a fixed amount of 833,334 Ordinary shares at any time through June 30, 2013 (the "Conversion Alternative").
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
As of the Issuance Date, all of the five designated product candidates were pursued in the Company's validation pipeline. Furthermore, the Company had an obligation to continue the research and developments activities on a best effort basis and to issue to the investor an "Annual Report" containing a summary report for each such designated product candidate, providing general information with respect to what research was conducted by Compugen since the Issuance Date or the prior Annual Report (as applicable).
|
|
In accordance with ASC 730-20, "Research and Development Arrangements" and ASC 815, "Derivative and Hedging" the Company considered the Participation Rights as well as the New Arrangement Rights of the instrument issued to be a research and development arrangement ("Research and Development Component") coupled with embedded derivatives (that are the Conversion Alternative and the New Arrangement Rights) as those instruments do not have fixed settlement provisions.
|
|
Consequently, the Company determined that the embedded derivatives in the Research and Development Component should be accounted for as a liability to be measured at fair value at inception. The embedded derivatives will be re-measured to fair value at each reporting period until their exercise or expiration with the change in such calculated value reported in the statement of operations (as part of financial income or expenses). As a result, the fair value of those embedded derivatives would be bifurcated out of the amount to be allocated to the Research and Development Component.
|
|
The Company has further determined that the Detachable Warrants should be accounted for and classified as an equity component since the warrants have fixed settlement provisions as stated above.
|
|
As per the above, at the issuance date the consideration of $ 5,000 was allocated as determined by the Company assisted by the work of a third party valuator:
|
|
(1)
|
An amount of $ 999 was allocated to the equity component net of $ 61 issuance expenses.
|
|
(2)
|
An amount of $ 3,940 was allocated to the Research and Development Component and it was entirely assigned to the Participation Rights and the Conversion Alternative measured at fair value. Issuance expenses that were allocated to this component, amounted to $ 228, were expensed immediately and are included as part of financial expenses in the consolidated statements of operations.
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
b.
|
On December 20, 2011 (the "Effective Date"), the Company entered into an additional funding arrangement ("mAb Funding Arrangement and, together with the Pipeline Funding Arrangement, the “Funding Arrangements") with the same investor, pursuant to which the Company was to receive a total of $ 8,000 (the "Funding Amount") in order to fund certain research and development activities preformed on a best effort basis, in consideration for an entitlement to receive a portion of future income derived from certain monoclonal antibody ("mAb") product candidates ("Products") that are successfully commercialized or are licensed out as defined in the agreement ("mAb Participation Interest").
|
|
According to the mAb Funding Arrangement the Funding Amount should have been paid in three installments, $ 2,000 was paid on December 21, 2011. The investor was committed to invest additional $ 3,000 on or before June 30, 2012 and additional $ 3,000 on or before September 30, 2012.
|
|
Pursuant to the mAb Funding Arrangement, in the event the remaining funds are not transferred, the Company had the right to exchange the relative Funding Amount for Company's Ordinary Shares, at the price of $ 6.00 per share (the "Company Option"), and the Company would then have no obligations towards the investor under the mAb Funding Arrangement.
|
|
The mAb Participation Interest from the Products, was calculated on a sliding scale mainly as fraction of the Funding Amount, relative to total amount invested both by the investor and the Company in the Products, provided that the investor will be entitled to no less than ten percent of such future payments related to any qualifying Products. The investor had the right, during the first quarter of 2014, to waive its rights to the mAb Participation Interest in exchange for a fixed amount of 1,455,000 Ordinary shares (the "Exchange Option").
|
|
On July 24, 2012 the Company entered into an amendment (“First Amendment”) to the mAb Funding Agreement, pursuant to which the number of specified Compugen-identified targets in the field of oncology against which mAb product candidates that are subject to the mAb Participation Interest was reduced from twelve to eight, and the payment dates for the $ 6,000 of the Funding Amount remaining to be paid were amended such that $ 1,000 was to be paid on or before July 31, 2012 and $ 5,000 was to be paid on or before December 31, 2012. $ 1,000 was paid on July 27, 2012.
|
|
On December 27, 2012, the Company entered into a second amendment ("Second Amendment") to the mAb Funding Arrangement, pursuant to which:
|
|
(1)
|
The number of specified Compugen-identified targets in the field of oncology against which mAb product candidates that are subject to the mAb Participation Interest was reduced from eight to six. However, according to this Amendment, in the event the investor increases its funding in the Company's research and development activities to an aggregate of $ 10,500 the number of targets that are subject to the mAb Participation Interest will revert to eight.
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
(2)
|
The term for the remaining payment of between $ 5,000 and $ 7,500 has been revised and this amount is due to be paid no later than April 30, 2013.
|
|
(3)
|
The Exchange Option was postponed to the first quarter of 2015. In addition, the exchange shares amount has been modified and will now be determined by dividing the funding amount that was paid by the investor and the average closing price of the Company's Ordinary shares during twenty trading days prior the actual exchange date as described in the Second Amendment.
|
|
On April 19, 2013, the Company received from the research and development funding arrangements investor the remaining final funding amount of $ 5,000 under the mAb Funding Arrangement. In connection with the payment of the final $ 5,000 payment under the mAb Funding Arrangement, as amended the Company entered into an amendment ("Third Amendment") to the Funding Arrangements, pursuant to which the following terms would apply to all investments under the Funding Arrangement as amended:
|
|
(1)
|
The mAb Funding Arrangement was terminated.
|
|
(2)
|
Until June 30, 2015, the investor has the right to receive 10% of the Research and Development Component received by the Company or its affiliates from third parties, less certain pass-through amounts, with respect to certain designated product candidates (the “Amended Participation Rights”).
|
|
(3)
|
The term of the Conversion Alternative under the Pipeline Funding Arrangement has been extended to June 30, 2015 and the exchange shares amount will be determined based on the aggregate funding amount of $ 13,000 paid by the investor in connection to the Funding Arrangements, less 50% of any Amended Participation Rights paid to the investor by Compugen, divided by the average closing price of the Company's Ordinary shares during twenty (20) trading days prior the actual exchange date provided however that the exchange price shall not be lower than $ 3.00 per share, and shall not exceed $ 12.00 per share.
|
|
(4)
|
The warrants granted to the investor under the Pipeline Funding Arrangements to purchase up to 500,000 of the Company’s Ordinary shares has been replaced with a new warrant to purchase up to 500,000 of the Company’s Ordinary shares, exercisable at $ 7.50 per share through June 30, 2015. |
|
In accordance with ASC 730-20, "Research and Development Arrangements" and ASC 815, "Derivative and Hedging" the Company considered the mAb Participation Interest to be a research and development arrangement ("Research and Development Component") coupled with embedded derivatives (the Exchange Option and the Company Option) as those instruments do not have fixed settlement provisions. Consequently, the Company determined that the embedded derivatives in the Research and Development Component should be accounted for as a liability to be measured at fair value at inception. The embedded derivatives are being re-measured to fair value at each reporting period until their exercise or expiration with the change in such calculated value reported in the statement of operations (as part of financial income or expenses).
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
The Research and Development component was calculated as residual between the payments received and the embedded derivatives (as mentioned below), recorded at cost and has been amortized over the period in which the development is being provided in connection with the relevant designated product candidates as deduction from research and development expenses in the consolidated statements of comprehensive loss. As of December 31, 2013 and 2012 the Research and Development Component amounted of $ 758 and $ 744. During the years ended December 31, 2013 and 2012 the Company has amortized of the Research and Development Component within research and development funding arrangement amounted of $ 230 and $ 130, respectively.
|
|
As a result, the fair value of those embedded derivatives would be bifurcated out of the amount to be allocated to the Research and Development Component.
In measuring the fair value the Company considered the various amendments in the terms of the embedded derivatives.
|
|
As per the above, the first payment in 2011 of $ 2,000 was allocated as determined by the Company assisted by the work of a third party valuator:
|
|
·
|
An amount of $ 443 was allocated as Research and Development Component to liability component.
|
|
·
|
An amount of $ 1,557 was allocated to the Research and Development Component and it was entirely assigned to the mAb Participation Interest and the Exchange Option measured at fair value. Issuance expenses that were allocated to this component, amounted to $ 463, were expensed immediately and are included as part of financial expenses in the consolidated statements of operations.
|
|
The second payment in 2012 of $ 1,000 was allocated as determined by the Company assisted by the work of a third party valuator:
|
|
·
|
An amount of $ 431 was allocated as Research and Development Component to liability component.
|
|
·
|
An amount of $ 569 was allocated to the Research and Development Component and it was entirely assigned to the mAb Participation Interest and the Exchange Option measured at fair value. No additional Issuance expenses were allocated to this component.
|
|
The third payment in 2013 of $ 5,000 was allocated as determined by the Company assisted by the work of a third party valuator:
|
|
·
|
An amount of $ 244 was allocated as Research and Development Component to liability component.
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
·
|
An amount of $ 4,756 was allocated to the Research and Development Component and it was entirely assigned to the mAb Participation Interest and the Exchange Option measured at fair value. No additional issuance expenses were allocated to this component.
|
|
As of December 31, 2013, the Company re-measured the embedded derivatives in the Research and Development Component and recorded an accumulated $ 811 as financial expenses in the consolidated statements of comprehensive loss.
|
|
Following the First, Second and Third Amendments, as of December 31, 2013 and 2012, the Company selected the Monte Carlo Simulation model as the methodology for determining the fair value for the embedded derivatives.
|
|
These option-pricing models require a number of assumptions, of which the most significant are the expected share price volatility and the expected term.
|
|
In estimating the Participation Rights' fair value, the Company used the following assumptions:
|
Year ended December 31,
2013
|
Year ended December 31,
2012
|
|||||||||
Amended Funding Arrangement
|
mAb Funding Arrangement
|
Pipeline
Funding Arrangement
|
||||||||
Risk-free interest rate (1)
|
0.25% | 0.28% | 0.11% | |||||||
Expected volatility (2)
|
55.65% | 47.46% | 48.02% | |||||||
Expected life (in years) (3)
|
1.5 | 2.25 | 0.5 | |||||||
Expected dividend yield (4)
|
0 | 0 | 0 |
|
(1)
|
Risk-free interest rate - based on the yields from U.S. treasury bonds with different periods to maturity (according to different projection periods).
|
|
(2)
|
Expected volatility - was calculated based on actual historical share price movements of the Company over a term that is equivalent to the expected term of the option.
|
(3)
|
Expected life - the expected life of the conversion feature was based on the term of the derivative.
|
(4)
|
Expected dividend yield - was based on the fact that the Company has not paid dividends to Ordinary shareholders in the past and does not expect to pay dividends to Ordinary shareholders.
|
NOTE 7:-
|
RESEARCH AND DEVELOPMENT FUNDING ARRANGEMENTS AND OTHERS (Cont.)
|
|
c.
|
As part of issuance expenses the Company granted, and committed to grant upon execution of the remaining payments by the investor, up to 100,000 options to an agent and cash payment of $ 80. As of December 31, 2011, the Company recorded $ 453 as finance expenses, net related to these awards, based on its fair value, $ 284 out of which were classified as part of research and development funding arrangements and others account. Based on ASC 505, the Company re-measured the options which are classified as liability and recorded $ 104 and $ 20 as financial income in the consolidated statements of comprehensive loss during the year ended December 31, 2013 and 2012 (See also Note 13), respectively.
Subject to the final $ 5,000 payment under the mAb Funding Arrangement the liability related to the options of non-employee amounted of $ 160 was classified to equity.
In April 2013, following receipt of the final funding amount of $ 5,000 under the mAb Funding Arrangement and grant of the remaining options to an agent, the remaining re-measured outstanding liability was classified to the Company's additional-paid-in-capital (See also Note 11).
|
NOTE 8:-
|
COMMITMENTS AND CONTINGENCIES
|
|
a.
|
The Company and Compugen Inc. lease their facilities and motor vehicles under various operating lease agreements that expire on various dates.
|
|
Annual minimum future rental commitments under non-cancelable operating leases are approximately as follows:
|
|
Operating lease expenses for the Company and Compugen Inc. were approximately $ 637, $ 551 and $ 383 in the years ended December 31, 2013, 2012 and 2011, respectively.
|
|
b.
|
The Company provided bank guarantees in the amount of $ 154 in favor of its offices' lessor in Israel and credit card security for its U.S. subsidiary and check deposit in the amount of $ 40 in favor of its offices' lessor in California, U.S.
|
NOTE 8:-
|
COMMITMENTS AND CONTINGENCIES
|
|
c.
|
Under the OCS royalty-bearing programs, the Company is not obligated to repay any amounts received from the OCS if it does not generate any income from the results of the funded research program. If income is generated from a funded research program, the Company is committed to pay royalties at a rate of between 3% to 5% of future revenue arising from such research programs, and up to a maximum of 100% of the amount received, linked to the U.S. dollar (for grants received under programs approved subsequent to January 1, 1999, the maximum to be repaid is 100% plus interest at LIBOR). For the year ended December 31, 2013, the Company has an aggregate of paid and accrued royalties to the OCS recorded as cost of revenue in the consolidated statement of comprehensive loss in the amount of $ 120. For the years ended December 31, 2012 and 2011 the Company incurred no obligation to pay or accrue any amounts to the OCS.
As of December 31, 2013, the Company's aggregate contingent obligations for payments to OCS, based on royalty-bearing participation received or accrued, net of royalties paid or accrued, totaled approximately to $ 8,765.
Under the BIRD plan, the Company is not obligated to repay any amounts previously received from BIRD if it does not generate any income from the outcome of the funded research program. As of December 31, 2013 the Company received proceeds under BIRD plan in total aggregate amount of approximately $ 500. As of December 31, 2013 and 2012 the Company does not expect any income to be generated from the outcome of the funded research BIRD plan and as such no correlated contingent obligation was recorded (see also Note 2l).
|
|
d.
|
On June 25, 2012 the Company and Compugen Inc. added to its mAb enabling technology base by entering into an Antibodies Discovery Collaboration Agreement (the "Agreement") with a U.S. antibody technology company ("mAb Technology Company"), providing an established source for fully human mAbs. The agreement includes time based research and commercial licenses to use specific mAb Technology Company proprietary collections of polynucleotides encoding antibodies, and their associated biological materials, together with the systems and/or licensed know how and/or to practice patent rights to identify, isolate, and modify discovery Fabs (the "Technology"), and to develop and exploit discovery products. According to the Agreement (i) the Company paid $ 600 in consideration for a three-year access right to the Technology, of which $ 400 was recorded as long-term prepaid expenses and is being charged to the statement of comprehensive loss over three years, (ii) $ 150 in consideration for the associated biological materials which was recorded as other accounts receivables and prepaid expenses and will be charged to the statement of comprehensive loss in accordance with actual use of materials during each measured period and (iii) in the event any Compugen mAb programs utilize the Technology, the Company would pay additional fees upon the occurrence of certain development and commercialization milestone up to a maximum cumulative total of $ 3,250 for each antibody drug product that achieved all such milestone events. In addition, the mAb Technology Company will be entitled to certain royalties that could be eliminated, upon payment of certain one-time fees (all payments referred together as "Contingent Fees"). As of December 31, 2013 and 2012 the Company did not incur any obligation for such Contingent Fees.
|
NOTE 8:-
|
COMMITMENTS AND CONTINGENCIES (Cont.)
|
|
During the year ended December 31, 2012, the Company replenished additional associated biological materials to support the research and development activities performed under the Agreement in the amount of $ 100, which was recorded as other accounts receivables and prepaid expenses. During the year ended December 31, 2013 the Company did not purchase additional biological materials to support research and development activities under the Agreement.
|
|
During the year ended December 31, 2013 and 2012, the Company charged research and development expenses to the statement of comprehensive loss in the amount of $ 294 and $ 109 related to the Agreement, respectively.
|
|
e.
|
As mentioned in Note 7 as of December 31, 2013 under the Third Amendment the investor is entitled to receive Amended Participation Rights
, under the Pipeline Funding Arrangement. For the year ended December 31, 2013, the Company has an aggregate of paid and accrued payments under these arrangements recorded as cost of revenue in the consolidated statement of comprehensive loss in the amount of $ 616.
|
|
f.
|
In May 2012 the Company entered into agreement with a U.S. Business Development Strategic Advisor (“Advisor”) for the purpose of entering into transactions with Pharma companies related to selected Pipeline Program Candidates. Under the agreement the Advisor shall be entitled for certain payments from cash considerations that may be received under such transactions.
|
|
For the year ended December 31, 2013 and 2012, the Company has an aggregate of paid and accrued payments under this agreement recorded as marketing and business development expenses in the consolidated statement of comprehensive loss in the amount of $ 267 and $ 0, respectively.
|
|
g.
|
On September 29, 2013, the Company's Board of Directors resolved to recommend before the shareholders to approve the grant of bonus payments totaling approximately $175 to the chairman of the Board of Directors and the Chief Executive Officer ("CEO"). Since such bonus payments remain subject to shareholders' approval, which is expected to take place after the filing date, they were not accounted for during 2013.
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY
|
|
a.
|
Ordinary shares:
The ordinary shares confer upon their holders the right to attend and vote at general meetings of the shareholders . Subject to the rights of holders of shares with limited or preferred rights which may be issued in the future, the ordinary shares of the Company confer upon the holders thereof equal rights to receive dividends, and to participate in the distribution of the assets of the Company upon its winding-up, in proportion to the amount paid up or credited as paid up on account of the nominal value of the shares held by them respectively and in respect of which such dividends are being paid or such distribution is being made, without regard to any premium paid in excess of the nominal value, if any.
|
|
b.
|
Share option plans:
In March 2000, the Company adopted the Compugen Ltd. Share Option Plan (2000) (the "2000 Options Plan"), which provides for the grant of options to purchase up to 1,500,000 ordinary shares to employees and non-employees of the Company and its subsidiaries.
The number of shares authorized for issuance under the 2000 Options Plan automatically increased each January 1 by the lesser of 1,500,000 or 4% of the total number of the Company's then outstanding shares or such lower amount as shall be determined by the Board. On July 25, 2010, the Board resolved to cease making grants under the 2000 Options Plan.
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
|
In July 2010, the Company adopted the Compugen Ltd. 2010 Share Incentive Plan (the "2010 Options Plan"), and determined to cease making grants under the 2000 Option Plan. In addition, the board of directors and shareholders resolved that the options available for grants under the 2000 Option Plan, at such time, as well as any options that may return to such pool in connection with terminated options, will be made available for future grants under the 2010 Plan. Up to 1,953,851 shares were initially reserved for grant, under the 2010 Options Plan . In keeping with the Company's resolution any shares subject to options granted under the 2000 Option Plan prior to the adoption of the 2010 Plan which terminate unexercised, will also be made available for future grants under the 2010 Plan. On August 6, 2012 the Company adopted certain amendments to the 2010 Plan which, among other things, provided for additional types of awards, namely restricted share and restricted share unit awards.
|
|
In general, options granted under the 2000 Options Plan and the 2010 Options Plan vest over a four-year period and expire 10 years from the date of grant and are granted at an exercise price of not less than the fair market value of the Company's ordinary shares on the date of grant, unless otherwise determined by the board of directors. The exercise price of the options granted under the plans may not be less than the nominal value of the shares into which such options are exercised and the expiration date may not be later than 10 years from the date of grant. If a grantee leaves his or her employment or other relationship with the Company, or if his or her relationship with the Company is terminated without cause (and other than by reason of death or disability, as defined in the 2010 Plan), the term of his or her unexercised options will generally expire in 90 days, unless determined otherwise by the Company's board of directors.
|
|
Any options that are cancelled or forfeited before expiration become available for future grants. Under the 2010 Options Plan, there were 1,828,885 options to purchase shares available for future grant as of December 31, 2013.
|
|
Transactions related to the grant of options to employees, directors and non-employees under the above plans during the year ended December 31, 2013, were as follows:
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual life
|
Intrinsic value
|
|||||||||||||
$ |
Years
|
$ | ||||||||||||||
Options outstanding at beginning of year
|
6,589,215 | 3.34 | 6.63 | 10,958,989 | ||||||||||||
Options granted
|
1,335,200 | 5.54 | 4,569,139 | |||||||||||||
Options exercised
|
(1,786,473 | ) | 3.15 | 8,843,331 | ||||||||||||
Options expired
|
(16,076 | ) | 4.21 | 76,131 | ||||||||||||
Options forfeited
|
(76,713 | ) | 4.71 | 325,257 | ||||||||||||
Options outstanding at end of year
|
6,045,153 | 3.86 | 6.83 | 30,789,923 | ||||||||||||
Options vested and expected to vest at end of year
|
5,863,150 | 3.84 | 6.78 | 29,989,767 | ||||||||||||
Exercisable at end of year
|
3,010,708 | 3.12 | 5.13 | 17,544,083 |
|
Weighted average fair value of options granted during the years 2013, 2012 and 2011 was $ 3.79, $ 2.72 and $ 2.33 per share, respectively.
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
|
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing share price on the last trading day of fiscal 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2013. This amount is impacted by the changes in the fair market value of the Company's shares.
|
|
As of December 31, 2013, the total unrecognized estimated compensation cost related to non-vested share options granted prior to that date was $ 6,303 which is expected to be recognized over a weighted average period of approximately 2.49 years.
|
|
The Company used the following weighted-average assumptions for granted options:
|
Year ended December 31,
|
|||||||||
2013
|
2012
|
2011
|
|||||||
Volatility
|
67% | 82% | 83% | ||||||
Risk-free interest rate
|
1.20% | 0.69% | 1.49% | ||||||
Dividend yield
|
0% | 0% | 0% | ||||||
Expected life (years)
|
4.2 | 4.5 | 4.7 |
|
The stock-based compensation expenses are included as follows in the expense categories:
|
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cost of revenue
|
$ | 320 | $ | 59 | $ | - | ||||||
Research and development expenses, net
|
1,724 | 1,239 | 1,003 | |||||||||
Marketing and business development expenses
|
151 | 192 | 178 | |||||||||
General and administrative expenses
|
1,348 | 979 | 2,219 | |||||||||
$ | 3,543 | $ | 2,469 | $ | 3,400 |
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
|
c.
|
Options to non-employees:
|
Year ended December 31, 2013
|
||||||||||||
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual life
|
||||||||||
$ |
Years
|
|||||||||||
Options outstanding at beginning of year
|
321,500 | 4.71 | 3.52 | |||||||||
Options granted
|
135,000 | 5.75 | ||||||||||
Options exercised
|
(40,000 | ) | 2.80 | |||||||||
Options expired
|
- | - | ||||||||||
Options outstanding at end of year
|
416,500 | 5.23 | 3.60 | |||||||||
Options vested and expected to vest at end of year
|
416,500 | 5.23 | 3.60 | |||||||||
Exercisable at end of year
|
392,343 | 5.14 | 3.47 |
|
The options are re-measured using a Black-Scholes option-pricing model at their then-current fair value at the last date of each reporting period and compensation cost is adjusted for the changes for those fair values. The Company recognized the compensation cost using the straight-line method.
|
|
The Company used the following weighted-average assumptions for general options:
|
Year ended December 31,
|
|||||||||
2013
|
2012
|
2011
|
|||||||
Volatility
|
67% | 75% | 78% | ||||||
Risk-free interest rate
|
1.03% | 0.66% | 2.56% | ||||||
Dividend yield
|
0% | 0% | 0% | ||||||
Expected life (years)
|
4.5 | 4.3 | 6.0 |
|
As for compensation expenses, see also Note 9b.
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
|
d.
|
On May 12, 2011, the shareholders approved a new grant to the former CEO and a former director on the Company's board of directors of a fully vested option to purchase 380,000 shares, exercisable until the earlier to occur of: (i) 180 days after the former CEO and current board member terminates his service as board member for any reason (ii) the date when the options expire had he remained CEO (i.e. after April 19, 2015). The total compensation cost related to this new grant was $ 1,264 and recorded in the year ended December 31, 2011. As of December 31, 2013, the Company fully recognized those compensation costs.
|
|
e.
|
On December 12, 2011, the Board approved to extend the exercise period of options vested as of December 15, 2010, which were previously granted to the Company's CEO, until October 24, 2016. The Company accounted for the extension of options' terms pursuant to ASC 718 as a modification. Accordingly, additional compensation was calculated by the Company as the fair value of the modified award in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances. The total incremental compensation cost related to this modification was $ 61 and recorded in the year ended December 31, 2011. As of December 31, 2013, the Company fully recognized those compensation costs.
|
|
f.
|
On July 15, 2013, the Board resolved to recommend before the shareholders to grant to its Chairman of the Board and its CEO options to purchase 60,000 and 120,000 shares, respectively, at an exercise price of $ 5.445 per share, which was the market share price at such date.
On September 17, 2013 the shareholders of the Company approved this grant. The options shall vest on a monthly basis over a period of 12 months commencing January 1, 2016.
The pricing model for the award was estimated using a Binomial model with the following assumptions: risk-free interest rate of 2.96%, dividend yields of 0%, expected volatility of 70%, expected term of the options range between 3.78 – 5.46 years, post-vesting termination rate of 0.51% and suboptimal exercise factor range between 1 -2.11 factoring rate.
Consequently, during the year ended December 31, 2013 the Company recorded stock-based compensation expenses amounted of $ 108 as part of its general and administrative expenses.
|
NOTE 10:-
|
INCOME TAXES
|
|
a.
|
Tax rates applicable to the income of the Company:
|
|
1.
|
Taxable income of the Company is subject to the Israeli corporate at the tax rate as follows: 2011 - 24%, 2012 - 25% and 2013 – 25%.
|
|
2.
|
On July 29, 2013, the Israeli Parliament (the Knesset) approved the second and third readings of the Economic Plan for 2013-2014 ("Amended Budget Law") which includes, among others, raising the Israeli corporate tax rate from 25% to 26.5%. |
|
b.
|
Measurement of taxable income under the Income Tax (Inflationary Adjustments) Law, 1985:
|
|
Results for tax purposes are measured in terms of earnings in NIS after certain adjustments for increases in Israeli Consumer Price Index (the "Israeli CPI"). As explained in Note 2b, the financial statements are measured in U.S. dollars. The difference between the annual change in Israeli CPI and in the NIS/dollar exchange rate causes a further difference between taxable income and the income before taxes shown in the financial statements. In accordance with paragraph 9(f) of ASC 740, the Company has not provided deferred income taxes on the difference between the functional currency and the tax basis of assets and liabilities.
|
|
According to the law, until 2007 the results for tax purposes were adjusted for changes in the Israeli CPI.
|
|
In February 2008 the "Knesset" (Israeli parliament) passed an amendment to the Income Tax (Inflationary Adjustments) Law, 1985, which limits the scope of the law starting 2008 and thereafter. Starting 2008 the results for tax purposes are measured in nominal values, excluding certain adjustments for changes in the Israeli CPI carried out in the period up to December 31, 2007. The amendment to the law includes, inter alia, the elimination of the inflationary additions and deductions and the additional deduction for depreciation starting 2008.
|
|
c.
|
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"):
|
|
According to the Law, the Company is entitled to various tax benefits by virtue of the "approved enterprise" and/or "beneficiary enterprise" status granted to part of their enterprises, as implied by this Law. The principal benefits by virtue of the Law are:
|
|
According to the provisions of the Law, the Company has chosen to enjoy the "Alternative" track. Under this track, the Company is tax exempt in the first two years of the benefit period and subject to tax at the reduced rate of 10%-25% for a period of several years for the remaining benefit period.
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
Another condition for receiving the benefits under the alternative track is a minimum qualifying investment. This condition requires an investment in the acquisition of productive assets such as machinery and equipment which must be carried out within three years. The minimum qualifying investment required for setting up a plant is NIS 300 thousand. As for plant expansions, the minimum qualifying investment is the higher of NIS 300 thousand and an amount equivalent to the "qualifying percentage" of the value of the productive assets. Productive assets that are used by the plant but not owned by it will also be viewed as productive assets. The Company was eligible under the terms of minimum qualifying investment and elected 2008 and 2012 as its "years of election".
|
|
The qualifying percentage of the value of the productive assets is as follows:
|
The value of productive
assets before the expansion
(NIS in millions)
|
The new proportion that the
required investment bears to the
value of productive assets
|
||
Up to NIS 140
|
12% | ||
NIS 140 - NIS 500
|
7% | ||
More than NIS 500
|
5% |
|
The income qualifying for tax benefits under the alternative track is the taxable income of a company that has met certain conditions as determined by the Law ("a beneficiary company"), and which is derived from an industrial enterprise. The Law specifies the types of qualifying income that is entitled to tax benefits under the alternative track with respect of an industrial enterprise, whereby income from an industrial enterprise includes, among others, revenue from the production and development of software products and revenue from industrial research and development activities performed for a foreign resident (and approved by the Head of the Administration of Industrial Research and Development).
|
|
The benefit period starts with the first year the beneficiary enterprise earns taxable income, provided that 14 years have not passed since the approval was granted and 12 years have not passed since the enterprise began operating. In respect of expansion programs pursuant to Amendment No. 60 to the Law, the benefit period starts at the later of the year elected and the first year the Company earns taxable income provided that 12 years have not passed since the beginning of the year of election. The respective benefit period has not yet begun.
|
|
The above benefits are conditional upon the fulfillment of the conditions stipulated by the Law, regulations published thereunder and the letters of approval for the investments in the approved enterprises, as above.
Non-compliance with the conditions may cancel all or part of the benefits and refund of the amount of the benefits, including interest. The management believes that the Company is meeting the aforementioned conditions.
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
The Company is also a "foreign investors' company", as defined by the Capital Investments Law, and, as such, is entitled to a 10-year period of benefits and may be entitled to reduced tax rates of between 10% to 25% (depending on the percentage of foreign ownership in each tax year).
|
|
Income from sources other than the "Approved Enterprise" and "Beneficiary Enterprise" during the benefit period will be subject to the tax at the regular tax rate.
|
|
Amendments to the Law:
|
|
In December 2010, the "Knesset" (Israeli Parliament) passed the Law for Economic Policy for 2011 and 2012 (Amended Legislation), 2011, which prescribes, among others, amendments to the Law. The amendment became effective as of January 1, 2011. According to the amendment, the benefit tracks in the Law were modified and a flat tax rate applies to a company's preferred income. The Company will be able to opt to apply (the waiver is non-recourse) the amendment and from then on it will be subject to the amended tax rates that are: 2011 and 2012 - 15% (in development area A - 10%), 2013 and 2014 - 12.5% (in development area A - 7%) and in 2015 and thereafter - 12% (in development area A - 6%).
|
|
On July 29, 2013, the Israeli Parliament (the "Knesset") approved the second and third readings of the Economic Plan for 2013-2014 ("Amended Budget Law") which, among others, canceling the lowering of the tax rates applicable to preferred enterprises (9% in development area A and 16% in other areas), taxing revaluation gains and increasing the tax rates on dividends within the scope of the Law for the Encouragement of Capital Investments to 20% effective from January 1, 2014.
|
|
The Company estimates that the effect of the change in tax rates will not lead to material change in the amounts on the consolidated financial statements.
|
|
d.
|
Tax benefits under the Law for the Encouragement of Industry (Taxation), 1969:
|
|
Management believes that the Company currently qualifies as an "industrial company" under the above law and as such, enjoys tax benefits, including:
|
|
(1)
|
Deduction of purchase of know-how and patents and/or right to use a patent over an eight-year period;
|
|
(2)
|
The right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial company and an industrial holding company; and
|
|
(3)
|
Accelerated depreciation rates on equipment and buildings.
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
The Company believes currently is qualified as an "industrial company" under the above law and, as such, is entitled to certain tax benefits, mainly accelerated depreciation of machinery and equipment, and the right to claim public issuance expenses over three years, as a deduction for tax purposes.
|
|
e.
|
Net operating losses carryforward and capital loss:
|
|
As of December 31, 2013, the Company's net operating losses carryforward and capital loss for tax purposes in Israel amounted to approximately $ 177,952 and $ 727, respectively. These net operating losses may be carried forward indefinitely and may be offset against future taxable income. The Company expects that during the period in which these tax losses are utilized its income will be substantially tax-exempt.
|
|
Compugen Inc. is subject to U.S. income taxes. As of December 31, 2013, Compugen Inc. has net operating loss carryforwards for federal income tax purposes of approximately $ 14,511 which expires in the years 2018 to 2032. Compugen Inc. also has net operating loss carryforwards for state income tax purposes of approximately $ 15 which expires in the years 2013 to 2032. Utilization of the U.S. net operating losses may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.
|
|
f.
|
Loss (income) before taxes is comprised as follows:
|
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Domestic (Israel)
|
$ | 13,859 | $ | 13,370 | $ | 12,004 | ||||||
Foreign
|
(276 | ) | 258 | - | ||||||||
$ | 13,583 | $ | 13,628 | $ | 12,004 |
|
g.
|
Taxes on income are comprised from withholding tax payment amounted of $ 1,585 which was deducted from non-refundable upfront payment of $ 10,000 (see also Note 1f) by the German tax authorities and from tax receivables as refund from authorities in total amount of $ 1,085 that the Company expect to receive in the foreseeable future under ASC 450-30-25, “Gain Contingencies.
|
NOTE 10:-
|
INCOME TAXES (Cont.)
|
|
h.
|
Deferred taxes:
|
|
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company and Compugen Inc.'s deferred tax assets are comprised of operating loss carryforward and other temporary differences. Significant components of the Company and Compugen Inc. deferred tax assets are as follows:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Operating loss carryforward
|
$ |
52,092
|
$ | 43,297 | ||||
Research and development credit
|
3,265 | 2,300 | ||||||
Accrued social benefits and other
|
182 | 136 | ||||||
Deferred tax asset before valuation allowance
|
55,539
|
45,733 | ||||||
Valuation allowance
|
( 55,539 | ) | (45,733 | ) | ||||
Net deferred tax asset
|
$ | - | $ | - |
|
The Company and Compugen Inc. have provided full valuation allowances in respect of deferred tax assets resulting from operating loss carryforward and other temporary differences. Management currently believes that since the Company and Compugen Inc. have a history of losses it is more likely than not that the deferred tax regarding the operating loss carryforward and other temporary differences will not be realized in the foreseeable future.
|
|
i.
|
Reconciliation of the theoretical tax expense (benefit) to the actual tax expense (benefit):
|
|
The main reconciling items between the statutory tax rate of the Company and the effective tax rate are the non-recognition of tax benefits from accumulated net operating losses carryforward among the Company and
Compugen Inc. due to the uncertainty of the realization of such tax benefits and the effect of "approved" and "beneficiary" enterprise.
|
NOTE 11:-
|
FAIR VALUE MEASUREMENTS
|
|
In accordance with ASC 820 "Fair Value Measurements and Disclosures", the Company measures its Investment in Evogene and embedded derivatives in connection with research and development funding arrangement at fair value. Investment in Evogene is classified within Level 1 because this asset is valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Embedded derivatives are classified within Level 3 because they are valued using valuation techniques. Some of the inputs to these models are unobservable in the market and are significant.
|
|
The Company's financial assets measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of the following dates:
|
December 31, 2013
|
||||||||||||||||
Fair value measurements
|
||||||||||||||||
Description
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Investment in Evogene
|
$ | 4,565 | $ | 4,565 | $ | - | $ | - | ||||||||
Embedded Derivatives
|
12,431 | - | - | 12,431 | ||||||||||||
Total financial assets
|
$ | 16,996 | $ | 4,565 | $ | - | $ | 12,431 |
December 31, 2012
|
||||||||||||||||
Fair value measurements
|
||||||||||||||||
Description
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Investment in Evogene
|
$ | 5,196 | $ | 5,196 | $ | - | $ | - | ||||||||
Embedded Derivatives
|
6,864 | - | - | 6,864 | ||||||||||||
Liability with respect to outstanding
options to non- employee
|
264 | - | - | 264 | ||||||||||||
Total financial assets
|
$ | 12,324 | $ | 5,196 | $ | - | $ | 7,128 |
NOTE 11:-
|
FAIR VALUE MEASUREMENTS (Cont.)
|
|
Fair value measurements using significant unobservable inputs (Level 3):
|
Fair value
of Embedded Derivatives
|
||||
Balance at January 1, 2012
|
$ | 5,707 | ||
Fair value of Exchange Option within the 2012 proceeds under the mAb
research and development arrangement
|
569 | |||
Change in fair value of Exchange Option and embedded derivatives within
research and development arrangements
|
588 | |||
Balance at December 31, 2012 *)
|
6,864 | |||
Fair value of Exchange Option within the 2013 proceeds under the mAb
research and development arrangement
|
4,756 | |||
Change in fair value of Exchange Option and embedded derivatives within
research and development arrangements
|
811 | |||
Balance at December 31, 2013 *)
|
$ | 12,431 |
|
*)
|
The amount on the balance sheet of the research and development funding arrangements and others includes also Research and Development Component of $ 758 and $ 744 as of December 31, 2013 and 2012, respectively,
and fair value of liability with respect to outstanding options to non-employee, as mentioned below, in amount of $ 0 and $ 264 as of December 31, 2013 and 2012, respectively.
|
Fair value
of outstanding options to non- employee
|
||||
Balance at January 1, 2012
|
$ | 284 | ||
Change in fair value of liability with respect to outstanding options to non- employee
|
(20 | ) | ||
Balance at December 31, 2012
|
264 | |||
Change in fair value of liability with respect to outstanding options to non- employee
|
(104 | ) | ||
Classification of portion liability with respect to outstanding options to
non-employee to additional paid in capital
|
(160 | ) | ||
Balance at December 31, 2013
|
$ | - |
NOTE 12:-
|
GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
|
|
The Company's business is currently comprised of one operating segment, the research, development and commercialization of therapeutic and product candidates. The nature of the products and services provided by the Company and the type of customers for these products and services are similar. Operations in Israel and the United States include research and development, sales and business development. The Company follows ASC 280, "Segment Reporting." Total revenues are attributed to geographic areas based on the location of the end customer.
|
|
The following represents the total revenue for the years ended December 31, 2013, 2012 and 2011 and long-lived assets as of December 31, 2013 and 2012:
|
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Revenue from sales to customers:
|
||||||||||||
Israel
|
$ | 260 | $ | 242 | $ | - | ||||||
Europe
|
3,289 | - | - | |||||||||
Total revenue
|
$ | 3,549 | $ |
242
|
$ | - |
December 31,
|
||||||||
2013
|
2012
|
|||||||
Long-lived assets:
|
||||||||
Israel
|
$ | 567 | $ | 483 | ||||
United States
|
641 | 767 | ||||||
Total long-lived assets
|
$ | 1,208 | $ | 1,250 |
Year ended December 31,
|
|||||||||||
2013
|
2012
|
2011
|
|||||||||
Sales to a single customer exceeding 10%:
|
|||||||||||
Customer A
|
93 | % | 100 | % | - |
NOTE 13:-
|
FINANCIAL INCOME (LOSS), NET
|
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Interest income
|
$ | 169 | $ | 301 | $ | 421 | ||||||
Bank fees and other finance income (expenses)
|
(28 | ) | (61 | ) | 27 | |||||||
Change in fair value of research and development funding arrangements
|
(811 | ) | (588 | ) | (113 | ) | ||||||
Change in fair value of liability with respect to outstanding options to non-employee
|
104 | 20 | - | |||||||||
Funding arrangements issuance expenses
|
- | - | (463 | ) | ||||||||
Gain from sales of marketable securities
|
3,711 | - | 239 | |||||||||
Gain from derivatives transactions
|
- | - | 134 | |||||||||
Foreign currency translation adjustments
|
315 | 242 | (270 | ) | ||||||||
Financial income (loss), net
|
$ | 3,460 | $ | (86 | ) | $ | (25 | ) |
NOTE 14:-
|
RELATED PARTY BALANCES AND TRANSACTIONS
|
|
The Company provides research and development services to Neviah in consideration for pre-scheduled determined fees. As of December 31, 2013 and 2012 the Company recognized revenue from the agreement with Neviah in total amount of $ 260 and $ 242, respectively (see also Note 1d).
|
1.
|
Definitions.
|
1.1.
|
“Affiliate”
means, with respect to a person, organization or other entity, any person, organization or other entity controlling, controlled by or under common control with, such person, organization or entity. For purposes of this definition, an entity shall be deemed to “control” another entity if it (i) owns directly or indirectly fifty percent (50%) or more of the outstanding voting securities, capital stock or other comparable equity or ownership interest of such entity having the power to vote on or direct the affairs of such entity, as applicable (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction), or (ii) possesses, directly or indirectly, the power to direct or cause the direction of the policies and management of such entity, as applicable, whether by the ownership of stock, by contract or otherwise.
|
1.2.
|
“Bayer Competitor”
means any person, organization or other entity that is active in the field of clinical development and/or commercialization of prescription pharmaceuticals for indications in the area of oncology.
|
1.3.
|
“Bayer Development Process”
means Bayer’s [***] internal process for the research and development of therapeutic candidates described in
Exhibit 1.3
, or any similar internal process implemented by Bayer for its therapeutic development activities in general (i.e. not just for a Target Program) that succeeds or amends the process described in Exhibit 1.3.
|
1.4.
|
“Bayer Intellectual Property”
means (a) any Bayer Know-How, (b) any Bayer Product Patent Rights and (c) any other Program Know-How and/or Program Inventions owned by Bayer in accordance with Section 8.1.2.1.
|
1.5.
|
“Bayer Know-How”
means any and all Know How with respect to [***], Products and/or [***]developed or generated by Bayer or an Affiliate of Bayer in the performance of a [***] and, [***] or [***] for the [***] of the licenses granted by Bayer to Compugen under Section 3,
including but not limited to [***]
information relating to [***], Products and/or Product Companion Diagnostics, but for clarity specifically excluding any [***] and/or [***] not specific to [***] or [***]. For the avoidance of doubt, the Bayer Know-How includes Program Know-How owned by Bayer to the extent that such Program Know-How relates to [***], Products and/or [***].
|
1.6.
|
“Bayer Product Patent Rights”
means
any Patents with respect to an invention developed or generated by Bayer or an Affiliate of Bayer in the performance of a [***] and that claim, in each case solely to the extent they claim, (a) a Product or [***]Product(s) or (b) a [***] or [***]. For clarity, “Bayer Product Patent Rights” do not include Patents that claim [***] that [***] Product(s) nor [***] (e.g. [***]), except to the extent they include claims that are [***] Product(s) or [***].
|
1.7.
|
“Biologic”
means any [***] or a [***].
|
1.8.
|
“Biomarker”
means a distinctive biological or biologically derived indicator (including, without limitation, DNA, RNA, protein, peptide, antibodies and cells) by which particular normal biologic processes, pathogenic processes or pharmacologic responses to therapeutic intervention can be identified, quantified or predicted.
|
1.9.
|
“BLA”
means (a) an FDA Biologics License Application, Product License Application or similar application filed with the United States FDA for approval to market a Product for use in the Field and (b) any comparable application filed with a Regulatory Authority in any other country or jurisdiction.
|
1.10.
|
“Business Day(s)”
shall mean a day other than a Friday, Saturday, Sunday and any day on which commercial banks located in Berlin, Germany or in Tel Aviv, Israel, are authorized or obligated by law to be closed.
|
1.11.
|
“Calendar Quarter”
means each of the periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31, for so long as this Agreement is in effect.
|
1.12.
|
“CGEN-15001T Research Program”
means the research and preclinical development program to be performed by the Parties until the end of the Research Period, i.e. until [***] or such other date as may be agreed in any amendment or change to the CGEN-15001T Workplan.
|
1.13.
|
“CGEN-15001T Target”
means any protein encoded by the gene locus on [***] with the official gene symbol [***] as provided by HGNC consortium, and any [***]. For purposes of this definition “[***]” means all [***] from that [***] (including any [***]) with an [***] of at least [***], in which overlap there is a [***] of at least [***].
|
1.14.
|
“CGEN-15001T Target Biologic”
means any Target Biologic [***] a CGEN-15001T Target.
|
1.15.
|
“CGEN-15001T Target Program”
means the program for the research, development and commercialization of Products containing CGEN-15001T Target Biologics and Product Companion Diagnostics for such Products as contemplated by this Agreement.
|
1.16.
|
“CGEN-15001T Workplan”
means the workplan attached hereto as
Exhibit 1.16
, which sets forth the research and preclinical development work to be performed by each of the Parties with respect to the CGEN-15001T Target Program during the relevant Research Period, as such workplan may be amended by Bayer and Compugen in accordance with Section 2.4.
|
1.17.
|
“CGEN-15022 Research Program”
means the research and preclinical development program to be performed by the Parties until the end of the Research Period, i.e. until [***] or such other date as may be agreed in any amendment or change to the CGEN-15022 Workplan.
|
1.18.
|
“CGEN-15022 Target”
means any protein encoded by the gene locus on [***] with the official gene symbol [***] as provided by HGNC consortium, and any [***] For purposes of this definition, “[***]” means all proteins derived from that [***] (including any [***]) with an [***] of at least [***] amino acids, in which overlap there is a [***] of at least [***].
|
1.19.
|
“CGEN-15022 Target Biologic”
means any Target Biologic [***] a CGEN-15022 Target.
|
1.20.
|
“CGEN-15022 Target Program”
means the program for the research, development and commercialization of Products containing CGEN-15022 Target Biologics and Product Companion Diagnostics for such Products as contemplated by this Agreement.
|
1.21.
|
“CGEN-15022 Workplan”
means the workplan attached hereto as
Exhibit 1.21
, which sets forth the research and preclinical development work to be performed by each of the Parties with respect to the CGEN-15022 Target Program during the relevant Research Period, as such workplan may be amended by Bayer and Compugen in accordance with Section 2.4.
|
1.22.
|
“Commercially Reasonable Efforts”
means efforts and resources, with respect to a particular Party, that are [***] by that Party (together with its Affiliates) in the exercise of its [***] with respect to programs it is [***] on relating to other [***] or [***] by it (and/or its Affiliates) or to which it (together with its Affiliates) has [***], which have a [***] and are at a [***] or [***], as appropriate, taking into account issues of [***] of the [***] and [***], the [***] or [***] of the product, and other relevant factors, including without limitation, [***], and/or [***], where such level of efforts and resources, in any event, shall be [***] than [***] with [***] of a [***]. For clarity, in the event Bayer grants a Sublicense, the efforts exerted by Bayer and/or its Sublicensee to develop and commercialize Products will continue to be compared to those efforts generally exerted by a [***] of a [***] in active programs relating to other [***] or [***] by it (and/or its Affiliates) or to which it (together with its Affiliates) has [***] for purposes of this definition.
|
1.23.
|
“Companion Diagnostic”
means any Product Companion Diagnostic and any Other Companion Diagnostic.
|
1.24.
|
“Composition Of Matter Claim”
means a Valid Claim that covers one or more Target Biologic(s) and/or Target Biomarker(s) as composition of matter, regardless of whether the [***] of such Target Biologic(s) or Target Biomarker(s) is claimed. For clarity, “Composition of Matter Claims” includes, without limitation, Valid Claims covering [***] Target Biologics against a Target, a [***] of a Target or [***] of a Target.
|
1.25.
|
“Composition Of Matter Patent Rights”
means any Compugen Patent Rights or Joint Patent Rights that include one or more Composition Of Matter Claim(s).
|
1.26.
|
“Compugen Intellectual Property”
means (a) any Compugen Know-How, (b) any Compugen Patent Rights and (c) any other Program Know-How and/or Program Inventions owned by Compugen in accordance with Section 8.1.2.2 (other than [***], which are specifically excluded from this definition).
|
1.27.
|
“Compugen Know-How”
means any and all Know How with respect to [***] (alone or together with another composition, e.g. conjugate), [***] or [***] that is [***] and is, in Compugen’s [***] or [***] for the [***] of the licenses granted by Compugen to Bayer under Section 3, including but not limited to [***] and [***] information relating to [***] or [***] but for clarity specifically excluding: (i) any and all [***] and [***] and (ii) other [***] and/or [***] to [***] or [***]. For the avoidance of doubt, the Compugen Know-How includes Program Know-How owned by Compugen to the extent that such Program Know-How relates to [***] and/or [***]. Notwithstanding the foregoing, “Compugen Know-How” does not include Know How with respect to [***] and/or [***] that was [***] before the date of [***], but (a) was [***] before such date by the [***] or the [***], as applicable or (b) is/was developed by such [***] in independent activities without the use of or reference to [***] by persons who were [***], provided that those independent activities are/were made within a project that was started by [***] with respect to [***][***] and/or [***] in connection with the evaluation of the [***]. The Parties agree that in case of dispute, Compugen will have the burden of proof to demonstrate that all requirements of lit. (a) or lit. (b) are fulfilled.
|
1.28.
|
“Compugen Patent Rights”
means any Patents Controlled by Compugen or any of its Affiliates [***] or [***] that claim, in each case solely to the extent they claim, [***], Products (but excluding, if and to the extent that such Patents claim Products, any composition of matter that is [***] and [***]) and/or [***], or their use, or a manufacturing process [***] and/or one or more [***] including without limitation the Patents set forth in
Exhibit 1.28
. For clarity, “Compugen Product Patent Rights” do not include patents or patent applications that claim [***] that [***] to [***] (e.g. [***]), except to the extent they include claims that are [***]or [***].
Notwithstanding the foregoing, “Compugen Patent Rights” does not include Patents to the extent they claim [***] and/or [***], or a manufacturing process specific to one or more [***] and/or one or more [***], that were not Controlled by Compugen before the date of [***] or [***], but (a) were Controlled before such date by the [***] or the [***], as applicable or (b) claim inventions conceived and reduced to practice by such [***] after such [***] in independent activities without the use of or reference to [***] by persons who were [***], provided that those independent activities are/were made within a project that was started by the [***] with respect to [***] and/or [***] in connection with the evaluation of the [***]. The Parties agree that in case of dispute, Compugen will have the burden of proof to demonstrate that all requirements of lit. (a) or lit. (b) are fulfilled.
|
1.29.
|
“Control”
means, with respect to intellectual property or intellectual property rights that is/are owned or in-licensed by a Party and/or its Affiliate(s), the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign or to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party (including the terms of any such in-license agreement) or any applicable law and without the need for any consent (or further consent) from such Third Party.
|
1.30.
|
[***]
means [***] as set forth in [***].
|
1.31.
|
[***]
means [***] and a [***]. [***] will entail [***] of [***], together with [***].
|
1.32.
|
[***]
means [***] of a [***] and a [***] of the [***], in accordance with [***].
|
1.33.
|
“Diagnostic”
means any Companion Diagnostic and any General Diagnostic that (a) is covered by a claim of a Compugen Patent Right or Joint Patent Right and/or (b) is/was [***] and/or [***] through the use ([***]) of [***] or [***]. The Parties agree that in case of dispute, Bayer will have [***] that [***] has been [***] without the use of [***] and without the use of [***].
|
1.34.
|
“Field”
means the treatment or prevention of any [***] and/or [***], [***] in [***].
|
1.35.
|
“First Commercial Sale”
means, on a [***] basis with respect to each Product and each Diagnostic, the date of the first sale for [***] in an arm’s length transaction by a Related Party of such Product or Diagnostic, as applicable, to an Unrelated Third Party for [***] of such Product or Diagnostic, as applicable, following receipt of all [***] required to [***] such Product or Diagnostic, as applicable, in such [***] to the [***]. For clarity, sales or other distribution for (a) use in [***], use in [***] or [***] programs or use in similar instances in which products may be provided to patients prior to [***] or (b) provision of [***] for [***] or similar purposes shall not be deemed “First Commercial Sale”.
|
1.36.
|
“Fusion Protein”
means a protein created by the fusion of the extracellular domain of a protein, or fragment thereof, to any heterologous sequence (such as an Fc fragment of an Immunoglobulin G).
|
1.37.
|
“General Diagnostic”
means any diagnostic product that contains and/or detects a Target Biomarker, other than Companion Diagnostics, including without limitation standalone diagnostics.
|
1.38.
|
“Indication”
means: (a) for oncological diseases characterized by [***] from [***], whereby [***] from [***] shall constitute a [***] (e.g. by way of illustration: [***]. [***], whereas, [***] that [***]; and (b) for other oncological diseases and non-oncological diseases, Indications shall be classified as defined in [***]. By way of illustration, [***] would list nine different Indications.
|
1.39.
|
“
Infringed Claim” means a claim of a Patent of a Third Party which would be infringed by [***] of, or the [***] of, [***] included in the relevant Product (at the date and in the country of such activity). Notwithstanding the foregoing, “Infringed Claim” does not include claims with respect to [***] or [***] that are [***] to a [***]. Any risk of infringement of such Third Party rights will be reasonably considered in the selection of the [***] to be further developed, to the extent that such a risk is already recognizable at the time of selection of the [***].
|
1.40.
|
“Joint Intellectual Property”
means any Joint Patent Rights and/or Joint Know-How.
|
1.41.
|
“Joint Invention”
means any Program Invention for which (a) one or more inventors is an employee or contractor of Bayer or its Affiliate and (b) one or more inventors is an employee or contractor of Compugen or its Affiliate.
|
1.42.
|
“Joint Know-How”
means Program Know-How developed jointly by (a) one or more employees or contractors of Bayer or its Affiliate
and (b) one or more employees or contractors of Compugen or its Affiliate. For the avoidance of doubt, “Joint Know-How” also includes Joint Inventions.
|
1.43.
|
“Joint Patent Rights”
means any patent or patent application that claims a Joint Invention.
|
1.44.
|
“Know-How”
means any proprietary tangible and intangible: methods, inventions, techniques, processes, specifications, materials, recipes, formulae, preparations, designs, plans, drawings, data, trade secrets or other technical or scientific information.
|
1.45.
|
“
Marketing Authorization
” means, with respect to a Product or Diagnostic in a given country, all approvals from the relevant Regulatory Authority (e.g. a BLA in the case of a Product) necessary to market and sell such Product or Diagnostic, as applicable, in such country to the relevant patient population in general.
|
1.46.
|
“Net Sales”
means the [***] amount [***] or (if not [***])[***] by a Related Party for sales of a Product or Diagnostic to [***] less the following deductions to the extent specifically applicable to such sales of Products or Diagnostics, as applicable, and not previously deducted from such [***] amount [***]:
|
|
·
|
[***] of gross amount for [***];
|
|
·
|
[***] and [***] or [***] included in such [***] invoiced and paid by a [***] or any other [***] imposed upon the sale of the relevant Product or Diagnostic and paid by a [***], but specifically excluding [***];
|
|
·
|
[***] and [***] granted or allowed in the ordinary course of business by a Related Party in connection with such sale of a Product or Diagnostic;
|
|
·
|
[***] or [***] granted by a Related Party to customers on account of governmental requirements, rejection, outdating, returns, billing errors or recalls of a Product or Diagnostic;
|
|
·
|
[***] and [***] or [***] (as described below) granted by a Related Party in the ordinary course of business with respect to the sale of a Product or Diagnostic; and
|
|
·
|
[***] of [***] for [***].
|
1.47.
|
“Non-Royalty Sublicense Income”
means any payments or other consideration that Bayer or any of its Affiliates receives in connection with a Sublicense, other than royalties (including percentage payments and fixed per unit amounts) on account of Net Sales by a Sublicensee or an Affiliate of a Sublicensee. If Bayer or its Affiliate receives non-cash consideration (e.g. equity, other non-cash assets)
in connection with a Sublicense, Non-Royalty Sublicense Income will be calculated based on the [***]. For the avoidance of doubt, Bayer is in no way obliged or expected to receive any payments or other consideration from Sublicensees in connection with Companion Diagnostics and that enabling or facilitating the approval and commercialization of Products shall not be deemed a non-cash consideration.
|
1.48.
|
“Other Companion Diagnostics”
means any diagnostic product that contains and/or detects a Target Biomarker
and is developed specifically for use in conjunction with a [***] that is [***] to inform the selection, initiation, dosing, monitoring, and/or avoidance of treatment with such product with the objective that such diagnostic be approved by the relevant Regulatory Authority in the label of such product, regardless of whether such approval is ultimately granted.
|
1.49.
|
“Patents”
means national, regional and international patents and patent applications, including provisional applications, continuations, continuations-in-part, continued prosecution applications, divisionals, substitutions, reissues, additions, renewals, re-examinations, extensions, term restorations, confirmations, registrations, revalidations, revisions, priority rights, converted provisionals, requests for continued examination and supplementary protection certificates and pediatric drug exclusivity periods granted in relation thereto, as well as utility models, innovation patents, design patents, petty patents, patents of addition, inventor’s certificates, and equivalents in any country or jurisdiction and any similar rights, including pipeline protection, or any importation, or introduction patent to any such foregoing patent applications and patents and any and all patents that have issued or in future issue from the foregoing patent applications.
|
1.50.
|
“
Phase 1 Clinical Trial
” means a human clinical trial conducted on a limited number of study subjects for the purpose of gaining evidence of the safety and tolerability of, and information regarding, pharmacokinetics and potential pharmacological activity for a product or compound, as described in 21 C.F.R. § 312.21(a) (including any such clinical study in any country other than the United States).
|
1.51.
|
“Phase 2 Clinical Trial”
means a human clinical trial conducted on study subjects with the disease or condition being studied for the principal purpose of achieving a preliminary determination of efficacy or appropriate dosage ranges, as further described in 21 C.F.R. §312.21(b) (including any such clinical study in any country other than the United States).
|
1.52.
|
“Phase 3 Clinical Trial”
means a pivotal clinical trial in humans performed to gain evidence with statistical significance of the efficacy of a product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product, to form the basis for the filing for approval of a BLA by a Regulatory Authority and to provide an adequate basis for physician labeling, as described in 21 C.F.R. § 312.21(c) or the corresponding regulation in jurisdictions other than the United States, regardless of whether such trial is labeled by the relevant Related Entity as Phase 3 Clinical Trial.
|
1.53.
|
“Product”
means any therapeutic or prophylactic product containing or comprising a Target Biologic, in any and all forms, presentations, formulations and dosage forms that (a) is covered by a claim of a [***] and/or (b) is/was identified, developed and/or generated [***] of [***].
The Parties agree that in case of dispute, Bayer will have the burden of proof to demonstrate that [***] containing or comprising
a Target [***] has been [***] without the use of [***]. For the avoidance of doubt, the definition of “Products” shall not include Product Companion Diagnostics.
|
1.54.
|
“Product Companion Diagnostic”
means any diagnostic product that contains and/or detects a Target Biomarker
and is developed specifically for use in conjunction with a Product to inform the selection, initiation, dosing, monitoring, and/or avoidance of treatment with such Product with the objective that such diagnostic be approved by the relevant Regulatory Authority in the label of such Product, regardless of whether such approval is ultimately granted.
|
1.55.
|
“Program Know-How”
means any Know-How developed or generated in the performance of the Research Programs and Controlled by Bayer, an Affiliate of Bayer, Compugen or an Affiliate of Compugen (including but not limited to [***], and [***] and (to the extent applicable) [***] and [***]).
|
1.56.
|
“Program Invention”
means any patentable Know-How Controlled by Bayer, an Affiliate of Bayer, Compugen or an Affiliate of Compugen that is [***] and/or [***] in the performance of a Research Program.
|
1.57.
|
“Regulatory Authority”
means the FDA or any other supranational, national or local agency, authority, department, inspectorate, ministry official, parliament or public or statutory person of any government of any country having jurisdiction over any of the activities contemplated by the Agreement or the Parties, or any successor bodies thereto.
|
1.58.
|
“Related Party”
means any of the following: (a) Bayer; (b) an Affiliate of Bayer; (c) a Sublicensee; or (d) an Affiliate of a Sublicensee.
|
1.59.
|
“Research Period”
means, with respect to each Research Program, the period until completion of all obligations under the Research Program as set forth in the Workplan for such Research Program.
|
1.60.
|
“Research Program”
means either the CGEN-15001T Research Program or the CGEN-15022 Research Program.
|
1.61.
|
“Sublicense”
means: (a) any license given (including without limitation licenses with respect to Bayer Product Patent Rights and Bayer Know-How) by Bayer or an Affiliate of Bayer to any Third Party (or by a Sublicensee to a further Sublicensee) to develop, manufacture, market and/or sell Products and/or Diagnostics and/or any other licenses granted by Bayer or an Affiliate under any of the rights granted to Bayer under this Agreement;
and (b) any [***] by [***] to any other person or entity (or by a Sublicensee to a further Sublicensee) [***] for or [***]; in each case regardless of whether such license given is referred to or is described as a license, sublicense or otherwise. For clarity, “Sublicense” does not include (i) any agreements or other grants of rights that fulfill the requirements of Section 3.1.2 or (ii) the engagement of a Third Party wholesale distributors who (1) purchase Products from a Related Party in arm’s length transaction and who have no sales, marketing or reporting obligation to a Related Party and (2) do not pay Related Parties any consideration on account of such engagement other than the sales price of the Products and/or Companion Diagnostics sold by the Related Party to such Third Party. For clarity, such wholesale distributors do not include those distributors whose obligations to a Related Party include responsibility for sales and/or marketing efforts in a country or sharing of costs and expenses with respect to sales and/or marketing on behalf of a Related Party or who pay other consideration on account of such engagement, which distributors shall be deemed to be Sublicensees for purposes of this definition.
|
1.62.
|
“Sublicensee”
means any person or entity granted a Sublicense.
|
1.63.
|
“Sublicense Diagnostic Sales Income”
means any payments or other consideration that Bayer or any of its Affiliates receives on account of sales of Diagnostics by a Sublicensee. If Bayer or any of its Affiliates receives non-cash consideration (e.g. equity, other non-cash assets)
on account of sales of Diagnostics by a Sublicensee, Sublicense Diagnostic Sales Income will be calculated based on [***], at the time of [***], [***]. Bayer informs and Compugen understands and acknowledges that the [***] of [***] to the [***] of [***] is to [***] or [***] of [***], and that [***] may [***] or [***] from Sublicensees on account of Sublicensing of [***], in which case Compugen would [***] or [***] from Bayer in relation to the [***] and [***] of [***].
|
1.64.
|
“Target”
means any CGEN-15001T Target and/or any CGEN-15022 Target.
|
1.65.
|
“Target Biologic”
means any Biologic, including but not limited to any [***], or [***], that is [***], except that “Target Biologic” specifically excludes [***]. The Parties (a) acknowledge that in [***] not [***] any of [***], a Party or its Affiliate may [***]
and/or [***]
a Biologic directed [***] another [***] which [***] inadvertently [***] to [***] and (b) agree that such [***] will not be deemed [***] for purposes of this Agreement.
|
1.66.
|
“Target Biomarker”
means (a) any Target
,
(b) any [***] and (c) any [***], or of such [***], that is derived from the [***] of such [***]. For purposes of this definition, [***] means (i) with respect to a [***], a consecutive portion of the [***] or more [***], and (ii) with respect to [***], a consecutive portion of the [***] or more [***].
|
1.67.
|
“Target Fusion Protein”
means a protein created by the fusion of the extracellular domain of a Target, or fragment thereof, to any heterologous sequence (such as an Fc fragment of an Immunoglobulin G).
|
1.68.
|
“Target Program”
means either the CGEN-15001T Target Program or the CGEN-15022 Target Program.
|
1.69.
|
“Third Party”
means any person or entity other than Bayer, Bayer’s Affiliates, Compugen and Compugen’s Affiliates.
|
1.70.
|
“Third Party [***] Payments”
means amounts paid by Bayer to a Third Party as a result of a [***] or [***] for [***] due to [***] were [***] in the performance of [***] (for the avoidance of doubt, including [***] of this Agreement).
|
1.71.
|
“Unrelated Third Party”
means any person or entity that is not a Related Party.
|
1.72.
|
“Use Patent Rights”
means Compugen Patent Rights or Joint Patent Rights that are not Composition Of Matter Patent Rights.
|
1.73.
|
“Valid Claim”
means a claim of an issued and unexpired patent within the Compugen Patent Rights, Joint Patent Rights or Bayer Product Patent Rights that has not been (a) held permanently revoked, unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (b) rendered unenforceable through disclaimer or otherwise, (c) abandoned or (d) permanently lost through an interference or opposition proceeding without any right of appeal or review.
|
1.74.
|
“Workplan”
means either the CGEN-15001T Workplan or the CGEN-15022 Workplan.
|
2.
|
Research Program.
|
2.1.
|
Purpose and Scope of Work.
The Parties are entering into a research and development collaboration for the Research Period, with the intent of developing CGEN-15001T Target Biologics and CGEN 15022 Target Biologics that will be candidates for the development of Products and of discovering and developing Target Biomarkers that can be used as research tools for the development of Products and/or for the development of Product Companion Diagnostics. Each Workplan sets forth certain activities to be performed by each of the Parties, details regarding each of the Parties’ deliverables and timetables for delivery of such deliverables. Each Workplan may be amended by the Joint Steering Committee (as defined below in Section 2.2.1) in accordance with Section 2.2, provided that no such amendment may increase Compugen’s or Bayer’s obligations under such Workplan unless the Parties have agreed to such increase in writing, including with respect to funding to be provided by Bayer to Compugen to support additional work. To the extent any terms in a Workplan shall at any time conflict with the terms of this Agreement, the terms of this Agreement shall prevail.
|
2.2.
|
Management.
|
2.2.1.
|
Establishment of Joint Steering Committee.
The Parties hereby establish a Research Program steering committee (the “
Joint Steering Committee
” or “
JSC
”) that will be responsible for overall supervision and direction of, and for making decisions related to, the Parties’ activities under the Workplans.
|
2.2.2.
|
Membership
. The Joint Steering Committee will be comprised of [***] members, with [***] members appointed by each Party, all of whom shall be employees of the appointing Party and shall have appropriate authority to make the decisions assigned to the Joint Steering Committee hereunder. In addition, each Party will appoint one associate member (having no voting power in the JSC) with the tasks to (i) prepare and manage the JSC meetings, (ii) ensure proper communication and exchange of information between the Parties, (iii) oversee the budget and resources in the Research Programs, (iv) attempt to resolve conflicts, and (v) act as a point of contact for external communications (e.g. press releases) and publications taking into account company specific regulations for external communications and publications (the “
Alliance Manager
”). Each of Bayer and Compugen may replace its Alliance Manager or one or more of its Joint Steering Committee representatives at any time, upon written notice to the other Party. From time to time, the Joint Steering Committee may establish subcommittees, comprised of an equal number of representatives from each Party (who may be persons other than Joint Steering Committee members), to oversee particular activities.
|
2.2.3.
|
Responsibilities.
The Joint Steering Committee will be responsible for:
|
|
(a)
|
overseeing the overall progress achieved in each Research Program and directing the Research Program;
|
|
(b)
|
informing each other on strategic aspects;
|
|
(c)
|
making and approving go/no-go decisions regarding the attainment of Research Program’s milestones based on proposals made by the Project Managers (as defined below in Section 2.3.2);
|
|
(d)
|
deciding on amendments to or changes of the Workplan(s) (including changes to timelines and actions to be taken), from time to time, as proposed by the Project Managers (as defined below);
|
|
(e)
|
agreeing upon contractors to be used by the Parties in performing work under a Workplan in the event that the Project Managers are not able to agree upon such contractors;
|
|
(f)
|
proposing amendments to this Agreement; and
|
|
(g)
|
such other matters as the Parties may assign to the Joint Steering Committee from time to time.
|
2.2.4.
|
Meetings.
The Joint Steering Committee shall meet [***], whether in-person or by telephone or video conference as the Joint Steering Committee agrees, provided that at least [***] ([***] in Israel or San Francisco, CA and [***] in Germany) shall be held in each calendar year. Members of the Joint Steering Committee may participate in and vote at meetings, in person, by telephone or by video-conference, and may vote at meetings by proxy; in addition, the Joint Steering Committee may agree from time to time with unanimous consent to take decisions in writing. Additional employees or consultants of either Party may be permitted to attend meetings of the Joint Steering Committee and/or of its sub-committees’ meetings with the consent of the other Party’s members of the Joint Steering Committee, such consent not to be unreasonably withheld. For each such Joint Steering Committee meeting (or sub-committee meeting), whether an in-person meeting or otherwise, either of the Alliance Managers (as agreed prior to the meeting) shall prepare an agenda and written minutes which shall document all Joint Steering Committee discussions and decisions in such meeting. Draft minutes shall be distributed to the Joint Steering Committee members [***] following the particular Joint Steering Committee meeting, revised as necessary, and promptly approved in writing by all Joint Steering Committee members. Thereafter, the approved minutes of each Joint Steering Committee meeting shall be distributed to each member. Each Party is responsible for the travelling costs of its Alliance Manager and its members of the Joint Steering Committee.
|
2.2.5.
|
Decision-Making.
All decisions of the Joint Steering Committee shall be made by unanimous consent. In the event the Joint Steering Committee is unable to reach agreement on a matter relating to the activities under a Workplan (a “
Deadlock
”), then either Party may notify the other of the Deadlock in writing, such notice to describe the subject of the Deadlock in reasonable detail. In such case, the following shall apply:
|
2.2.5.1.
|
Subject to the limitations set forth in Section 2.2.5.2, [***] shall [***]
over the Deadlocked matter, such authority to be exercised by [***] and notified to [***] within [***] days after delivery of the applicable Deadlock notice. If [***] fails to notify [***] how [***] has elected to [***] on the Deadlocked matter, [***] may take such action with respect to the Deadlocked matter as [***] deems appropriate [***]. With respect to matters described in Section 2.2.5.2, for which [***] is not entitled to [***] with respect to any Deadlock, such Deadlock shall be resolved pursuant to the provisions of Section 2.2.5.3.
|
2.2.5.2.
|
[***] will not have the authority under Section 2.2.5.1 or 2.2.5.4 to [***] make any decision that: (a) [***] or otherwise is [***] any term or provision of this Agreement; (b) [***] or its ability to meet its obligations under this Agreement; (c) [***] under a Workplan or [***] the achievability of such [***] in each case in a manner [***]; (d) [***]; (e) would require [***], in a manner material to [***], in the [***] or the use of [***] or [***] not currently contemplated in the relevant Workplan; (f) would [***] for which [***] is entitled to make use of [***]
Protein Controls (as defined in [***]); (g) would [***] of the [***]; or (h) [***] either Party’s [***] obligations under [***].
|
2.2.5.3.
|
With respect to matters described in Section 2.2.5.2 with respect to which [***] does not have authority under Section 2.2.5.1 to [***] make decisions (“
Specific Deadlocked Matters
”), the Parties shall first try to resolve such Specific Deadlocked Matter in a second JSC meeting to be held within [***] Business Days from the meeting in which the Specific Deadlocked Matter has remained unsolved. In the event that the JSC is again unable to resolve the Specific Deadlocked Matter, such matter shall be promptly referred to the [***] of Compugen and the [***] of Bayer. If said officers cannot resolve such Specific Deadlocked Matter through [***] and [***] within [***] calendar days after the date on which the matter is referred to the Parties’ executive officers listed above, the Parties will attempt in [***] to settle the Specific Deadlocked Matter by mediation in accordance with the [***] by a [***] mediator with [***] Program. If the Parties [***] on a [***] mediator, the mediator will be appointed by the [***]. The place of the mediation proceedings shall be [***], [***], and the language to be used shall be [***]. If the Parties decide to submit the Specific Deadlocked Matter to mediation, [***] shall bear [***] expenses and [***] of all costs and fees of the mediator. If the Parties can also not resolve the Specific Deadlocked Matter by mediation in accordance with the [***], the Parties will continue the performance of the Research Program in accordance with the relevant Workplan without any change with respect to the Specific Deadlocked Matter for which no agreement was reached.
|
2.2.5.4.
|
Notwithstanding the above, [***] may, at any time upon one (1) month prior written notice to [***], disband the Joint Steering Committee. If [***] provides such notice of disbandment to [***], the Parties’ obligations under this Section 2.2 will terminate, unless and until [***] provides written notice to [***] that it wishes to reinstate the Joint Steering Committee, in which case the Parties’ obligations under this Section 2.2 will be reinstated for the period following such notice by [***]. In the event of such disbandment and unless and until the Joint Steering Committee is reinstated, subject to [***], all activities and decisions assigned to the Joint Steering Committee as set forth above shall be performed and decided upon by [***] such authority to be exercised by [***] (taking into consideration concerns raised by [***] and the goals of the relevant Research Program). During the period of disbandment, [***] shall inform Compugen with written notice about proposed decisions [***]. If [***] provides such written notice, each Party will promptly appoint authorized representatives with the same competencies as the members of the Joint Steering Committee to discuss such proposed decisions [***]. If such representatives are unable to agree on such matter within [***] days of [***]’s notice to [***], such matter shall be promptly referred to the [***] and the [***]. If said [***]
cannot resolve such matter through [***] negotiations within [***] days after the date on which the matter is referred to the Parties’ [***] listed above, the Parties will attempt to resolve the matter in accordance with the mediation process described in [***].
|
2.2.5.5.
|
Unless earlier disbanded in accordance with [***] or agreed by the Parties otherwise in writing, the Joint Steering Committee will disband within [***] months following the end of the later to expire [***]. After such disbandment the Joint Steering Committee may reconvene on an ad-hoc basis solely to discuss [***]. A request by a Party for a Joint Steering Committee meeting shall be given in written form to the other Party with [***] notice and shall contain sufficiently detailed information about the requested topic and the required decision by the Joint Steering Committee.
|
2.3.
|
Performance of Work
.
|
2.3.1.
|
Performance.
Each of the Parties shall use Commercially Reasonable Efforts to perform the activities designated as its responsibility under each Workplan, including delivering deliverables and reports set forth in each Workplan, in accordance with the timetables set forth in such Workplan.
Each Party will provide the [***] needed to perform the activities designated as its responsibility under each Workplan.
|
2.3.2.
|
Project Manager.
The Parties acknowledge that effective communications between Parties is an essential ingredient to the success of the Research Programs. In order to facilitate such communications, each Party will designate a person to serve as the project manager on its behalf for purposes of each Research Program (each, a “
Project Manager
”). A Party may designate the same person to serve as its Project Manager of both Research Programs or designate two persons to serve as Project Managers, one for each Research Program. Each Party may appoint and replace its Project Manager(s) by written notice to the other Party. The Project Managers for each Research Program will meet (in person, teleconference or video conference) on a monthly
basis, or more often as needed, to give each other an update on the results in the Research Program, review the progress of such Research Program and scientific issues relating to such Research Program. The Project Managers may with mutual agreement include members of their scientific teams in such meetings. The Project Managers will prepare and propose decisions on activities under and amendments of the Workplans, promote the performance of the work under the Research Programs and ensure that such work is done as agreed under the Workplans.
|
2.3.3.
|
Reports.
Each Party’s Project Manager for the relevant Research Program shall provide the members of the Joint Steering Committee with written updates regarding its Party’s activities under the Workplan, including summary results and analyses thereof, prior to each JSC meeting. In addition, within [***] days after the end of each year of the relevant Research Period and at the end of such Research Period, each Party’s Project Manager will provide the Joint Steering Committee with a written report regarding its Party’s activities under the Workplan, including protocols, experimental procedures, results, analyses thereof and conclusions for the previous [***] month period (or in the case of the report at the end of the Research Period, for the period since the previous written report) in the format and containing the level of detail described in
Exhibit 2.3.3
. At the request of a Project Manager, the Project Managers for the relevant Research Program and members of the relevant scientific teams will discuss any questions raised by either Party regarding the contents of such reports.
|
2.3.4.
|
Use of Contractors.
Each Party may use contractors (including Affiliates) to perform, on its behalf and for its benefit (on a work-for-hire basis), [***] (unless agreed otherwise by the Parties) activities designated as such Party’s task under the relevant Workplan, provided that any such contractor (except for Affiliates of Bayer used as contractor of Bayer or Affiliates of Compugen used as contractor of Compugen) has been approved in advance by both Project Managers or, if the Project Managers do not reach agreement on the choice of contractors, by the Joint Steering Committee and enters or has entered into an agreement with such Party obligating such contractor to all confidentiality, publication and intellectual property-related provisions of this Agreement, applicable to such Party (subject to exceptions with respect to the publication limitations which may be approved by the Joint Steering Committee on a case-by-case basis). Each Party shall be solely responsible for the supervision and direction of contractors performing activities designated as such Party’s task under such Workplan and shall be solely liable for any damage, injury or harm caused by such contractors. Without limiting the foregoing, the Parties agree that for purposes of the work to be performed by [***], a [***] of [***] in accordance with the stage entitled [***] of the CGEN-15001T Workplan and the stage entitled [***] of the CGEN-15022 Workplan, [***] will be a contractor of Compugen or its Affiliate, regardless of the fact that [***].
|
2.3.5.
|
Compliance.
Each Party agrees to comply with all laws, governmental regulations and guidelines applicable to the performance of the activities that it is responsible for under the relevant Workplan.
|
2.3.6.
|
Records.
Each Party shall prepare and maintain, or cause to be prepared and maintained, complete and accurate written records pertaining to its respective activities within each Research Program in sufficient detail and in good scientific manner, which shall be complete and accurate and shall fully and properly reflect the work done and results achieved in the performance of its respective activities under the Research Program, and which shall be retained by such Party for at least [***] years after the expiration or termination of this Agreement, or for such longer period as may be required by any applicable law. Each Party shall make such records available for inspection by the other Party at all reasonable times, and deliver copies of such records to the other Party at the other Party’s reasonable request and cost.
|
2.3.7.
|
Material Transfer
.
|
2.3.7.1.
|
General.
From time to time, each of Bayer (or any of its Affiliates) and Compugen (or any of its Affiliates) may transfer biological materials to the other for purposes of the Research Programs and the development of Products and Product Companion Diagnostics. Each Party understands that biological materials transferred by the other Party or its Affiliates are experimental in nature and neither Party makes any representation or warranty, express or implied, as to the identity, ownership, purity, utility, safety or activity of such biological materials. Neither Party shall be liable for any loss, harm, illness or other damage or injury arising from the other Party’s or its Affiliate’s receipt, handling, use or disposal of any such biological materials, except to the extent attributable to the transferring Party’s or its Affiliate’s own gross negligence or willful misconduct. Further, neither Party makes any representation or warranty that the use of the biological materials transferred by it or its Affiliate will not infringe any Third Party intellectual property rights. Each Party and its Affiliates shall use the other Party’s biological materials only for the purposes of performing its obligations or exercising its rights under this Agreement. Neither Party shall transfer the other Party’s material to any Third Party, except to contractors or collaborators of such Party for the purposes authorized by this Agreement. For the avoidance of doubt, after the Research Program, unless Compugen notifies Bayer of limitations on the transfer of any biological materials (other than Target Biologics and/or Target Biomarkers) provided by Compugen that are imposed by agreements Compugen is party to, Bayer is free to share biological materials provided by Compugen to Bayer (including, inter alia, Target Biologics), other than
[***]
, with Third Parties solely for the purpose of the research and development of Products and/or Product Companion Diagnostics without any reporting obligation to, or requirement of authorization by, Compugen and provided that Bayer remains liable to Compugen with respect to any such use. Each Party will use the other Party’s biological materials in accordance with all applicable laws, regulations and governmental guidelines.
|
2.3.7.2.
|
[***]
Protein Controls.
The Parties agree that the CGEN-15001T Research Program may benefit from the use, as research reagents, of certain Compugen proprietary material [***] (“[***]
Protein Controls
”) and that the CGEN-15022 Research Program may benefit from the use, as research reagents, of certain Compugen proprietary material [***] (“[***]
Protein Controls
”). Bayer understands that [***] Protein Controls and [***] Protein Controls are part of Compugen therapeutic development programs that are not subject to this Agreement (the “[***]
Protein Program
” and the “[***]
Protein Program
”, respectively). The [***] Protein Program and the [***] Protein Program will each be referred to as a “[***]
Protein Program
”. The Parties contemplate that Compugen will provide Bayer
(a) certain [***] Protein Controls for [***] specifically set forth in the CGEN-15001T Workplan or [***] otherwise specifically agreed to by [***]; and (b) certain [***] Protein Controls for use in certain activities specifically set forth in the CGEN-15022 Workplan or [***] otherwise specifically agreed to by [***]. The [***] Protein Controls and [***] Protein Controls provided by Compugen or its Affiliate to Bayer or its Affiliate shall be referred to as
“
[***]
Protein Controls”
. [***] Protein Controls provided by Compugen for purposes of the Workplans, as existing on the Effective Date, will be [***] along with information regarding the [***] and/or other [***] of the [***] Protein Controls. Compugen shall provide the [***] Protein Controls [***] in the [***] described in the Workplans; such [***] Protein Controls will be [***] form and quality [***]. In addition to the provisions of Section 2.3.7.1, the following provisions will apply to use of such [***] Protein Controls provided by Compugen to Bayer:
|
|
(a)
|
Notwithstanding [***], Bayer shall not be entitled to [***] Protein Controls to any [***], other than [***] of Bayer who are [***] (as described in the next sentence) on behalf of Bayer. Bayer and its [***] may use such [***] Protein Controls solely for performance of the [***] or otherwise specifically [***] as tasks involving the use of such [***] Protein Controls.
|
|
(b)
|
Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall [***] the [***] or use [***] Confidential Information regarding the [***] and/or other [***] of the [***] nor any other [***] regarding the [***] provided by Compugen on a [***] any other [***] incorporating the [***] of a [***], without the prior express written consent of Compugen in each case;
|
|
(c)
|
Bayer shall not, and shall ensure that its Affiliates, contractors and collaborators shall not, [***] to any Third Party results of their use of the [***] Protein Controls, without Compugen’s prior written consent; and
|
|
(d)
|
Bayer shall within reasonable time, but in any case within [***] days, after becoming aware thereof, [***] to Compugen [***] with respect to Target [***] Proteins, their use or their production (in each case including, without limitation, [***] thereof), that are conceived and/or reduced to practice by Bayer, its Affiliates, contractors and/or collaborators, [***] Compugen or its Affiliates in the performance of work using a [***] Protein Control (“[***]
Protein Invention
”). Any such [***]
Protein Invention, whether made by Bayer, any of its Affiliates or any of its contractors or collaborators, solely by Compugen or an Affiliate of Compugen, or jointly by any of the above, shall be [***]. Bayer and its Affiliates [***], and Bayer shall cause its contractors and collaborators [***], any and all of their [***] in and to any and all [***] to Compugen. Upon Compugen’s request and at Compugen’s expense, Bayer shall [***] and [***] that any relevant Affiliate, contractor and collaborator [***] as Compugen deems [***], in its [***], to enable Compugen to [***] with respect to any of the foregoing. Bayer will, and shall ensure that its Affiliates, contractors and collaborators will, at Compugen’s request, provide [***] and [***], as [***] to [***]. Bayer is [***] that its Affiliates, contractors and collaborators [***], and [***] by its Affiliates of, the provisions of this Section 2.3.7.2(d). Bayer shall ensure
that its contractors and collaborators are [***] of this Section 2.3.7.2(d) by [***] to which Compugen is [***], prior to [***] to [***]
Protein Controls or any Compugen Confidential Information related to Target [***]
Proteins.
|
2.3.7.3.
|
Use of Target Biologics in Compugen’s
[***]
Protein Programs.
The Parties agree that Compugen’s [***] as part of its [***]
may benefit from the use, as research reagents, of certain CGEN-15001T Target Biologics [***] and that Compugen’s [***] as part of its [***] may benefit from the use, as research reagents, of certain CGEN-15022 Target Biologics [***]. The Parties further agree that uses by Compugen of such Target Biologics must be restricted to prevent any adverse effect of such uses on the [***] of [***] and/or [***] and, in particular, the intellectual property rights in relation thereto. As a result, the Parties agree that [***], in accordance with the procedure set forth in Section 2.3.7.3.3, certain of such Target Biologics [***] of the Research Programs which Compugen will be entitled to use subject to [***]. The CGEN-15001T Target Biologics and the CGEN-15022 Target Biologics that are [***] in accordance with Section 2.3.7.3.3 will be referred to as [***].
|
2.3.7.3.1.
|
Allowed uses of Target Biologics [***]:
Compugen may use Target Biologics Controls only for [***]. No [***] shall be allowed to be performed by Compugen using Target Biologic [***], unless [***] agrees on any [***] in advance.
|
2.3.7.3.2.
|
Transfer to third parties:
Subject to sentence 2 of this Section 2.3.7.3.2, Compugen is entitled to provide Target Biologic [***] and data relating to such Target Biologic [***] to its Affiliates, contractors and collaborators, solely to [***] within the [***]
Protein Programs and with no right of such Affiliates, contractors and collaborators [***] the Target Biologic [***] or [***] to any further third parties; provided that Compugen ensures that any [***] relating to [***] and that Compugen imposes on such third parties obligations with regard to [***] than those agreed between Bayer and Compugen, including, without limitation that third parties [***] relating to such Target Biologic [***] – other than [***] specified in
Exhibit 2.3.7.3.2
– prior to the [***] with respect to such Target Biologic [***] by the Parties (i.e. [***]
months after filing date), without Compugen first obtaining the [***]. In any event (including in connection with any publication of the data specified in Exhibit 2.3.7.3.2) Compugen will not make, and will ensure that third parties to which Compugen discloses data relating to Target Biologic [***] will not make, [***], with the exceptions that Compugen does not have to prevent such third parties from making [***] (i) solely vis-à-vis Compugen within the relevant [***] Protein Program on a [***] basis or (ii) solely based on data that is [***], or data relating to Target Biologic Controls, provided by Compugen to such third party pursuant to sentence 1 of this Section 2.3.7.3.2. Compugen may only provide Target Biologic [***] to its Third Party contractors and/or collaborators if (a) such [***] have been [***] not to have [***] or (b) such [***] have been [***] to have [***], but a [***] such [***]. Compugen shall be liable for any non-compliance of its contractors and collaborators with the obligations under this Section 2.3.7.3.2. Compugen shall ensure
that its contractors and collaborators are bound by the provisions of this Section 2.3.7.3.2 by agreements pursuant to which Bayer is named as a third party beneficiary, [***] to Target Biologic [***] or any Bayer Confidential Information related to Target Biologic [***].
|
2.3.7.3.3.
|
Selection of Target Biologic [***]:
Exhibit 2.3.7.3.3
sets forth the criteria that a particular Target Biologic developed in the performance of a [***] needs to fulfill in order to be chosen as a [***] and the timing and procedure for such selection by [***]. The Parties, through the [***], shall [***] suitable CGEN-15001T Target Biologics or CGEN-15022 Target Biologics to serve as Target Biologic [***]. Both Parties agree that for the selection of appropriate Target Biologics [***] for Compugen’s [***] Protein Programs [***] for the Target Biologics to [***] for the [***] as determined by the [***] It is understood that in no instance shall any CGEN-15001T Target Biologic or CGEN-15021 Target Biologic that is a [***] or that has, in [***], the [***] as a [***]; provided however, that [***] as a [***], such [***] shall remain a [***] unless [***]. Once any Target Biologics are chosen as Target Biologic [***], Compugen will be entitled to use the [***] such [***] in order to [***] such [***] for [***] in accordance with the provisions of [***].
|
2.3.7.3.4.
|
Additional provisions on Target Biologic [***]:
In addition to the provisions of Section 2.3.7.1, the following provisions will apply to use of Target Biologic [***]:
|
|
(a)
|
Compugen shall only be allowed to [***] Target Biologic [***] and TBC Producing Cells [***] according to this Section 2.3.7.3 during the duration of [***]. For clarity, Compugen will be [***] Target Biologic [***] and TBC Producing Cells in accordance with the provisions of Section 2.3.7.3, and to [***] Target Biologic [***] for such use, after [***].
|
|
(b)
|
Compugen shall not, and shall ensure that its Affiliates, contractors and collaborators shall not, [***] the Target Biologic [***] and TBC Producing Cells, except that Compugen and its Affiliates, contractors and collaborators may [***] for the purpose of [***] (e.g. [***] with [***] to allow [***] in certain [***]).
For clarity, any such modifications shall be deemed [***] and will be subject to the terms of this Section 2.3.7.3;
|
|
(c)
|
Compugen shall within reasonable time, but in any case within [***] days after becoming aware thereof, [***] to Bayer any and all [***] with respect to Target Biologics, their [***] or their [***] (in each case including, without limitation, [***] thereof), that are [***] by Compugen, its Affiliates, contractors and/or collaborators, alone or jointly with one another or with Bayer or its Affiliate in the performance of the work using a Target Biologic Control [***]. Any such [***], whether made solely by Compugen or any of its Affiliates or contractors or collaborators, solely by Bayer or a Related Party, or jointly by any of the above, shall be [***] and be [***] in Section [***] and [***] to [***]. In the case of a [***] by a [***] or [***], Compugen shall ensure that such inventions are [***] to Compugen such that they will also be [***]. Compugen will, at Bayer’s request, provide all necessary [***] and cooperate with Bayer, as reasonably required to [***]. Compugen is responsible for ensuring that its Affiliates, contractors and collaborators [***], and shall [***] by its Affiliates of, the provisions of this Section 2.3.7.3.4(c). Compugen shall ensure
that its contractors and collaborators are bound by the provisions of this Section 2.3.7.3.4 by agreements pursuant to which Bayer is named as a third party beneficiary, prior to obtaining access to Target Biologics [***] or any Bayer Confidential Information related to Target Biologics [***].
|
2.3.8.
|
Data Transfer.
The Parties agree that (a) the Research Programs may benefit from Know-How with respect to the [***] of Targets that Compugen has [***] in the [***] with respect to its [***] Protein Programs (“
[***] Program Target Know-How
”) and (b) Compugen’s [***] respect to the [***] Protein Programs [***] from Program Know-How relating to the [***] of Targets
(“
Research Program Target Know-How
”). The Parties agree (i) that Bayer may use the [***] Program Target Know-How [***] and (ii) that, other than for purposes of the Target Programs, Compugen may use such Research Program Target Know-How [***] its [***] Protein Programs.
|
2.3.9.
|
Funding.
Subject to Section 2.4, each Party shall bear its own costs and expenses incurred in the performance of the activities to be performed by it under the Workplans.
|
2.4.
|
Revisions or Expansions to Workplans.
|
2.4.1.
|
Any revision or expansion to a Workplan that may be requested by either of the Parties during the relevant Research Period shall be discussed by the Joint Steering Committee. This includes, without limitation, discussions regarding the effect any such requested revision or expansion will have on the deliverables (including timing) to be provided under the relevant Workplan, the allocation of [***] resources for performance of [***] under the relevant Research Program, and appropriate funding to be provided by [***] to support additional work to be performed by [***] and not contemplated under the then actual Workplan.
|
2.4.2.
|
If the Joint Steering Committee determines that a Party’s request refers to matters that do not materially change the relevant Workplan (such as [***]) and such changes do not impact the [***] to such activity, the Joint Steering Committee shall have the authority to amend the relevant Workplan per such Party’s request, and such amendment shall be incorporated into the relevant Workplan by reference.
|
2.4.3.
|
If the [***] determines that the request refers to matters that materially change the relevant Workplan, or that such changes impact the [***] to such activity, the Steering Committee shall prepare and present to the Parties’ authorized personnel a detailed written proposal for such revision or expansion to the relevant Workplan. If such proposal is approved by authorized personnel of each of the Parties, it shall be incorporated into an amendment to this Agreement and an amendment to the relevant Workplan, and will be signed by the Parties.
|
2.5.
|
Target
[***]
.
If, with respect to a Research Program, the Parties [***], as set forth in the Workplan for such Research Program (despite also Bayer using [***] to perform its part of the Research Program for such Workplan), and Bayer terminates this Agreement with respect to the relevant Target Program in accordance with Section 14.3, at the request of either Party, the Parties will discuss in good faith the [***] of such [***] to be [***] (including a [***] and [***]); provided that there may be [***] for each [***]. Any such other [***] would be [***] from [***]. If the Parties agree on such a [***], including a [***] and [***] to be provided by [***] to support such [***], this Agreement will be amended accordingly and (a) if the [***] is the [***], to [***] the [***] with such [***], to [***] the [***] and [***] with references to the [***] in such [***] or (b) if the [***] is the [***], to [***] the [***] with such [***], to [***] the definitions of [***] and [***] with [***] to the [***] in such [***] Compugen [***].
|
3.1.
|
By Compugen to Bayer.
|
3.1.1.
|
Exclusive Licenses.
|
3.1.1.1
|
Target Biologics.
Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even as to Compugen, except as set forth in Section 3.1.1.4), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint Intellectual Property, solely to do or have done further research on and or with Target Biologics in the Field.
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3.1.1.2
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Products.
Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even as to Compugen, except as set forth in Section 3.1.1.4), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint Intellectual Property, solely to develop, have developed, make, have made and use and have used Target Biologics solely in order to do or have done research on, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale and import and have imported Products for use in the Field. For clarity, no rights are granted by Compugen with respect to Target Biologics for any other uses.
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3.1.1.3
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Target Biomarkers
. Subject to the terms and conditions set forth in this Agreement, Compugen hereby grants to Bayer an exclusive (even as to Compugen, except as set forth in Sections 3.1.1.4 and 3.3), worldwide, royalty-bearing license, with the right to grant sublicenses (subject to Section 3.1.3), under the Compugen Intellectual Property and Compugen’s interest in Joint Intellectual Property solely to do or have done further research on, develop, have developed, make, have made, use, have used Target Biomarkers solely:
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(a) for therapeutics research and development purposes; and
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(b) subject to Section 3.1.1.4, to do or have done research on, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale and import and have imported Diagnostics.
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3.1.1.4
|
Exceptions.
Notwithstanding the licenses set forth above, Compugen reserves the following rights:
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(i)
|
on behalf of itself, its Affiliates and its contractors approved in accordance with Section 2.3.4 the right to use and practice the Compugen Intellectual Property and Joint Intellectual Property within the scope of the license granted in Sections 3.1.1.1, 3.1.1.2 and 3.1.1.3 to perform its activities under the Research Programs (for clarity, including the right to license such Affiliates and contractors approved in accordance with Section 2.3.4 under Joint Intellectual Property to do the same);
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(ii)
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on behalf of itself and its Affiliates, contractors and collaborators, the right to use and practice the Compugen Intellectual Property and Joint Intellectual Property to [***] solely to [***] with [***], including without limitation for the [***] (for clarity, including the right to [***]),
provided that
Compugen will [***] on [***] and thereafter up until the earlier of (1) [***] with respect to a [***] from the [***] and (2) [***] years following the Effective Date, [***] provide Bayer with the following information: (x) whether [***] for [***], (y) [***] of [***], and (z) to the extent that the [***] of the [***] to [***] of [***] and/or that the [***] have [***], [***], (for example: based on [***], and [***]) as a [***] of the [***] of such [***] and, upon request of Bayer, further [***] including [***] of [***]; and
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(iii)
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on behalf of itself and its Affiliates, contractors and collaborators, the right to use and practice the Compugen Intellectual Property and Joint Intellectual Property to [***] or have [***] for [***] purposes solely to support [***] and [***] of [***] (for clarity, including the right to [***]),
provided that
if and to the extent that those studies [***] that the [***] have [***] (in Compugen’s [***]) as a [***], Compugen will [***] on [***] and thereafter up until the earlier of (1) [***] and (2) [***] years following the Effective Date, [***] provide Bayer with a detailed description of the [***] of the [***] that [***] and, upon request of Bayer, with further [***] including [***].
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3.1.1.5
|
For the avoidance of doubt, the licenses granted above do not limit in any way the Parties’ and their Affiliates’ right to conduct independent activities that a Third Party would also be allowed to perform (e.g. based on publications or Target Biologics obtained from a Third Party who did not make use of Compugen Intellectual Property nor of Joint Intellectual Property in developing or making such Target Biologics).
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3.1.2
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Affiliates and Contractors.
The licenses granted to Bayer under Section 3.1.1 include the right to have some or all of Bayer’s rights under Section 3.1.1 exercised or performed by one or more of Bayer’s Affiliates on Bayer’s behalf and/or by one or more contractors on Bayer’s behalf or on behalf of an Affiliate of Bayer without such right being deemed a Sublicense; provided however that:
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3.1.2.1
|
with respect to contractors of Bayer or of an Affiliate of Bayer, no such contractor or Affiliate shall be entitled to grant, directly or indirectly, to any Third Party any right of whatever nature under, or with respect to, or permitting any use or exploitation of, any of the Compugen Intellectual Property or Joint Intellectual Property, including any right to develop, manufacture, market or sell Products or Diagnostics; and
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3.1.2.2
|
any act or omission taken or made by an Affiliate or contractor of Bayer or by a contractor of an Affiliate of Bayer under this Agreement will be deemed an act or omission by Bayer under this Agreement.
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3.1.3
|
Sublicenses.
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3.1.3.1
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Sublicense Grant.
Bayer will be entitled to grant Sublicenses to third parties subject to the terms of this Section 3.1.3; provided that with respect to the development of Products under a Target Program, Bayer may only grant a Sublicense to a [***] that (a) in Bayer’s [***] has the [***] to [***] in accordance with the [***], and (b) is, in Bayer’s [***] and [***] all [***] obligations of Bayer under this Agreement. Any such Sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of this Agreement. Bayer may grant Sublicenses only pursuant to written agreements, which will be subject and subordinate to the terms and conditions of this Agreement. Such Sublicense agreements will contain, among other things, the following:
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(a)
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all [***] to [***] to [***] under this Agreement;
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(b)
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if the [***], a provision stating that
[***]with, and [***], including without limitation those relating to the [***].
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3.1.3.2
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Delivery of Sublicense Agreement.
Bayer shall furnish Compugen with a fully executed copy of any Sublicense agreement and any amendment to a Sublicense agreement, promptly after its execution. Bayer may redact such copies to the extent necessary to preserve the confidentiality of proprietary information that is not relevant to Compugen’s rights or Bayer’s obligations under this Agreement, provided that sufficient information remains unredacted to allow Compugen to assess whether Bayer is in compliance with its obligations under this Agreement and to verify amounts owed to Compugen in connection with such Sublicense. Compugen shall keep all such copies of such agreements in its confidential files and shall use them solely for the purpose of monitoring Bayer’s and Sublicensees’ compliance with their obligations hereunder and enforcing Compugen’s rights under this Agreement.
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3.1.3.3
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Breach by Sublicensee.
In the case of any act or omission by any Sublicensee of Bayer that would have constituted a material breach of this Agreement by Bayer entitling Compugen to terminate this Agreement in accordance with Section 14.3.3 had it been the act or omission of Bayer hereunder, (a) Bayer will take reasonable steps to cause such material breach to be cured (if curable) in a timely manner or (b) if such material breach cannot be cured in a timely manner, Bayer will notify Compugen of such material breach promptly after Bayer, cumulatively, becomes aware of the relevant act or omission of the Sublicensee and understands both that such act or omission constitutes a material breach and that such material breach is not curable, and [***] will [***] the appropriate measures to be taken, which may include termination of the Sublicense. Compugen will not have the right to terminate this Agreement on account of such material breach by such Sublicensee, if (i) such breach is cured in a reasonable time period or (ii) Bayer discusses with Compugen possible courses of action, and terminates such Sublicense agreement based on a right to terminate the Sublicense agreement (which Bayer undertakes to include in the Sublicense agreement) if such material breach is not cured within [***] days and Compugen requests Bayer to terminate the Sublicense agreement due to such failure to cure the material breach.
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3.1.4
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Technology Transfer.
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3.1.4.1
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Within [***] weeks of the Effective Date, Compugen shall, [***], deliver to Bayer or its designated Affiliate or Sublicensee, in whatever form Bayer may reasonably request, true and complete copies of all written, graphic or electronic embodiments of the Compugen Intellectual Property. Thereafter, on a continuing basis during the term of the Agreement, Compugen shall, without [***], and shall cause its Affiliates to, [***] after Compugen both (a) becomes aware of any additional Compugen Intellectual Property and (b) understands that the relevant Know How is Compugen Intellectual Property, disclose and deliver to Bayer or its designated Affiliate or Sublicensee, in whatever form Bayer may reasonably request, true and complete copies of all written, graphic or electronic embodiments of all additional Compugen Intellectual Property which comes into existence from time to time. For clarity, the transfer obligation under this Section 3.1.4 excludes information specifically relating [***] and/or [***] Proteins (other than the information provided under [***]).
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3.1.4.2
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Without prejudice to the generality of Section 3.1.4.1, during the term
of the Agreement, Compugen shall, without [***], provide Bayer or its designated Affiliate or Sublicensee with reasonable technical assistance relating to the use of the Compugen Intellectual Property for the purposes of Related Party’s acquisition of expertise on the practical application of the Compugen Intellectual Property or for the provision of assistance to the applicable Related Party on issues arising during exploitation of the Compugen Intellectual Property. If visits of Compugen representatives to the facilities of the applicable Related Party are reasonably requested, Compugen shall send appropriate representatives to such facilities, provided that Bayer shall [***] for its [***] and [***] for such [***].
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3.2
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By Bayer to Compugen.
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3.3
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Availability for Compugen.
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(a)
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Bayer hereby undertakes to use good faith efforts to ensure that with respect to Companion Diagnostics, Compugen and its Affiliates, collaborators and licensees will have access, under terms [***] (or in the event [***]), to the [***] (i.e. [***]). If Bayer is [***] Compugen, its Affiliates, collaborators and/or licensees, [***]. In such case, Compugen, its Affiliates, collaborators and/or licensees (as the case may be) may [***] an Affiliate, collaborator or licensee [***] and will perform [***] under which Compugen, its Affiliates, collaborators and/or licensees (as the case may be) [***], under terms [***]. If, cumulatively, (i) [***] between [***] (as the case may be) and [***] developing [***] do not [***] within [***] of the date Compugen, its Affiliates, collaborators and/or licensees (as the case may be) [***] and (ii) Compugen, its Affiliates, collaborators and/or licensees (as the case may be) and [***] are [***] with respect to a [***],
notwithstanding the [***], Compugen and its Affiliates will have the [***] and [***] and [***] (including the right to [***]) solely to do or have done [***] on, [***], have [***], have [***] (i.e. a [***]).
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(b)
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If Compugen or its Affiliate wishes to [***] (for the avoidance of doubt, on [***] basis) as a commercial product (for Compugen and/or for a licensee of Compugen) a Target Biomarker for [***] (e.g. [***]) than the one [***] (or if [***]), the procedure will be as follows: [***] of its interest [***], and shall [***] of such a product [***]. Bayer may [***] or [***], at that time, [***] or [***] the [***]. If, following a [***] of [***], [***] does not (i) enter into [***] in relation to [***] refers to within [***] after this [***] (or, if [***] after [***]), or (ii) [***] with its [***] in relation to the [***] that the [***], which period will be extended by an additional [***] month period if Bayer and its [***]), Bayer will be [***]. If, from the date when [***], neither [***] (i) [***] with a [***] within [***] or (ii) [***] with [***] in relation to the [***] of a [***] within a period of [***] which will be extended by an additional [***] period if [***] (or its licensee, as applicable) and [***] are still in [***], [***] of the [***] of a [***] will be [***]. For the avoidance of doubt, if, after [***], Compugen again becomes [***], the process described in this Section 3.3 (b) will [***]. If, following [***], [***], its Affiliate or its licensee thereafter [***] with a [***] use [***] to ensure that [***] to such assay [***] than those agreed upon between [***] (or its Affiliate or licensee) and its contract partner (or in the event [***] its Affiliate or licensee develops such an assay, on reasonable terms).
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3.4
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No Other License or Grant of Rights.
Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to confer any ownership interest, license or other rights upon a Party by implication, estoppel or otherwise as to any technology, intellectual property rights, products or biological materials of another Party or any other entity.
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4.
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Exclusivity
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During the Research Period of each Research Program, neither Party shall use a Target of such Research Program to [***] relating to Target Biologics directed against such Target, other than under such Research Program or as otherwise permitted under this Agreement (including without any limitations Sections 2.3.7.3 and 3.1.1.4). If either Party becomes aware that as a result of [***] in [***] that are not [***] that are directed at the [***], using [***], result in the [***], such Party, unless it is prohibited from doing so due to an obligation of confidentiality to a licensee of such Biologic(s), will promptly inform the other Party and both Parties will [***] to keep the Research Program and the project under which such [***] separate.
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5.
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Development and Commercialization Diligence.
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5.1.
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General
.
With respect to each Target Program, Bayer shall use Commercially Reasonable Efforts [***] to develop and obtain Marketing Authorization for [***] Product from such Target Program and to commercialize such Product in each of the following major markets: [***] the [***] at least [***] of the [***] in the [***]; and [***] of [***] and [***].
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5.2.
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Bayer Development Process
.
With respect to each Target Program, Bayer will at [***] inform Compugen about the [***] to r[***], made by the [***] in a manner consistent with [***] to [***], to enable [***] of the [***] comply with [***] to [***] to [***]. Bayer will also [***] provide Compugen with [***] and about any [***] and/or [***]. Bayer will [***] to meet the [***] of the next decision point set by the relevant committee. For the avoidance of doubt, any failure of Bayer to reach a new decision point within a specific timeline (including any timelines set by the relevant Bayer internal committee) does not in itself give rise to any right of Compugen to terminate the relevant Target Program, unless Bayer did not [***] to [***]. The effects of any termination of the relevant Target Program by Compugen against Bayer due to violation of diligence obligations will be limited to a right to terminate the relevant Target Program with the effects specified in Section 14.4 and with any other rights specifically on account of such violation of diligence obligations (such as damages, specific performance etc.) being excluded.
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5.3.
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[***] Report
.
Within [***] days after the end of each [***] period ending June 30th or December 31st, as applicable, during the term from completion of the relevant Research Program until termination or expiration of the relevant Target Program, Bayer shall furnish Compugen with a written report setting forth for each Target Program, its and other Related Parties’ efforts during the prior [***] period to develop and commercialize Products for such Target Program, including without limitation: (a) [***] (including without limitation [***] described in Section [***]); (b) [***]; and (c) [***]. The report shall also contain a discussion [***] for the then current [***] period. In addition, if Bayer has made changes or foresees changes to the [***] and [***] pursuant to Section 5.2, Bayer shall include in such a report the revised or contemplated [***] and a [***]. Each report shall be broken down by [***] within each Target Program and must contain a sufficient level of detail for Compugen to assess whether Bayer is in compliance with its obligations under Section 5.1 with respect to the relevant Target Program, however, it being understood that the [***] of Bayer’s reporting obligation to Compugen shall not [***]. Within [***] days after the delivery of each such report, the Joint Review Committee (as defined below) will meet to review with Bayer the contents of such report and the progress of Bayer’s efforts to meet its obligations under this Section 5.
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5.4.
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Joint Review Committee
.
After the end of the first Research Program, the Parties will establish a joint review committee (“
Joint Review Committee
”) comprised of an equal number of representatives from each Party. Each Party may change its representatives to the Joint Review Committee from time to time, in its sole discretion, effective upon notice to the other Party of such change. The representatives shall have appropriate technical credentials, experience and knowledge relevant to the development and commercialization of Products. The Joint Review Committee will [***] in [***] under the other provisions of [***]. Additional representatives of a Party may be invited, from time to time by mutual consent of the Parties, to attend Joint Review Committee meetings. [***] with the Joint Review Committee; however, Bayer will [***] to the Joint Review Committee by Compugen. The Joint Review Committee will meet at least [***] (following the receipt of reports as set forth in Section 5.3) at such dates, times and locations as may be determined by the Joint Review Committee with unanimous consent. Alternatively, the Joint Review Committee may meet by means of teleconference, videoconference or other similar communications equipment. [***] will [***][***] associated with [***] participation on the Joint Review Committee. [***] may, at any time upon written notice to [***] disband the Joint Review Committee. If [***] provides such notice of disbandment to [***], the Parties’ obligations under this Section 5.4 will terminate, unless and until [***] provides written notice to Bayer that it wishes to reinstate the Joint Review Committee, in which case the Parties’ obligations under this Section 5.4 will be reinstated for the period following such notice by [***].
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6.
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Consideration.
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6.1.
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Upfront License Issuance Fee.
For the licenses granted to Bayer under Section 3.1.1, Bayer shall pay Compugen a non-refundable license issuance fee of ten Million US Dollar ($10,000,000), which Compugen is entitled to invoice upon the Effective Date.
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6.2.
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Milestone Payments.
CONFIDENTIAL TREATMENT REQUESTED
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6.2.1
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First Product Milestones.
With respect to each Target Program,
Bayer shall pay Compugen the following milestone payments with respect to [***] Product [***] a Target Biologic from such Target Program (i.e. a CGEN-15001T Target Biologic in the case of the CGEN-15001T Target Program and a CGEN-15022 Target Biologic in the case of the CGEN-15022 Target Program) to reach such milestone, regardless of whether such milestone is achieved by Bayer or another Related Party:
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6.2.1.1
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[***] US Dollars ($[***]) upon the achievement of [***];
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6.2.1.2
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[***], US Dollars ($[***]) upon the [***] of [***] as a [***]);
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6.2.1.3
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[***] US Dollars ($[***]) upon [***] such a Product [***];
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6.2.1.4
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[***] Thousand US Dollars ($[***]) upon the [***] with such a Product in a [***];
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6.2.1.5
|
[***] US Dollars ($[***]) upon the [***] with such a Product in a [***];
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6.2.1.6
|
[***] US Dollars ($[***]) upon the [***] with such a Product [***] for a [***] with such a Product;
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6.2.1.7
|
[***] US Dollars ($[***]) upon the [***] with such a Product [***] with such a Product;
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6.2.1.8
|
[***] US Dollars ($[***]) upon the [***] with respect to such a Product with a [***], [***] or [***]; for the avoidance of doubt, this milestone, [***];
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6.2.1.9
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.10
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.11
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
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6.2.1.12
|
[***] US Dollars ($[***]) upon [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.13
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.14
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
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6.2.1.15
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.16
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.1.17
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
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6.2.1.18
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[***] US Dollars ($[***]) in the [***] in which [***] for such a Product within such [***] reach [***] US Dollars ($[***]); such amount will be due [***] for the Calendar Quarter in which [***] for such Product in such [***];
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6.2.1.19
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[***]
US Dollars ($[***]) in the [***] in which [***] for such a Product within such [***] reach [***] US Dollars ($[***]); such amount will be due [***] for the Calendar Quarter in which [***] for such Product in such [***]; and
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6.2.1.20
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[***]
US Dollars ($[***]) in the [***] in which [***] for such a Product within such calendar year reach [***] US Dollars ($[***]); such amount will be due together with the payments on royalties in accordance with Section 7.1 for the Calendar Quarter in which [***] for such Product in such [***] reach such milestone.
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6.2.2
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[***]
Product Milestones.
With respect to each Target Program,
Bayer shall pay Compugen the following milestone payments with respect to the [***] Product containing a Target Biologic from such Target Program to reach such milestone, regardless of whether such milestone is achieved by Bayer or another Related Party, provided that such [***] milestone payments shall not be paid if (a) [***], all [***] (“[***] Product”) and (b) such [***] did not [***] US Dollars ($[***]) [***] prior to [***]), it being understood that if a milestone payment is not paid with respect to a [***] Product due to the [***] Product becoming [***] Product, Compugen shall be entitled to such milestone payment upon the achievement of such milestone by a [***] Product containing a Target Biologic from such Target Program to reach such milestone.
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6.2.2.1
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[***] US Dollars ($[***]) upon the [***] with such a Product in [***] for a [***] with respect to such a Product;
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6.2.2.2
|
[***] US Dollars ($[***]) upon the [***] with such a Product in a [***] for a [***] with respect to such a Product;
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6.2.2.3
|
[***] US Dollars ($[***]) upon the [***] with respect to such a Product with a [***] [***], [***] and/or [***]; for the avoidance of doubt, this milestone, [***] with respect to the [***] with all [***];
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6.2.2.4
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.2.5
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.2.6
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
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6.2.2.7
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.2.8
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
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6.2.2.9
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
|
6.2.2.10
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.11
|
[***] US Dollars ($[***]) upon the [***] in the [***] with respect to the [***] for such a Product;
|
6.2.2.12
|
[***] US Dollars ($[***]) upon the [***] in [***] with respect to the [***] for such a Product;
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6.2.2.13
|
[***]
US Dollars ($[***]) in the [***] in which [***] for such a Product within such calendar year reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] such [***] in such [***];
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6.2.2.14
|
[***]
US Dollars ($[***]) in the [***] in which [***] for such a Product within such [***] reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] for such [***] in such [***]; and
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6.2.2.15
|
[***]
US Dollars ($[***]) in the first [***] in which [***] for such a Product within such [***] reach [***] US Dollar ($[***]); such amount will be due [***] in accordance with [***] for the Calendar Quarter in which [***] for such [***] in such [***].
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6.2.3
|
The milestones set forth in Sections 6.2.1 and 6.2.2 are intended to be [***]. In the event that Bayer [***] any of such milestones for a Product (“
[***]
”), Bayer shall be deemed to have achieved such [***] Milestone when it achieves the [***] milestone for the relevant Product (“
Achieved Milestone
”). Payment for any [***] Milestone that is owed in accordance with the provisions of this Section 6.2.3 shall be reported and paid together with the reporting and payment of the Achieved Milestone, according to Sections 7.1.2.
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6.2.4
|
For the avoidance of doubt, Bayer does not have to pay (a) with respect to either Target Program, any of the milestone payments set forth in Section 6.2.2 [***], or (b) in relation to a specific Product, for any [***].
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6.3
|
Royalties on Net Sales of Products.
|
6.3.1
|
Royalties.
Bayer shall pay Compugen royalties on [***] Net Sales of each Product in each calendar year, as follows:
|
6.3.1.1
|
An amount [***]% of Net Sales of such Product on the [***] US Dollars ($[***]) in [***] Net Sales of such Product in such calendar year;
|
6.3.1.2
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***] up to [***] Net Sales of such Product of [***] US Dollars ($[***]) in such [***];
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6.3.1.3
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***] up to [***] Net Sales of such Product of [***] US Dollars ($[***]) in such [***];
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6.3.1.4
|
An amount [***]% on the portion of Net Sales of such Product [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***] up to total Net Sales of such Product of [***] US Dollars ($[***]) in such [***]; and
|
6.3.1.5
|
An amount equal to [***]% on the portion of Net Sales of such Product exceeding [***] US Dollars ($[***]) in [***] Net Sales of such Product in such [***].
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6.3.2
|
Third Party Royalty Set-Off.
If [***] is required (a) in its reasonable judgment to obtain a license from a Third Party to an Infringed Claim that would be infringed by [***] research on, making or using of [***] in the research on, making, using, selling, offering for sale or importing of a [***] in a certain country, and [***] obtains such a license after good faith, arm’s length negotiations and consultation with [***], or (b) to make any [***] with respect to the research, making, using, selling, offering for sale or importing of a [***] in any country, [***] may offset an amount of [***] percent ([***]%) of any [***] due as consideration for such license (in the case of (a)) or all such [***] (in the case of (b)) with respect [***] in such country against [***] with respect to [***] on such [***] in such country; provided that in no event shall [***] with respect to any [***] fall below [***] percent ([***]%).
|
6.3.3
|
Payments to Compugen Licensors.
For clarity, nothing herein shall be deemed to impose on Bayer any obligation towards licensors of Compugen (including [***]) on any amounts, if any, due by Compugen to any such licensor on account of consideration received by Compugen under this Agreement.
|
6.4
|
Royalties on Net Sales of Diagnostics.
|
6.4.1
|
Bayer shall pay Compugen an amount [***] percent ([***]%)
of all Net Sales of Diagnostics by Bayer and/or its Affiliates.
|
6.4.2
|
Bayer shall pay Compugen an amount [***] percent ([***]%)
of all Sublicense Diagnostic Sales Income.
|
6.5
|
Non-Royalty Sublicense Income.
Bayer shall pay Compugen the following amounts on Non-Royalty Sublicense Income:
|
6.5.1
|
Products.
If the relevant Sublicense agreement includes rights with respect to one or more Products, Bayer shall pay Compugen the following percentages of Shared Non-Royalty Sublicense Income received for the respective Product(s) and, if applicable, Diagnostics Sublicensed with such Product(s). “
Shared Non-Royalty Sublicense Income
” means all [***], less the sum of, cumulatively, (a) [***] under [***] prior to the date of [***] and (b) an amount equal to [***] under [***] with respect to [***] after the date of [***] and up to and including [***]e is received (for clarity, [***]):
|
6
.5.1.1
|
An amount equal to [***] percent ([***]%) of all [***] if the [***];
|
6.5.1.2
|
An amount equal to [***] percent ([***]%) of all [***], if the [***], but prior to [***];
|
6.5.1.3
|
An amount equal to [***] percent ([***]%) of all [***], but prior to the [***]; and
|
6.5.1.4
|
An amount equal to [***] percent ([***]%) of all [***], in connection with [***].
|
6.5.2
|
Diagnostics Only.
If the Sublicense agreement includes no rights with respect to the making, using and/or sale of Products (i.e. the Sublicense is solely with respect to the making, using and/or selling of Diagnostics), Bayer shall pay Compugen an amount [***] percent ([***]%) of all Non-Royalty Sublicense Income with respect to such Sublicense.
|
6.6
|
Royalty Term.
Royalties under Sections 6.3 and 6.4 will be payable on a Product-by-Product, Diagnostic-by-Diagnostic and country-by-country basis until the latest of:
|
|
(a)
|
the [***], as the case may be, [***]; provided that if [***], as the case may be[***], [***], such [***] for purposes of this [***] if and when (a) [***] for such [***] or (b) [***] the [***] in accordance with [***]
|
|
(b)
|
the [***] of [***] with respect to [***], as the case may be, [***]; and
|
|
(c)
|
[***], as the case may be, [***].
|
6.7
|
Blended Royalty Rate.
The Parties acknowledge and agree that [***] justify royalties of differing amounts [***], which royalties could be applied separately to [***], and/or [***] on the one hand and [***] and/or [***] on the other hand, and that if such royalties were calculated separately, royalties [***] would last for different terms. The Parties further acknowledge and agree that the royalty rate [***] would be [***] in the absence of the Parties’ agreement to adopt a blended royalty rate as set forth herein and that the terms and structure set forth in this Section 6 were agreed upon for convenience purposes and represent the fair market value of the rights granted hereunder as determined and agreed upon by the Parties.
|
6.8
|
Other Third Party Payments.
For clarity, subject to [***], [***] will be responsible for paying [***] all royalties and other payments owed by [***] in performing work under this Agreement, including [***] any payments due to Third Parties under agreements [***] (e.g. [***]).
|
7.1
|
Reports and Payments.
|
7.1.1
|
Quarterly Reports.
Within [***] days after the conclusion of each Calendar Quarter commencing with the first Calendar Quarter in which Net Sales are generated or Non Royalty Sublicense Income or Sublicense Diagnostic Sales Income is received, Bayer shall deliver to Compugen a report containing the following information (in each instance, with a Product-by-Product or Diagnostic-by- Diagnostic, as applicable, and country-by-country breakdown):
|
7.1.1.1
|
[***];
|
7.1.1.2
|
[***];
|
7.1.1.3
|
the total amount of Net Sales with respect to Products for the applicable Calendar Quarter;
|
7.1.1.4
|
[***];
|
7.1.1.5
|
[***];
|
7.1.1.6
|
the total amount of Net Sales with respect to Diagnostics sold, leased or otherwise transferred by Bayer and/or its Affiliates for the applicable Calendar Quarter;
|
7.1.1.7
|
a detailed accounting of all Sublicense Diagnostic Sales Income received during the applicable Calendar Quarter;
|
7.1.1.8
|
a detailed accounting of all Non-Royalty Sublicense Income received during the applicable Calendar Quarter; and
|
7.1.1.9
|
[***].
|
7.1.2
|
Reports on Milestone Achievement.
Bayer shall provide written notice to Compugen of any occurrence of any of the milestones set forth in Section 6.2 of this Agreement no later than [***] days following the occurrence of the relevant milestone.
|
7.1.3
|
Invoices.
Compugen shall be entitled to invoice all amounts to be paid based on the reports provided by Bayer according to Section 7.1.1 and 7.1.2 directly after receipt of the relevant report.
|
7.1.4
|
Payments.
|
7.1.4.1
|
Subject to the last sentence of this Section 7.1.4.1, payment will be only made upon receipt of an invoice complying with requirements provided by Bayer to Compugen in writing in advance of the date Compugen is entitled to issue an invoice
and according to the following rule: (a) if invoices are received by Bayer at the below address until the [***], then payments shall be made until the [***] in which the invoice was received; and (b) if invoices are received by Bayer at the below address after the [***] of [***], then payments shall be made until the [***] in which the invoice was received. Notwithstanding the sentences above, the upfront license issue fee according to Section 6.1 shall be paid within [***] days upon receipt of the invoice.
|
7.1.4.2
|
Payment Address.
All invoices shall be sent to the following address:
|
7.1.4.3
|
Payments made by Wire Transfer.
All payments made to Compugen under the Agreement shall be made by wire transfer to the following bank account of Compugen, or such other bank account as notified by Compugen to Bayer from time to time:
|
7.2
|
Payment Currency.
|
7.3
|
Records.
Bayer shall maintain, and shall cause other Related Parties to maintain, complete and accurate records of Products and Diagnostics that are made, used, sold, leased or transferred under this Agreement, any amounts payable to Compugen in relation to such Products and Diagnostics, and all Sublicense Diagnostic Sales Income and Non Royalty Sublicense Income received by Bayer and its Affiliates, which records shall contain sufficient information to permit Compugen to confirm the accuracy of any reports or notifications delivered to Compugen under Section 7.1. Each Related Party shall retain such records relating to a given Calendar Quarter for [***]
years after the conclusion of that Calendar Quarter, during which time Compugen will have the right, at its expense, to cause an independent, certified public accountant to inspect such records during normal business hours for the purposes of verifying the accuracy of any reports and payments delivered under this Agreement and Bayer’s compliance with the terms hereof. Such accountant will be entitled to use the services of independent experts (e.g. patent lawyer), as may be needed to properly perform the audit and determine amounts due to Compugen under this Agreement. Such accountant and experts shall not disclose to Compugen any information other than information relating to the accuracy of reports and payments delivered under this Agreement. The Parties shall reconcile any underpayment or overpayment within [***] days after the accountant delivers the results of the audit. If any audit performed under this Section 7.3 reveals an underpayment in excess of [***]
percent ([***]%) in any calendar year, [***]. Compugen may exercise its rights under this Section 7.3 only once per year per audited entity and only with reasonable prior notice to the audited entity. The accounts, records and reports related to any particular period of time may only be audited one time under this Section 7.3.
|
7.4
|
Late Payments.
Any payments due under this Agreement shall be due on such date as specified in this Agreement. Any failure by Bayer to make a payment within [***]
days after the date when due shall obligate Bayer to pay interest on the due payment to Compugen. The interest period shall commence on the due date (inclusive) and end on the payment date (exclusive). Interest shall be calculated based on the actual number of days in the interest period divided by [***]. The interest rate per annum shall be equal to the [***] rate calculated by the [***], currently published on [***], fixed [***]
Days prior to the due date and reset to the prevailing [***] rate in [***] intervals thereafter, plus a premium of [***] percent ([***]%), or shall be equal to the [***] rate allowed by local legal law provisions, whatever is [***].
|
7.5
|
VAT; Withholding and Similar Taxes.
|
7.5.1
|
All agreed remunerations are considered to be net of VAT. VAT applies additionally as legally owed, payable after receipt of a proper invoice, which meets all legal requirements according to the applicable VAT law.
|
7.5.2
|
Bayer shall be entitled to deduct and withhold from the amount payable the tax which Bayer is liable under any provisions of tax law to withhold. If the withholding tax rate is reduced according to the regulations in the Double Tax Treaty, no deduction shall be made or a reduced amount shall be deducted only if Bayer is timely furnished with necessary documents (Freistellungsbescheid) by Compugen issued by the German Tax Authority (Bundeszentralamt für Steuern), certifying that the payment is exempt from tax or subject to a reduced tax rate. Bayer shall inform Compugen promptly regarding any documentation it requires from Compugen for obtaining such exemption or reduction. Any withheld tax shall be treated as having been paid by Bayer to Compugen for all purposes of this Agreement. Bayer shall timely forward the tax receipts certifying the payments of withholding tax on behalf of Compugen. In case Bayer cannot deduct the withholding tax due to fulfillment of payment obligation by settlement or set-off with respect to taxes that should have been withheld, Compugen will pay the withholding tax to Bayer separately. If Bayer missed to deduct withholding tax but based on an audit performed by the relevant tax authorities during the period permitted for such audit according to applicable law, is still required by tax law to pay withholding tax on account of Compugen to the tax authorities and (a) promptly informs Compugen of such to enable the Parties sufficient time to appeal such decision within the time period allowed for such appeal and (b) actually pays such tax on account of Compugen, Compugen shall assist Bayer with regard to all procedures required in order to obtain reimbursement by tax authorities for amounts so paid or, in case tax authorities will not reimburse Bayer for such withholding tax paid by Bayer, Compugen will immediately refund the tax amount.
|
8.1
|
Ownership.
|
8.1.1
|
Determination of Inventorship.
Inventorship of inventions shall be determined in accordance with United States patent law.
|
8.1.2
|
Ownership
.
|
8.1.2.1
|
Bayer shall own all rights, title and interest in and to all Program Inventions and Program Know-How (other than Fusion Protein Inventions) for which each inventor or creator, as applicable, is an employee of Bayer, its Affiliate or a contractor performing a task assigned to Bayer under the Workplan [***].
|
8.1.2.2
|
Compugen or its designee shall own all rights, title and interest in and to all (a) Program Inventions and Program Know-How for which each inventor or creator, as applicable, is an employee of Compugen, its Affiliate or a contractor performing a task assigned to Compugen under the Workplan [***] and (b) all Fusion Protein Inventions.
|
8.1.2.3
|
The Parties will jointly own all rights, title and interest in and to all Joint Know-How, other than Fusion Protein Inventions. Subject to the exclusive licenses specifically granted under this Agreement, [***] shall have the [***] to [***] and [***] without [***] or to [***].
|
8.2
|
Disclosure.
Each Party shall notify the other, promptly and in writing, of any Program Invention relating to Targets, Target Biologics, Products and/or Target Biomarkers of which it becomes aware.
|
8.3
|
Patent Filing, Prosecution and Maintenance.
|
8.3.1
|
Intellectual Property Committee
.
|
8.3.1.1
|
The Parties hereby establish an “
Intellectual Property Committee
” that will be responsible for discussing intellectual property rights relating to Program Inventions. The Intellectual Property Committee will be comprised of [***] appointed by each Party, both of whom shall be full or part time employees of the appointing Party and shall have appropriate authority to make the decisions assigned to the Intellectual Property Committee hereunder. Each of Bayer and Compugen may replace its Intellectual Property Committee representative at any time, upon written notice to the other Party.
|
8.3.1.2
|
Responsibilities.
The Intellectual Property Committee responsibilities will include:
|
|
(a)
|
In consultation with patent counsel, discussing, determining and coordinating patent filing and prosecution activities with respect to Joint Inventions, including timing and content of patent applications, country filings and abandonment decisions in various countries, and choosing counsel for preparation and prosecution of Joint Patent Rights; and
|
|
(b)
|
Discussing and advising Bayer with respect to patent filing and prosecution activities with respect to Program Inventions solely-owned by Bayer ("
Bayer Program Inventions
") and discussing and advising the Parties with respect to patent filing and prosecution activities with respect to Program Inventions solely owned by Compugen ("
Compugen Program Inventions
") and other Compugen Patent Rights.
|
8.3.1.3
|
Decision Making.
The Intellectual Property Committee will [***]
with respect to Bayer Program Inventions, Compugen Program Inventions or other Compugen Patent Rights. With respect to Joint Inventions, the Intellectual Property Committee will [***]. If the Intellectual Property Committee cannot reach [***], the Parties shall try to [***] through [***] between the [***]
and the [***]. If said [***] cannot reach such a decision within [***] calendar days after the date on which the matter is referred to the Parties’ [***] listed above, the Parties will [***] by the [***] who will be charged with the duty to [***] of [***], taking into account (a) [***] under this Agreement and [***] in a manner that will [***] and [***] and (b) the [***]. For clarity, if one of the Parties [***], while the other Party [***].
|
8.3.2
|
Bayer Program Inventions.
Bayer shall have sole control, at its expense and discretion, over the preparation, filing, prosecution and maintenance of Patents covering the Bayer Program Inventions.
|
8.3.3
|
Compugen Patent Rights.
|
8.3.3.1
|
Control.
[***] shall be responsible for the preparation, filing, prosecution, defense (e.g. opposition and other stand-alone invalidity/unenforceability proceedings in accordance with Section 9.7) and maintenance of all Compugen Patent Rights not solely related to [***]. [***] shall be responsible for the preparation, filing, prosecution and maintenance of all Compugen Patent Rights solely related to [***]. The Party responsible for preparation, filing, prosecution and maintenance of certain Compugen Patent Rights as set forth above (the “
Responsible Party
”)
shall use independent patent counsel reasonably acceptable to the other Party and shall file, prosecute and maintain such Compugen Patent Rights in a country scope as defined in
Exhibit 8.3.3.1
; provided however, that [***] understands that with respect to some of the Compugen Patent Rights, the [***] for [***] and that [***] such Compugen Patent Rights in all of the countries listed in Exhibit 8.3.3.1. In addition, if [***] instructs [***] to prepare, file, prosecute, protect and maintain Patents for which [***] is the Responsible Party in a country not included in
Exhibit 8.3.3.1,
[***] will do so provided that such instructions are provided sufficiently in advance of the relevant filing deadline. In case such country scope is at the date of the relevant filing, prosecution, defense or maintenance no longer possible, [***] shall prepare, file, prosecute, defend and maintain such Patents in as many countries of the country scope as possible. With respect to Compugen Patent Rights, the Responsible Party shall: (a) [***] and [***], as well as [***]; (b) [***]; (c) [***]; (d) [***] with [***], together with [***] and [***]; and (e) [***]. The Responsible Party shall give the other Party the opportunity to provide comments on and make requests of the Responsible Party concerning the preparation, filing, prosecution, protection and maintenance of the Compugen Patent Rights, and shall consider such comments and requests in good faith. In no event shall [***] abandon any claim within the Compugen Patent Rights covering a [***] without the written consent of [***]. With respect to Compugen Patent rights not solely related to [***] the Parties shall agree on separation of subject matter to the extent possible which shall be further prepared, filed, prosecuted, protected or maintained in separate divisional or continuation applications. [***] shall have full control and decision making authority on such applications not related to [***]. The Parties will reasonably inform and consult with each other and, to the extent possible, will undertake the filing, prosecution and defense of any Patents in a way that will not be detrimental to the prosecution, issuance and validity of Patents that are part of Compugen Patent Rights, or the development or commercialization of the Product. The Party that is not the Responsible Party will cooperate with the Responsible Party and will, on reasonable request of the Responsible Party within [***], provide all requested declarations and other support to enable the Responsible Party to prepare, file, prosecute and maintain the relevant Compugen Patent Rights in accordance with this Section 8.3.3.1.
|
8.3.3.2
|
Expenses.
|
8.3.3.2.1
|
The Parties acknowledge that the Compugen Patent Rights listed in
Exhibit 8.3.3.2.1
also claim targets and antibodies other than [***] will [***] prosecution and maintenance expenses with respect to such applications up to national phase (including national phase entry). However, with respect to any divisional patent applications filed with respect to such Compugen Patent Rights that claim [***] and do not claim targets that are not [***] shall reimburse [***], subject to Section 8.3.3.3 below, for [***] expenses incurred in connection with the [***] (“
Patent Expenses
”) of such Compugen Patent Rights incurred by [***] after the Effective Date in the countries listed in Exhibit 8.3.3.1 and in any country not listed in Exhibit 8.3.3.1 requested by Bayer in accordance with Section 8.3.3.1, as follows: (a) if the [***] or [***] and/or [***] shall [***] for [***]
such [***]; and (b) if such [***] or [***] subject matter other than [***] that is [***] according to [***], [***] shall [***] for [***] such [***].
|
8.3.3.2.2
|
With respect to all Compugen Patent Rights, other than those described in Section 8.3.3.2.1, [***] shall
reimburse[***]
, subject to
Section 8.3.3.3 below, for [***]
Patent Expenses incurred by [***] following the Effective Date or, if [***] is the Responsible Party, [***] shall [***] for patent expenses with respect to the preparation, filing, prosecution, defense and maintenance of such Compugen Patent Rights in the countries listed in Exhibit 8.3.3.1 and in any country not listed in Exhibit 8.3.3.1 requested by [***] in accordance with Section 8.3.3.1 or in which [***] otherwise decides to file applications.
|
8.3.3.2.3
|
Patent Expenses to be reimbursed under this Section 8.3.3.2 shall be paid in accordance with Section 7.1.4, 7.2 and 7.4, provided that the invoice of Compugen shall be accompanied by supporting documentation from Compugen in relation to such expenses.
|
8.3.3.3
|
Abandonment.
|
8.3.3.3.1
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent application or patent within Compugen Patent Rights that is a [***] Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which Bayer previously requested Compugen to file such Compugen Patent Rights in accordance with Section 8.3.3.1 or in which Bayer otherwise filed Compugen Patent Rights, Bayer shall provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***] shall be released from any obligation to reimburse [***] for the expenses incurred thereafter as to such [***] Patent Rights; provided that expenses authorized prior to the receipt by [***] of such notice shall be deemed incurred prior to the notice. In the event of any such abandonment, [***], in its sole discretion, may choose to continue the preparation, filing, prosecution, protection or maintenance of such [***] Patent Right [***]. If a patent is thereafter granted with respect to such [***] Patent Rights, [***] shall promptly inform [***] in writing along with documentation of the relevant decision and [***] shall inform [***] in writing within [***] upon receipt of such notice (including documentation of the relevant decision) whether it wishes to keep or to abandon such [***] Patent Right (if abandoned, each then an “
Abandoned
[***]
Patent Right
”). If [***] wishes to keep such [***] Patent Right, [***] will pay to [***] to [***] costs in connection with such preparation, filing, prosecution, protection or maintenance of such [***] Patent Right [***]. If [***] decides not to pay such amount or fails to pay such amount when due, [***] may choose [***]. In such event, the license [***] will terminate, [***]. [***] shall then [***]without [***], to [***] and to [***].
|
8.3.3.3.2
|
[***] is free in its sole discretion to abandon Bayer Product Patent Rights without any obligation to offer such Bayer Product Patent Rights to [***] provided that in the case of a termination of this Agreement in whole or of a Partial Termination by [***] in accordance with Section 14.3.3 or Section 14.3.4 or by [***] in accordance with Section 14.3.1 (without cause), [***] will not abandon those Bayer Product Patent Rights that would, in the case of a Transfer Notice from [***], be covered by any of the licenses granted within such Program Transfer without first allowing [***] to elect to have [***] continue prosecution, maintenance and/or protection of such Bayer Product Patent Rights at [***]’s cost until the [***]-day-period for provision of a Transfer Notice according to Section 14.4.2.1 has expired without receipt of any Transfer Notice by [***]. Should [***] after a Program Transfer decide that it does not wish to continue the prosecution of any [***] that is covered by any of the licenses granted within such Program Transfer, [***] shall provide [***] with written notice of such election. Upon receipt of such notice by [***], [***] shall be released from any obligation to prosecute the relevant Bayer Product Patent Right. In the event of any such abandonment, [***], in its sole discretion, may choose to continue the prosecution of such Bayer Product Patent Right at [***] expense. [***] will cooperate with [***] and will, on reasonable request of [***] within three months after receipt of such request, provide all requested declarations and other support to enable [***] to prepare, file, prosecute and maintain the relevant Bayer Product Patent Rights. For the avoidance of doubt, [***] retains full ownership of such Bayer Product Patent Rights.
|
8.3.3.3.3
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent or patent application within Compugen Patent Rights that is a [***] Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which Bayer previously requested Compugen to file such Compugen Patent Rights in accordance with Section 8.3.3.1 or in which Bayer otherwise filed Compugen Patent Rights (each, an “
Abandoned
[***]
Patent Right
”), Bayer shall provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall [***] thereafter as to such [***]; provided that [***] shall be [***]. In the event of any such abandonment, [***] may [***] of such Abandoned [***]
Patent Rights [***]. In such event, the [***] by [***] with respect to such [***] will [***], but [***] will [***] under Section [***] such [***] and [***] shall have the [***] and [***].
|
8.3.4
|
Joint Patent Rights.
|
8.3.4.1
|
Control.
All Joint Patent Rights shall be filed, prosecuted, defended (e.g. opposition and other stand-alone invalidity/unenforceability proceedings in accordance with Section 9.7) and maintained by the Parties through patent counsel to be agreed upon by the Intellectual Property Committee. Such counsel shall confer with the members of the Intellectual Property Committee and attempt to achieve a consensus in all decisions made relative to the content of applications, the prosecution of the Joint Patent Rights and the content of communications with the relevant patent agencies, prior to any communications with such agencies.
|
8.3.4.2
|
Expenses.
Subject to Section 8.3.4.3 below,
Bayer shall [***] with respect to the activities described Section 8.3.4.1.
|
8.3.4.3
|
Abandonment.
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent application or patent within Joint Patent Rights that is a [***]
Patent Right (each a “[***]
Joint Patent Right
”) in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which the Parties filed such Joint Patent Rights in accordance with Section 8.3.4.1, Bayer shall provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall b[***]hereafter as to such [***]; provided that [***] shall be [***]. In the event of any such abandonment, [***], may [***] of such [***]. If a patent is [***], [***] shall promptly [***] and [***] shall [***] within [***] (including [***] of the [***]) whether it wishes to [***] such [***] Patent Right (if [***]”). If [***] wishes to [***] such [***], [***] will pay [***]
costs in connection with [***] which [***] is [***] after receipt of [***] request to keep the relevant [***]. If [***] decides [***] or [***] such amount when due, [***], may [***] to [***] hereunder with respect to [***]. If [***] exercises its right to [***] and continues to [***], (a) [***] thereafter shall have the [***] and [***] under such [***] without any duty to a[***] for such [***] and [***] and (b) [***] shall [***] without [***] to [***], and [***] shall then be [***] (except as set forth below in [***]) [***] to [***] (through [***] of [***]) in and to such [***]. In such event, [***] shall have [***] to [***] such [***] in the relevant country(ies) except as shall be [***] to [***] the [***] in such country of any Product for which Bayer is otherwise [***] and [***].
|
8.3.4.4
|
Should Bayer decide that it does not wish to pay for or does not wish to continue the preparation, filing, prosecution, protection or maintenance of any patent or patent application within Joint Patent Rights that is a [***]
Patent Right in any country listed in Exhibit 8.3.3.1 or in any country not listed in Exhibit 8.3.3.1 in which the Parties filed such Joint Patent Rights in accordance with Section 8.3.4.1 (each, an “
Abandoned Joint
[***]
Patent Right
”), Bayer shall provide Compugen with prompt written notice of such election. Upon receipt of such notice by [***], [***] shall [***] thereafter as to such [***]; provided that [***] shall be deemed [***]. In the event of any such abandonment, [***], may choose to continue the [***] at its or a Third Party’s [***]. In such event, the [***] with respect to such [***], but [***] will [***] under [***] to enforce such [***] and [***] shall have the [***] to enforce such [***] and [***].
|
8.3.5.
|
Compugen Program Invention.
Compugen shall have control, at its expense and discretion, over the preparation, filing, prosecution and maintenance of patents and patent applications covering Compugen solely-owned Program Inventions that are not Compugen Patent Rights.
|
8.4.
|
Patent Challenge.
If a Related Party commences an action in which it challenges the validity, enforceability or scope of any of the Compugen Patent Rights (a “
Challenge Proceeding
”) and the outcome of such Challenge Proceeding is a determination in favor of Compugen, then in addition to any other rights Compugen may have under this Agreement or under applicable law, Bayer shall [***] for all [***]with [***].
|
9.1
|
Notice.
If Bayer or Compugen becomes aware of any possible or actual infringement of any Compugen Patent Rights, Joint Patent Rights or Bayer Product Patent Rights with respect to the making, use or sale of Products and/or Diagnostics (an “
Infringement
”), that Party shall promptly, and in any event not later than one week after becoming aware of the Infringement,
notify the other Party and provide it with details of its knowledge regarding such Infringement.
|
9.2
|
Compugen Patent Rights and Joint Patent Rights
|
9.2.1
|
Suit by Bayer
. Bayer shall have the first right (with the right to grant such right to Sublicensees), but not the obligation, to file a lawsuit for patent infringement or otherwise take action in the prosecution, prevention, or termination of any Infringement, including enforcement of Compugen Patent Rights or Joint Patent Rights with respect to an Infringement. Before Bayer commences an action with respect to any such Infringement, Bayer shall consider in good faith the views of Compugen in making its decision whether to sue. Should Bayer elect to bring suit against such an infringer, Bayer shall keep Compugen reasonably informed of the progress of the action and shall give Compugen a reasonable opportunity in advance to consult with Bayer and offer its views about major decisions affecting the litigation. Bayer shall give careful consideration to those views, but shall have the right to control the action. Bayer agrees to vigorously defend the validity and enforceability of each patent subject to Compugen Patent Rights or to Joint Patent Rights on which it files suit. As to a particular patent that is subject to Joint Patent Rights, Bayer at any time may assign all of its right, title and interest in that patent to Compugen and offer Compugen the opportunity to take over the lawsuit, and after such offer all obligations of Bayer under this paragraph with respect to such patent shall cease. Likewise, with respect to a particular patent that is subject to Compugen Patent Rights, Bayer at any time may offer Compugen the opportunity to take over the lawsuit, and after such offer all rights and obligations of Bayer under this paragraph with respect to such patent shall cease. Should Bayer elect to bring suit against such an infringer Compugen agrees to join as party plaintiff in any such suit upon request by Bayer. [***] Bayer agrees to [***] the final decision as to the selection of counsel shall be made by Bayer. Compugen agrees to execute any retainer agreement reasonably requested by such counsel that provides that counsel shall take instructions regarding the lawsuit from Bayer and that waives any actual or potential conflicts of interest between Compugen and Bayer. Except as set forth in the next sentence, the expenses of such suit or suits that Bayer elects to bring, including any reasonable out-of-pocket expenses of Compugen, other than expenses for the time of its employees involved and disbursement involved in connection therewith, incurred in conjunction with the prosecution of such suits or the settlement thereof, [***] and [***] shall hold [***]. Bayer shall be responsible for [***] incurred [***] only to the extent that [***]. Should Compugen desire its own separate counsel, as set forth in Section 9.5, fees incurred by such counsel would be at Compugen’s expense. Bayer shall not settle such litigation in a manner that would adversely affect the validity or enforceability of the Compugen Patent Rights or Joint Patent Rights or that would admit fault or wrongdoing by, or impose liability on, Compugen without the prior written consent of Compugen, such consent not be unreasonably withheld or delayed. If Bayer exercises its right to sue pursuant to this Section 9.2.1, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character other than expenses for the time of its employees involved and disbursement involved in connection therewith, including reasonable attorneys’ fees, incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Compugen shall receive an amount equal to [***]
percent ([***]%) of such funds and the remaining [***]
percent ([***]%) of such funds shall be retained by Bayer.
|
9.3
|
Bayer Product Patent Rights.
Bayer shall have the sole right (with the right to grant such right to Sublicensees), at its discretion, to file a lawsuit for patent infringement or otherwise take action in the prosecution, prevention, or termination of any Infringement or enforcement of patent rights relating the Bayer Product Patent Rights. If Bayer exercises such right with respect to an Infringement occurring during a period in which royalties were due to Compugen on sales of Products covered by such Bayer Product Patent Rights in the country of the Infringement,
it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, incurred in the prosecution of any such suit and if, after such reimbursement, any funds shall remain from said recovery, then Compugen shall receive an amount equal to [***] percent ([***]%) of such funds and the remaining [***]-percent ([***]%) of such funds shall be retained by Bayer.
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9.4
|
Compugen Program Invention.
Compugen shall have control, at its expense and discretion, over the preparation, filing, prosecution and maintenance of Patents covering Compugen Program Inventions that are not Compugen Patent Rights (i.e. do not cover the Targets, Target Biologics nor Target Biomarkers).
|
9.5
|
Own Counsel.
Each of Bayer and Compugen shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted under this Section 9 by the other Party for Infringement.
|
9.6
|
Cooperation.
Each of Bayer and Compugen agrees to cooperate fully in any action under this Section 9 that is controlled by the other Party, provided that the controlling Party reimburses the cooperating Party promptly for any costs and expenses, other than expenses for the time of its employees involved and disbursement involved in connection therewith, incurred by the cooperating Party in connection with providing such assistance.
|
9.7
|
Declaratory Judgment.
If a declaratory judgment action is brought naming Bayer and/or any of its Affiliates or Sublicensees as a defendant and alleging invalidity or unenforceability of any claims within the Compugen Patent Rights, Bayer shall promptly notify Compugen in writing and Compugen may elect, upon written notice to Bayer within [***] days after Compugen receives notice of the commencement of such action, to take over the sole defense of the invalidity and/or unenforceability aspect of the action at its own expense, unless or until Bayer decides to take action according to Section 9.2.1. Should Compugen elect to take over such defense, Bayer shall have the right to approve the counsel selected by Compugen to represent Compugen and Bayer, such approval not to be unreasonably withheld or delayed.
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10.1
|
Definition.
“
Confidential Information
” means information received by one Party or any of its Affiliates (the “
Receiving Party
”) from the other Party or any of its Affiliates (the “
Disclosing Party
”) that is visibly marked or otherwise indicated as confidential or proprietary or that – without such information being marked or otherwise indicated as confidential or proprietary – the Receiving Party should reasonably understand is confidential to the Disclosing Party, and except that Confidential Information does not include information that: (i) was known to the Receiving Party (or an Affiliate of the Receiving Party) at the time it was disclosed, other than by previous disclosure by or on behalf of the Disclosing Party, as evidenced by written records at the time of disclosure; (ii) is at the time of disclosure publicly known, or later becomes publicly known under circumstances involving no breach of this Agreement by the Receiving Party or by any person or entity to whom Receiving Party discloses such information under Section 10.2; (iii) is lawfully and in good faith made available to the Receiving Party (or an Affiliate of the Receiving Party) by a Third Party who is not subject to obligations of confidentiality to the Disclosing Party with respect to such information; or (iv) is independently developed by the Receiving Party (or an Affiliate of the Receiving Party) without the use of or reference to Confidential Information of the Disclosing Party, as demonstrated by documentary evidence. The terms and conditions of this Agreement and the relationship between Parties shall be considered Confidential Information of each of the Parties for purposes of this Section 10.
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10.2
|
Restrictions.
Receiving Party agrees to maintain Confidential Information of the Disclosing Party in confidence and not disclose such Confidential Information without the prior written approval of the Disclosing Party, or make any use of such Confidential Information, except as required in order for such Party to perform its obligations and exercise its rights under this Agreement. Each Party may disclose the other Party’s Confidential Information to those employees or consultants of the Receiving Party and to contractors and (in the case of Bayer) Sublicensees who have a need to know such information for purposes of exercising rights and fulfilling obligations under this Agreement, and are bound by confidentiality and non-use obligations equivalent to those set forth herein. In addition, each Party may disclose the other Party’s Confidential Information to Affiliates who have a need to know such information for purposes of exercising rights and fulfilling obligations under this Agreement, provided that the Receiving Party is liable for any non-compliance of its Affiliates with the confidentiality and non-use obligations set forth herein. Receiving Party shall protect Confidential Information of the Disclosing Party by using the same degree of care, but not less than a reasonable degree of care, as it uses to protect its own confidential information of like nature to prevent the unauthorized disclosure of such Confidential Information.
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10.3
|
Compugen Undertakings with Respect to Certain Compugen Confidential Information.
|
10.3.1
|
Subject to the exceptions set forth in this Section 10.3.1 below, with respect to any Confidential Information within Compugen Know How so long as the exclusive license granted to Bayer under Section 3.1.1 with respect to such [***] is in effect, Compugen shall not disclose such [***] to Third Parties (other than consultants of Compugen who are subject to confidentiality and non-use obligations at least as restrictive as those set forth herein) without, cumulatively, (i) having [***]
and (ii) [***] such [***]the [***]
and [***] such [***] under [***]. Notwithstanding sentence 1 of this Section 10.3.1 (for the avoidance of doubt, without this sentence 2 of Section 10.3.1 in any way limiting the [***]), Compugen is entitled (a) to disclose such Confidential Information as permitted under Section 2.3.7.3.2; (b) to disclose such Confidential Information under obligations of confidentiality [***] to [***] and to [***] in order to enable Compugen to [***] under [***] and to publicly disclose information described in Exhibit 2.3.7.3.2; (c) unrestrictedly disclose information [***]with respect to or with [***]of [***] and [***]for [***] to [***]; (d) unrestrictedly disclose information specifically with respect to [***] of Targets; and (e) to disclose Confidential Information with respect to [***] and the [***]
under obligations of confidentiality on [***] to [***]
and to [***] in support of the [***]; provided that in the case of each of (a) through (e), (x) Compugen will not disclose any such Confidential Information with respect to a [***] to a [***], without [***] (y) any agreement pursuant to which Compugen authorizes a Third Party to make use of any such [***] or with respect to [***]of such [***]and [***]unless [***]; and (z) [***]
|
10.3.2
|
Notwithstanding Section 10.3.1, Compugen may disclose [***] to Regulatory Authorities in order to (i) obtain, maintain or defend Compugen Patent Rights for which it is a Responsible Party or any Patents specifically relating to [***] or (ii) seek or obtain approval to conduct clinical trials or gain Marketing Authorisation with respect to [***] In addition, the exceptions in Section 10.4.2 and Section 10.4.3 shall apply mutatis mutandis. Compugen will, to the extent possible, undertake the filing, prosecution and defense of any Patents disclosing [***] pursuant to Section 10.3.2 (i) in a way that will [***]with respect to [***]
|
10.4
|
Exceptions.
Notwithstanding the above:
|
10.4.1
|
The Receiving Party may disclose Confidential Information of the Disclosing Party to Regulatory Authorities in order to obtain, maintain or defend Patents or seek or obtain approval to conduct clinical trials or gain Marketing Authorisation with respect to Products or Diagnostics or to otherwise develop, manufacture or commercialize a Product or Diagnostic.
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10.4.2
|
The Receiving Party may disclose Confidential Information of the Disclosing Party and this Agreement as required to comply with any order of a court or any applicable rule, regulation, or law of any jurisdiction or securities exchange, provided that to the extent reasonably possible it (a) shall promptly notify the Disclosing Party and allow the Disclosing Party a reasonable time to oppose such disclosure, (b) shall use reasonable efforts to obtain an appropriate protective order or confidential treatment authorization that preserves the confidentiality of the information to the greatest extent practical and (c) shall limit the scope of such disclosure only to such portion of such Confidential Information that is legally required to be disclosed.
|
10.4.3
|
The Receiving Party may disclose a summary report describing the current status and next steps of the Target Program(s) in a general manner without any sensitive information (e.g. information relating to competitive, regulatory, commercial, clinical or scientific topics) and financial terms of this Agreement, which the Disclosing Party will deliver within reasonable time upon a request of the Receiving Party, as follows: (a) [***] and/or (b) [***]who are [***]of (i) [***]or (ii) [***]of this Agreement; provided that in the case of each of (a) and (b), [***] has entered into a written confidentiality and non-use agreement no less restrictive than the terms set forth herein. Such disclosure shall in any event be strictly limited to what is required by [***] for purposes of [***], or [***], and any use by [***] shall be limited to such purpose. Notwithstanding the above, if, in the event of a planned disclosure by Compugen, [***] is a Bayer Competitor, then a disclosure as set forth in this Section 10.4.3 shall be made to an independent attorney and/or accountant (and/or independent third party expert contracted by them) solely for the purpose of allowing such attorney and/or accountant to advise the Receiving Party regarding [***]this Agreement [***] or of [***] without disclosing any Bayer Confidential Information to the Bayer Competitor. The Receiving Party making such disclosure shall remain liable towards the Disclosing Party for compliance of [***] with the terms of confidentiality and non-use as set forth in this Agreement with respect to such Confidential Information.
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10.4.4
|
Each Party (a) shall have the right to disclose this Agreement as required by any securities laws, regulations or stock exchanges, provided, however, that the Party which discloses this Agreement shall give reasonable advance notice, as legally permissible, to the other Party and, at the other Party’s request, shall involve the other Party in discussions with the relevant government agency with respect to the items that may be redacted from such disclosure (it being understood that the Parties have a common interest that Confidential Information that does not have to be disclosed, including any details relating to financial terms, will be redacted from the version of the Agreement provided for publications), and (b) may disclose the existence of the relationship created by this Agreement; provided that the other Party shall have the right to review and approve any press release or other public disclosure of such information, such approval not to be unreasonably withheld. For clarity, each Party will be entitled to freely refer to any details disclosed in the press releases to be issued pursuant to Section 10.5 or in any other press release issued by a Party.
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10.5
|
Press Releases.
Promptly after the execution of this Agreement, each Party will issue a press release substantially in the form attached hereto (for each Party separately) as
Exhibit 10.5
and will coordinate press releases and other public disclosures regarding the execution of this Agreement and the completion of the Research Programs. Any press release or other public disclosure with respect to this Agreement or the Research Programs is subject to review and approval by the other Party (except as set forth in Section 10.4), such approval not to be unreasonably withheld.
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10.6
|
Publications.
The Parties acknowledge that publications or presentations relating to the Research Programs must be monitored to prevent any adverse effect from premature publication of results of the Research Programs. Accordingly, all abstracts, manuscripts or presentations containing data related to the activities within the Research Program or results generated in the performance of such Research Program, which have not been previously published, must be provided at least [***] days prior to [***] for publication or presentation in scientific journals and/or at scientific conferences by the submitting Party to the other Party via [***] for its review and comment. The receiving Party will provide any comments to the submitting Party within [***] days of receipt of such proposed abstract, manuscript or presentation, and the submitting Party will [***] as applicable. Without limiting a Party’s right under Section 10, a Party may use presentation materials that have been previously approved by a Party for a presentation by the other Party in subsequent presentations having a similar context without additional approvals under this Section 10.6. Notwithstanding the foregoing, Bayer may, in its sole discretion, [***]If Bayer so objects, [***]shall [***]and [***] For the avoidance of doubt, Bayer is free to submit any abstract, manuscript or presentation related to its activities under a Target Program after completion of the Research Program, to the extent that such publication does not contain any Confidential Information of Compugen.
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10.7
|
Duration.
The foregoing obligations shall remain in force for a period of [***] years following the date of the disclosure of the relevant Confidential Information.
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11.1
|
Representations and Warranties by the Parties.
Each Party hereby represents, warrants and covenants to the other as of the Effective Date, as follows:
|
11.1.1
|
Such Party (a) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and (b) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights
;
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11.1.2
|
The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder do not conflict with, violate, or breach or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound; and
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11.1.3
|
It will comply with, and shall ensure that its Affiliates, contractors and Sublicensees comply with, all applicable laws and regulations relating to its activities and the exercise of its rights under this Agreement.
|
11.2
|
Representations, Warranties and Covenants by Compugen
.
Compugen hereby represents, warrants and covenants that: (a) it has not granted and will not grant any rights in or to the Compugen Intellectual Property that are inconsistent with the rights granted to Bayer under this Agreement; (b) it has the right to grant the licenses granted by it under Section 3.1 of this Agreement; (c) it will not transfer, assign, encumber, grant, sell, lease or otherwise dispose of the Compugen Intellectual Property in a manner that will adversely affect the rights granted to Bayer under this Agreement; and (d) to its knowledge (it being understood that [***]), it possesses all the rights needed to perform its obligations under the Workplan as currently contemplated;
(e)
it has no knowledge as of the date hereof of any legal suit or proceeding by a third party against Compugen contesting the ownership or validity of the Compugen Intellectual Property; (f) it has not received as of the Effective Date, with respect to the Compugen Intellectual Property, any notice of infringement or any written communication from or on behalf of the owner of a Third Party patent rights relating in any way to a possible infringement of such Third Party patent rights by its activities with respect to Targets and Target Biologics prior to the date hereof or the activities of either Party contemplated under this Agreement; (g) to the best of Compugen’s knowledge, the Compugen Intellectual Property is not subject to any encumbrance, lien or claim of ownership of any Third Party; (h) it is the sole and exclusive owner and/or Controls the Compugen Intellectual Property and to the best of its knowledge the Compugen Intellectual Property has not been misappropriated from a Third Party; (i) to Compugen’s knowledge, the documents delivered or made available by Compugen to Bayer in connection with the transaction contemplated by this Agreement (for clarity, excluding any data that [***] do not contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained therein not misleading; and Compugen has not knowingly withheld from Bayer any material information concerning the transaction contemplated by this Agreement (or, with respect to documents redacted due to confidentiality obligations of Compugen, knowingly withheld from Bayer the information that such redacted parts contain material information concerning the transaction contemplated by this Agreement, other than the [***] to such redacted documents);
(j) the Compugen Patent Rights are being diligently prosecuted and maintained with the respective patent offices in accordance with the local applicable law, and to Compugen’s best knowledge, have been filed and maintained properly and correctly and all applicable fees have been paid on or before the final date for payment (including permissible extensions); (k) the Compugen Know-How has been kept confidential or has been disclosed to Third Parties only under terms of confidentiality, and Compugen and its Affiliates are not aware of any breach of such confidentiality by any Third Party; and (l) Compugen has not failed to disclose to Bayer any prior art or fact known to Compugen that causes Compugen to conclude that the Compugen Patent Rights Controlled by Compugen as of the Effective Date are invalid or unenforceable.
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11.3
|
Warranty Disclaimer
. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, PATENTS, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING. THE PARTIES ACKNOWLEDGE THAT ANY INFORMATION, BIOLOGICAL MATERIAL AND KNOW-HOW PROVIDED BY ONE PARTY TO ANOTHER HEREUNDER, ARE PROVIDED “AS IS” WITH NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION WITH RESPECT TO ANY COMPUGEN INTELLECTUAL PROPERTY, BAYER INTELLECTUAL PROPERTY, PROGRAM KNOW-HOW OR THE PERFORMANCE, CONDITION, ORIGINALITY OR ACCURACY OF THE RESULTS OF THE RESEARCH PROGRAM. SUBJECT TO SECTION 11.2, NEITHER PARTY MAKES ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY COMPUGEN INTELLECTUAL PROPERTY, BAYER INTELLECTUAL PROPERTY OR PROGRAM KNOW-HOW OR THAT THE USE OR PRACTICE OF ANY OF THE FOREGOING WILL NOT INFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.
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13.1
|
Indemnification of Compugen
. Bayer shall indemnify, defend and hold harmless Compugen and its Affiliates and their respective directors, officers and employees, and the successors and assigns of the foregoing (the “
Compugen Indemnitees
”) from and against any and all liabilities, damages, losses, costs and expenses (including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a Third Party (including without limitation for infringement of any intellectual property rights) against a Compugen Indemnitee to the extent resulting directly or indirectly from: (a) [***] (b) the negligence or willful misconduct of any Bayer Indemnitee (defined below); or (c) the breach by Bayer of any warranty, representation, covenant or agreement made by it in this Agreement; except in each case to the extent that such claim, suit or proceeding results from the negligence or willful misconduct on the part of any of the Compugen Indemnitees or from the breach by Compugen of any warranty, representation, covenant or agreement made by it in this Agreement.
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13.2
|
Indemnification of Bayer.
Compugen shall indemnify, defend and hold harmless Bayer and its Affiliates and their respective directors, officers and employees, and the successors and assigns of the foregoing (the “
Bayer Indemnitees
”) from and against any and all liabilities, damages, losses, costs and expenses (including reasonable attorneys’ and professional fees and other expenses of litigation and arbitration) resulting from a claim, suit or proceeding brought by a Third Party (including without limitation for infringement of any intellectual property rights) against a Bayer Indemnitee to the extent resulting directly or indirectly from (a) [***] (b) [***] (c) a breach by Compugen of any representation, warranty, covenant or agreement made by it in this Agreement;
and/or (d) the negligence or willful misconduct of any Compugen Indemnitee; except in each case to the extent that such claim, suit or proceeding results from the negligence or willful misconduct on the part of any of the Bayer Indemnitees or from the breach by Bayer of any warranty, representation, covenant or agreement made by it in this Agreement.
|
13.3
|
Procedure
. A Party that intends to claim indemnification under this Section 13 (the “
Indemnitee
”) shall promptly notify the indemnifying Party (the “
Indemnitor
”) of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the extent the Indemnitor so desires, to assume sole control of the defense thereof with counsel reasonably acceptable to the other Party and with involvement of the Indemnitor’s insurance, including, the right to settle the action on behalf of the Indemnitee on any terms the Indemnitor deems desirable in the exercise of its sole discretion, except that the Indemnitor shall not, without the Indemnitee’s prior written consent, settle any such claim if such settlement contains a stipulation to or admission or acknowledgment of any liability or wrongdoing on the part of the Indemnitee or imposes any obligation on the Indemnitee other than a monetary obligation, and only to the extent the Indemnitor assumes in full such obligation. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action shall not impair Indemnitor’s duty to defend such action but shall relieve Indemnitor of any liability to the Indemnitee to the extent the Indemnitor is prejudiced materially by the delay. At the Indemnitor’s request and cost, the Indemnitee shall cooperate reasonably with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification and provide full information with respect thereto. Subject to the Indemnitee’s fulfillment of its obligations under this Section 13.3, the Indemnitor shall pay any damages, costs or other amounts awarded against the Indemnitee, or payable by the Indemnitee pursuant to a settlement agreement entered into by the Indemnitor, in connection with such claim.
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13.4
|
Insurance.
Compugen represents, warrants and covenants that (a) it maintains the insurance coverage described in
Exhibit 13.4
hereto, (b) it will during the term of this Agreement maintain insurance sufficient to secure the performance of Compugen’s obligations under this Agreement including general liability/public liability (GL), in amounts not less than those set forth in Exhibit 13.4 hereto, and (c) it will upon delivery of a Transfer Notice following termination of this Agreement maintain insurance sufficient to secure the performance of Compugen’s obligations under this Agreement, with minimum insurance coverages as follows: (i) upon [***]$[***] (ii) upon [***], $[***], and (iii) $[***] Compugen shall provide Bayer with insurance certificates of the insurances mentioned under (a) to (c) above upon request.
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14.1
|
Term of Agreement.
The term of this Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with provisions of Section 14.3 below, shall continue until the end of the last-to-expire period during which Bayer is obligated to make payments to Compugen under Section 6. The term of this Agreement shall survive the non-renewal, termination or limitation of any particular license granted hereunder. Certain rights and obligations of the Parties may be terminated as provided in this Section 14. Following the expiration pursuant to this Section 14.1 (and provided the Agreement has not been earlier terminated pursuant to Section 14.3, in which case the provisions of Section 14.4 will apply), Bayer shall have a [***] under the Compugen [***] and Compugen’s interest in [***] with [***] as the licenses specified in Sections 3.1.1.1 to 3.1.1.3.
|
14.2
|
Early Termination of Research Program.
|
14.2.1
|
Termination for Breach by Compugen.
If Compugen
commits a material breach of its obligations under Section 2.3 with respect to its obligations under the CGEN-15001T Workplan or the CGEN-15022 Workplan and fails to take reasonable measures to cure such breach within [***] days after receiving written notice thereof from Bayer, Bayer may terminate the relevant Research Program (i.e. if the breach is with respect to obligations under the CGEN-15001T Workplan, the CGEN-15001T Research Program; if the breach is with respect to obligations under the CGEN-15022 Workplan, the CGEN-15022 Research Program) upon written notice to Compugen. A breach of Compugen’s obligations under the CGEN-15001T Workplan or the CGEN-15022 Workplan (but not of both Workplans) shall entitle Bayer to terminate both Research Programs only if the breach is of a general nature and impacts both Research Programs.
|
14.2.2
|
Consequences.
If Bayer terminates either [***] Program (“
Terminated [***] Program
”) pursuant to Section 14.2.1, without prejudice to any other rights and legal remedies that Bayer may have due to such breach of agreement, Compugen will cease all of its work under the Terminated [***] Program, and [***]
|
14.2.3
|
Effect on Other Provisions.
Except as specifically set forth in this Section 14.2, early termination of the Research Program shall not affect the Parties’ rights and obligations under this Agreement.
|
14.3
|
Early Termination of Agreement or of a Target Program.
|
14.3.1
|
Termination for Convenience.
Bayer may terminate this Agreement, either in whole or with respect to one of the Target Programs only, and in each case also on a Product-by-Product (with its applicable Product Companion Diagnostic), and/or country-by country basis, at any time without cause, upon [***] days prior written notice stipulating whether the termination applies to the Agreement in whole or with respect to one of the Target Programs only, and whether it is limited to certain Product(s), and/or countries.
|
14.3.2
|
Termination for Breach of Compugen.
In the event Compugen commits a material breach of its obligations under any of the Target Programs or under this Agreement as a whole and fails to cure that breach within [***] days after receiving written notice thereof, Bayer may terminate at its choice either this Agreement or the Target Program that the breach relates to immediately upon written notice to Compugen, provided that if (i) the breach is (1) curable, (2) is not an intentional breach, and (3) not susceptible of cure within the stated period and (ii) Compugen uses [***] in a [***] to cure such breach, the stated period will be extended by [***] the nature of the breach and the adverse effect that such breach and any further delay in curing such breach will have on Bayer.
|
14.3.3
|
Termination for Breach of Bayer.
In the event Bayer commits a material breach of its obligations under this Agreement and fails to cure that breach within [***] days after receiving written notice thereof, Compugen may terminate this Agreement immediately upon written notice to Bayer; provided that
|
|
(a)
|
if (i) the breach is (1) curable, (2) is not an intentional breach, and (3) not susceptible of cure within the stated period and (ii) Bayer uses [***] in a [***] to cure such breach, the stated period will be extended by [***] the nature of the breach and the adverse effect that such breach and any further delay in curing such breach will have on Compugen.
|
|
(b)
|
if the material breach relates solely to Bayer’s breach of its diligence obligations under Section 5 with respect to one of the Target Programs (and not to the other) and at such time the Agreement has not been terminated with respect to the other Target Program, Compugen may only terminate this Agreement with respect to the Target Program with respect to which such material breach applies.
|
14.3.4.
|
Termination for Patent Challenge.
Compugen may terminate this Agreement immediately upon written notice to Bayer if Bayer or an Affiliate of Bayer commences an action or assists a Third Party in commencing an action in which it or such Third Party challenges the validity, enforceability or scope of any of the Compugen Patent Rights.
|
14.4
|
Effect of Termination of Agreement.
|
14.4.1
|
General.
|
14.4.1.1
|
Termination of Agreement.
Upon termination of this Agreement by either Party pursuant to any of the provisions of Section 14.3, without prejudice to other claims and remedies, the following provisions shall apply:
|
|
(a)
|
the rights and licenses granted to Bayer under this Agreement shall terminate, all rights in and to and under the Compugen Intellectual Property and Compugen’s interest in the Joint Intellectual Property will revert to Compugen and neither Bayer nor its Affiliates may make any further use or exploitation of the Compugen Intellectual Property;
|
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(b)
|
except with respect to a Target Program(s) for which Compugen provides Bayer a Transfer Notice in accordance with Section 14.4.2.1, the rights and licenses granted by Bayer to Compugen under this Agreement will terminate, all rights in and to and under the Bayer Intellectual Property and Bayer’s interest in the Joint Intellectual Property will revert to Bayer and neither Compugen nor its Affiliates may make any further use or exploitation of the Bayer Intellectual Property. For clarity, such rights will not terminate with respect to Targets, Target Biologics or Target Biomarkers relating to the Transferred Part (as defined in Section 14.4.2.1); and
|
|
(c)
|
any existing agreements that contain a Sublicense shall terminate to the extent of such Sublicense, provided that if the Agreement is terminated by Compugen, with respect to each Sublicensee that is not, at the date of termination, an Affiliate of Bayer, if (i) the Sublicense was granted in conformance with the terms of this Agreement, (ii) the Sublicensee is not then in material breach of its Sublicense agreement with Bayer such that Bayer would have the right to terminate such Sublicense, and (iii) Compugen has been paid all consideration due to Compugen under this Agreement with respect to the Sublicense, Compugen shall be obligated, at the request of such Sublicensee, to enter into a direct license agreement with such Sublicensee on substantially the same terms as those set forth herein, which shall not impose any representations, warranties, obligations or liabilities on Compugen that are not included in this Agreement, and further provided that (x) the [***] of the license granted directly by Compugen to such Sublicensee shall be [***]; and (y) if the Sublicense granted to such Sublicensee was [***], such Sublicensee shall [***] under the license granted to it directly by Compugen; and
|
(d)
|
Bayer shall promptly destroy, or at Compugen’s request, deliver to Compugen, all Compugen Know-How and Compugen biological material in Bayer’s, its Affiliates’ and Sublicensees’ possession;
|
|
(e)
|
except with respect to a Target Program(s) for which Compugen provides Bayer a Transfer Notice in accordance with Section 14.4.2.1, Compugen shall promptly destroy, or at Bayer’s request, deliver to Bayer, all Bayer Know-How and Bayer biological material in Compugen’s or its Affiliates’ or contractors’ possession. For clarity, Compugen shall not be required to destroy nor deliver to Bayer any such Bayer Know-How or Bayer biological material relating to or used in the Transferred Part (as defined in Section 14.4.2.1); and
|
|
(f)
|
Bayer will not have to pay any more milestone payments except those milestone payments with respect to milestones that were achieved prior to the termination of the Agreement
.
|
14.4.1.2
|
Partial Termination.
Upon termination that is limited to one of the Target Programs (by either Party) or to certain Products (together with their applicable Product Companion Diagnostics) and/or countries (by Bayer) pursuant to any of the provisions of Section 14.3 (such partial termination hereinafter referred to as “
Partial Termination
” and the subject-matter of such termination hereinafter referred to as “
Terminated Part
”), the following provisions shall apply:
|
|
(a)
|
the rights and licenses granted to Bayer under this Agreement with respect to the Terminated Part, including without limitation with respect to the Targets, Target Biologics and Target Biomarkers to the extent they are covered by the termination, shall terminate, all rights in and to and under the Compugen Intellectual Property and Compugen’s interest in the Joint Intellectual Property relating to the subject matter of the Terminated Part (“
Terminated Part IP
”) will revert to Compugen and neither Bayer nor its Affiliates may make any further use or exploitation of the Terminated Part IP;
|
|
(b)
|
any existing agreements that contain a Sublicense under the Terminated Part shall terminate to the extent of such Sublicense; provided that in the case of termination of a Target Program by Compugen, with respect to each Sublicensee of subject matter of such Target Program that is not, at the date of termination, an Affiliate of Bayer, if (a) the Sublicense was granted in conformance with the terms of this Agreement, (b) the Sublicensee is not then in material breach of its Sublicense agreement with Bayer such that Bayer would have the right to terminate such Sublicense, and (c) Compugen has been paid all consideration due to Compugen under this Agreement with respect to the Sublicense, Compugen shall be obligated, at the request of such Sublicensee, to enter into a direct license agreement with such Sublicensee on substantially the same terms as those set forth herein as they relate to such Terminated Program, which shall not impose any representations, warranties, obligations or liabilities on Compugen that are not included in this Agreement, and provided further that (x) the scope of the license granted directly by Compugen to such Sublicensee shall be co-extensive with the scope of the license granted by Bayer to such Sublicensee and (y) if the Sublicense granted to such Sublicensee was non-exclusive, such Sublicensee shall not have the right to participate in the prosecution or enforcement of the Compugen Patent Rights, Joint Patent Rights or Bayer Product Patent Rights under the license granted to it directly by Compugen; and
|
|
(c)
|
Bayer shall promptly destroy, or at Compugen’s request, deliver to Compugen, all Compugen Know-How and Compugen biological material in Bayer’s, its Affiliates’ and Sublicensees’ possession provided in connection with Terminated Part.
|
14.4.2
|
Termination by Compugen for Cause or by Bayer without Cause.
In addition to the above, in the case
of termination of the Agreement in whole or of a Partial Termination by Compugen in accordance with Section 14.3.3 or Section 14.3.4 or by Bayer in accordance with Section 14.3.1 (without cause), the following provisions shall apply:
|
14.4.2.1
|
Compugen shall have an option, exercisable by the provision of written notice to Bayer within [***] days of the effective date of such termination (
“Trigger Date”
), to have (a) either Target Program or both Target Programs (in the case of a termination of the Agreement) or (b) the Terminated Part (in the case of a Partial Termination), transferred to Compugen. Such notice (a “
Transfer Notice
”) will state which Terminated Part(s) is/are to be transferred (each, a “
Transferred Part
”). If Compugen provides a Transfer Notice within such [***] day period, Bayer shall, to the extent the respective transferred or licensed items referred to below are Controlled by Bayer or its Affiliates and if and to the extent Bayer or its Affiliates have the right to make such transfer or grant such license (with respect to each transferred or licensed item subject to [***] by Compugen of [***], including, without limitation, [***], as the case may be, that [***] relating to [***]), promptly (a) transfer and assign to Compugen, upon Compugen’s request, all data, study reports, biological, chemical and written materials and information relating to Target Biologics, Target Biomarkers, Products and/or Product Companion Diagnostics developed or used by Bayer in the Transferred Part(s), including (if [***]) any [***] performed in such Terminated Part with the exception of [***] that also include [***] which is not a Target Biologic of the Transferred Part; (b) to the extent permitted by applicable law, transfer and assign to Compugen or its designee all [***] with respect to Products and/or [***] from the Transferred Part(s) and grant Compugen or its designee any [***] reasonably required for the continuing development or commercialization of such Products and [***]; (c) grant [***] to Compugen or its designee [***] under [***], under [***] and under [***], solely to the extent that [***], solely to do or have done further research on, develop, have developed, make, have made and use Target Biologics solely in order to develop, have developed, make, have made, use, sell, offer for sale and import Products and [***] within the Transferred Part; (d) grant to Compugen or its designee a [***] license under [***] and under [***] not covered by the license set forth in (c) solely to the extent that such [***], as applicable, [***] solely to develop, have developed, make, have made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination that is limited to a country, the Products and/or [***] in the countries to which the Partial Termination is limited) and provided that , in the case of a Product that [***],this license does not include any [***] that is/are not part of [***] included in the Product; and (e) grant to Compugen or its designee a [***] license under [***] and not covered by the licenses set forth in (c) and (d), solely to the extent that such [***], as applicable, [***] solely to develop, have developed, make, have made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination that is limited to a certain country, the Products and/or [***] in the countries to which the Partial Termination is limited) and provided that , in the case of a Product that [***], this license does not include any [***] that is/are not part of [***] included in the Product. Bayer undertakes to [***]. If the Transferred Part includes any (i) [***], (ii) [***] or (iii) other [***] or [***] used by Bayer within and needed to continue the Transferred Part, in each case (i) to (iii) which [***] or [***] that is/are not part of [***] included in the Product and which would be part of the licenses granted under lit. (d) and lit. (e) of this Section 14.4.2.1, if they were not specifically excluded because of [***], the Parties will on request of Compugen negotiate in [***]in [***] with the purpose to [***] of a license by Bayer to Compugen under [***] or [***] to the extent [***] (or, in the case of [***]) and solely in order to further develop, have developed, make, have made, use, sell, offer for sale and import Products and/or [***] (or, in the case of a Partial Termination that is limited to a country, the Products and/or [***] in the countries to which the Partial Termination is limited),
provided that
in the event of [***], Bayer will [***], except for [***] or [***].
|
14.4.2.2
|
With respect to Products in a Transferred Part for which clinical trials have commenced prior to such termination, Bayer will continue fulfilling, at [***] expense, all non-cancellable obligations undertaken by or on behalf of Bayer or its Affiliate(s) with respect to [***] prior to the Trigger Date. In addition, if Compugen provides Bayer with a Transfer Notice, at Compugen’s request, Bayer will use Commercially Reasonable Efforts [***].
|
14.4.2.3
|
Regardless of whether Compugen provides a Transfer Notice, Bayer and its Affiliates shall immediately cease all research, development and commercialization activities with respect to Products and with respect to Diagnostics (or, in the case of a Partial Termination, Products and its applicable Product Companion Diagnostics within the Terminated Part).
|
14.4.2.4
|
In the event of a Transfer Notice by Compugen following a Partial Termination by Bayer that is limited to certain Products (and their applicable Product Companion Diagnostics) or countries, the Parties will, upon either Party’s request, [***]
|
14.4.2.5
|
Consideration by Compugen
.
|
14.4.2.5.1
|
Net Sales by Compugen
. With respect to Compugen Net Sales (as defined below) made by Compugen and its Affiliates (but specifically excluding sale by licensees or sublicensees) of Products from or developed on the basis of the Transferred Part (“
Terminated Products
”), Compugen shall pay Bayer the royalties set forth in clauses (a) through (f) below,
provided that
(i) if the Terminated Product that the Compugen Net Sales relate to is, according to the Product definition in Section 1.53, another [***] that [***]described in [***]the [***]will be [***] percent ([***]
%) instead of the [***], as applicable; and (ii) if the [***]in Section[***]for which [***]has commenced [***] prior to the [***]and the [***]to does [***](i.e. it includes the [***]) and had to [***], the [***]will be [***] percent ([***]%) instead of the rate set forth in (c), (d), (e) or (f), as applicable:
|
|
(a)
|
If the Trigger Date with respect to the [***]occurred prior to [***],[***] will [***];
|
|
(b)
|
[***] percent ([***]%) of any [***]if the Trigger Date with respect to the [***]occurred after [***]but prior to [***]with respect to a [***]
|
|
(c)
|
[***]percent ([***]%) of any [***]if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***] with respect to a [***];
|
|
(d)
|
[***] percent ([***]%) of any [***]if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***] with respect to a [***]; and
|
|
(e)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to [***]; and
|
|
(f)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***].
|
|
(a)
|
the [***] of (i) the [***] and (ii) with respect [***], of the [***], within such [***] in each case (i) and (ii)
covering the [***] in the [***] in which [***]; provided that if there is [***] as [***] covering the [***] in the [***] in which such [***], such [***] will be deemed to [***] for purposes of this Section 14.4.2.5.1 if and when [***];
|
|
(b)
|
the [***] or other [***] with respect to such [***]; and
|
|
(c)
|
[***] of [***] (if the [***], the term [***] will be read to include [***]).
|
14.4.2.5.2
|
Consideration in the Event of a Third Party License.
In the event Compugen or any of its Affiliates grants a license to a Third Party under the rights transferred and/or licensed by Bayer to Compugen under Section 14.4.2.1, including without limitation [***] (a “
Third Party License
”), Compugen shall [***]such as [***] for [***]and [***]under such [***], it being understood that with respect to [***]to [***][***]shall provide [***]that such [***] are [***]and that such [***]for such [***][***]received by [***] or [***], to the extent these are [***]under Section [***] and shall [***]as set forth below;
provided that
(i) if the [***]to is, according to the [***], another [***]that [***]described in [***]the [***]will be [***] percent ([***]%) instead of the [***], as applicable; and (ii) if the [***] in Section [***] for which [***] has commenced [***] prior to the [***] that the [***] does not [***] included in such [***]) and had to [***], the r[***] percent ([***]%) instead of [***], as applicable:
|
|
(a)
|
If the Trigger Date with respect to the Transferred Part occurred prior to D3, Bayer will not [***];
|
|
(b)
|
[***] percent ([***]%) of any [***] under the [***] if the Trigger Date with respect to the Transferred Part occurred after [***] but prior to [***];
|
|
(c)
|
[***]
percent ([***]%) of any T[***] under the [***] if [***] with respect to the [***] after start of [***] with respect to a [***] from the [***] but prior to [***] with respect to a [***];
|
|
(d)
|
[***]
percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] but prior to start of [***] with respect to a [***];
|
|
(e)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] occurred after [***] with respect to a [***] of the [***]; and
|
|
(f)
|
[***] percent ([***]%) of any [***] if the Trigger Date with respect to the [***] of the respective [***].
|
|
(g)
|
In addition, [***] shall [***] such as [***]
received [***] under the [***] to the extent these [***] under Section [***], and shall pay to [***] as set forth below;
provided that
(i) if the T[***] to is, [***] in [***]the [***] as applicable, and (ii) if the Transferred Part [***] described in [***] for which [***] prior to the [***] and the [***] to does [***] (i.e. it includes the [***]) and had to [***] will be [***] (12[***]) instead of [***], as applicable:
|
14.4.2.5.3
|
Consideration in the Event of Sale of Compugen.
|
|
(a)
|
[***] shall [***] if the Trigger Date occurred prior to [***] for the [***];
|
|
(b)
|
If the Trigger Date occurred after [***] with [***] but prior to start of [***] for [***], [***] will be entitled to the [***] would have [***] to under Sections [***] upon [***];
|
|
(c)
|
If the Trigger Date occurred after [***] with respect to the [***] but prior to start of [***] with respect to [***] will be entitled to [***], in each case [***], upon [***]. For example, the [***] for the [***] of [***] with such a [***] in
a [***] (Section 6.2.1.5) would be $[***] (i.e. $[***]);
|
|
(d)
|
If the Trigger Date occurred after the start of [***] with respect to the [***]duct but prior to [***] with respect to the relevant [***], [***] will be entitled to [***], in each case [***], upon [***];
|
|
(e)
|
If the Trigger Date occurred after the start of a [***] with respect to the [***] but prior to the [***] with respect to [***], [***] will be entitled to [***], in each case [***], upon [***];
|
|
(f)
|
If the Trigger Date occurred after [***] with respect to the [***] Product, [***] will be entitled [***], in each case [***], upon attainment of [***].
|
14.4.2.5.4
|
All payments to Bayer under Section 14.4.2.5. will be made by Compugen within [***] days of receipt of an invoice by Bayer, provided that Compugen has duly informed Bayer about the Third Party License Payment prior to its receipt (or about the Compugen Net Sales in accordance with the reporting obligations specified in Section 7.1.1 (with these clauses amended
mutatis mutandis
to reflect that Compugen would be submitting the report in relation to Terminated Products)), absent such information the payment to Bayer shall be due [***] days of Compugen’s receipt of [***] from a [***] (or the [***]). Sections 7.2 to 7.4 shall apply mutatis mutandis.
|
14.4.3
|
Accruing Obligations.
Termination or expiration of this Agreement shall not relieve the Parties of obligations accruing prior to such termination or expiration, including obligations to pay amounts accruing hereunder up to the date of termination or expiration. After the date of termination (except in the case of termination by Compugen for Bayer’s failure to make payments when due), Bayer, its Affiliates and Sublicensees may sell Products and Companion Diagnostics then in stock; provided that Bayer shall pay the applicable royalties and payments to Compugen in accordance with Section 6 and provide reports and audit rights to Compugen pursuant to Section 7.
|
14.5
|
Survival.
The Parties’ respective rights, obligations and duties under Sections 1, 2.3.7.2 (c) and (d), 7 (with respect to sales made by Bayer prior to the expiration or termination of the agreement), 8.1, 8.3.3.3.2,. 10 (excluding 10.3), 11, 12, 13, 14.1, 14.4, 15 and 16 , as well as any rights, obligations and duties which by their nature extend beyond the expiration or termination of this Agreement, shall survive any expiration or termination of this Agreement. In addition, Section 2.3.7.3.4 (c) will survive expiration in accordance with Section 14.1, but not early termination of this Agreement.
|
15.1
|
Arbitration
. Any dispute, claim or controversy arising out of or relating to this Agreement, including the breach, termination or validity of this Agreement, that is not settled by mutual consent, shall be finally settled by binding arbitration, conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce (“
ICC Rules
”), by three arbitrators appointed in accordance with the following procedure: Each Party shall select one arbitrator and the two Party-selected arbitrators shall select a third arbitrator to constitute a panel of three arbitrators to conduct the arbitration in accordance with the ICC Rules.
The place of arbitration shall be New York, US, the language to be used in the arbitral proceedings shall be English, and the proceedings shall be confidential. The International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration shall govern the taking of evidence in any such proceeding. Unless the arbitrator determines that equity requires otherwise, the arbitrator shall award to the prevailing Party (as determined by the arbitrator) the costs of the arbitration, as well as the reasonable, out-of-pocket fees and expenses of the prevailing Party’s attorneys. A disputed performance or suspended performance pending the resolution of the arbitration must be completed within a reasonable time period following the final decision of the arbitrator. The decision of the arbitrator shall be the sole, exclusive and binding remedy between the Parties regarding any and all disputes, controversies, claims and counterclaims presented to the arbitrator. Any award may be entered in a court of competent jurisdiction for a judicial recognition of the decision and an order of enforcement.
|
15.2
|
Injunctive Relief.
Each of the Parties agrees that in the event of any breach of Section 10 (Confidential Information), the non-breaching Party may suffer severe and irreparable damage, for which no adequate remedy at law may exist, and for which damages would be difficult to determine. Each of the Parties agrees that, in such case, the injured Party shall be entitled to obtain from any court of competent jurisdiction preliminary injunctive relief.
|
16.1
|
Force Majeure.
None of the Parties will be responsible for delays resulting from causes beyond its reasonable control, including, without limitation, fire, explosion, flood, war, strike or riot; provided that the non-performing Party uses Commercially Reasonable Efforts to avoid or remove such causes of non-performance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed. The Party affected by the force majeure event shall upon its occurrence promptly give written notice to the other Party specifying the nature of the event and its anticipated duration.
|
16.2
|
Independent Parties.
The relationship of the Parties hereto to each other shall be solely that of independent parties and nothing contained in this Agreement shall be construed to make any of the Parties an agent, partner, co-venturer, representative or principal of another for any purpose, and none of the Parties hereto shall have any right whatsoever to incur any liability or obligation on behalf of or binding upon another Party.
|
16.3
|
Notices.
Any notices to be given hereunder shall be in writing and shall be sent by: (a) certified mail, return receipt requested; (b) delivery via an internationally recognized courier service; or (c) facsimile (with transmission confirmed) addressed the other, in any event to the other Party at the address shown hereunder or at such other address for which such Party gives notice hereunder :
|
If to Bayer:
|
Bayer Pharma AG
Müllerstraße 178
13353 Berlin
Attention: [***]
Head, Global Drug Discovery - TRG Oncology/GT
Fax +49 30 468 18069
With a copy to Legal Department
Fax : +49 30 468 14086.
|
If to Compugen:
|
Compugen Ltd. |
|
Pinchas Rosen Street #72
|
|
Tel Aviv 69512, Israel
|
|
Fax. +972 (3) 765-8111
Attention: VP Business Development
With a copy to: General Counsel
Fax: +972 (3) 765-8111
|
16.4
|
Governing Law.
This Agreement will be governed by, and construed in accordance with, the substantive laws of New York, US, without giving effect to any choice or conflict of law provision, 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.
|
16.5
|
Severability.
If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the Parties that the remainder of this Agreement shall not be affected. The Parties shall replace the invalid provision with a valid provision that comes closest to effectuating the economic and/or scientific intent of the Parties at the time of the Agreement's execution.
|
16.6
|
No Assignment.
This Agreement or any rights hereunder (including any right to develop, manufacture, market and/or sell Products), may not be assigned by either Party without the consent of the other, which consent shall not be unreasonably withheld, except that (i) each Party may, without such consent, assign this Agreement and the rights, obligations and interests of such Party to any purchaser of all or substantially all of its assets to which the subject matter of this Agreement relates, or to any successor corporation resulting from any merger or consolidation of such Party with or into such corporation; provided, in each case, that the assignee agrees in writing to be bound by the terms of this Agreement; and (ii) Bayer may assign this Agreement to any of its Affiliates without the prior consent of Compugen; provided, that the assignee agrees in writing to be bound by the terms of this Agreement.
|
16.7
|
Entire Agreement.
This Agreement is the sole agreement with respect to the subject matter hereof and supersedes all other agreements and understandings among the Parties with respect to the same.
|
16.8
|
Modification.
No modification or waiver of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and executed by duly-authorized representatives of the Parties. A failure by a Party to assert its rights under, including upon any breach or default of, this Agreement shall not be deemed a waiver of such rights. No such failure or waiver in writing by a Party with respect to any rights shall extend to or affect any subsequent breach or impair any right consequent thereon.
|
16.9
|
Interpretation.
Each Party hereto acknowledges and agrees that: (a) it and/or its counsel reviewed and negotiated the terms and provisions of this Agreement and has contributed to its revision; (b) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (c) the terms and provisions of this Agreement shall be construed fairly as to both Parties hereto and not in favor of or against either Party, regardless of which Party was generally responsible for the preparation of this Agreement.
|
16.10
|
Counterparts
.
This Agreement may be executed in counterparts and each such counterpart shall be deemed an original hereof.
|
16.11
|
Exhibits.
The following Exhibits shall form an integral part of this Agreement:
|
Exhibit 1.3
|
Bayer Development Process
|
Exhibit 1.16
|
CGEN-15001T Workplan
|
Exhibit 1.21
|
CGEN-15022 Workplan
|
Exhibit 1.28
|
Compugen Patent Rights
|
Exhibit 2.3.3
|
Research Program reports to the JSC
|
Exhibit 2.3.7.3.2
|
[***] publications
|
Exhibit 2.3.7.3.3
|
Criteria [***], [***]
|
Exhibit 8.3.3.1
|
Patent country scope
|
Exhibit 8.3.3.2.1
|
Patent rights claiming also targets and antibodies other than Target Biologics and Targets
|
Exhibit 10.5
|
Press release
|
Exhibit 13.4
|
Insurance
|
Bayer Pharma AG
By: ppa____________________
Name:_____________________
Title: ______________________
By: i.V.____________________
Name:_____________________
Title: ______________________
|
Compugen Ltd.
By:__________________________
Name:________________________
Title:_________________________
|
News Release Tweet
|
TERMS OF LEASE
|
DESCRIPTION
|
1. Date:
|
December 12, 2013
|
2. Premises
(
Article 1
).
|
|
2.1 Building:
|
250 East Grand Avenue
South San Francisco, California
Containing approximately 45,554 rentable square feet.
|
2.2 Premises:
|
Approximately 12,560 rentable square feet of space consisting of
Suite 65
in the Building, as further set forth in
Exhibit A
to the Lease.
|
3. Lease Term
(
Article 2
).
|
|
3.1 Length of Term:
|
Approximately four (4) years.
|
3.2
Lease Commencement
Date:
|
The date upon which the Premises is "Ready for Occupancy," as that term is set forth in Section 3(a) of the Tenant Work Letter, attached to the Lease as
Exhibit B
, which Lease Commencement Date is anticipated to be June 1, 2014.
|
3.3 Lease Expiration Date:
|
If the Lease Commencement Date shall be the first day of a calendar month, then the day immediately preceding the fourth (4
th
) anniversary of the Lease Commencement Date; or, if the Lease Commencement Date shall be other than the first day of a calendar month, then the last day of the month in which the fourth (4
th
) anniversary of the Lease Commencement Date occurs.
|
4. Base Rent (
Article 3
):
|
Lease Year
|
Monthly
Installment
of Base Rent
|
Approximate
Monthly Base
Rent
per Rentable
Square Foot
|
1
|
$18,900.00
|
$2.70
|
2
|
$34,916.80
|
$2.78
|
3
|
$35,921.60
|
$2.86
|
4
|
$37,052.00
|
$2.95
|
*Note: During the first twelve (12) months of the Lease Term, Base Rent has been calculated as if the Premises contained only 7,000 rentable square feet of space. Notwithstanding the method of Base Rent calculation, for all other purposes the Premises shall be deemed to contain 12,560 rentable square feet of space.
|
5. Tenant Improvements
(
Exhibit B
):
|
Landlord to provide "turn-key" improvements at Landlord's sole cost and expense as provided in the Tenant Work Letter attached hereto as
Exhibit B
.
|
6. Tenant's Share
(
Article 4
):
|
Approximately 27.57% of the Building.
The initial estimated Direct Expenses payable by Tenant hereunder are $0.62 per square foot per month, which estimated is based on Landlord’s most current information regarding Direct Expenses for calendar year 2014.
|
7. Permitted Use
(
Article 5
):
|
The Premises shall be used only for general office, research and development, engineering, laboratory, storage and/or warehouse uses, including, but not limited to, administrative offices and other lawful uses reasonably related to or incidental to such specified uses, all (i) consistent with first class life sciences projects in South San Francisco, California ("
First Class Life Sciences Projects
"), and (ii) in compliance with, and subject to, applicable laws and the terms of this Lease.
|
8. Security Deposit
(
Article 21
):
|
$74,104.00.
|
9. Parking
(
Article 28
):
|
2.8 unreserved parking spaces for every 1,000 rentable square feet of the Premises, subject to the terms of
Article 28
of the Lease.
|
10. Address of Tenant
(
Section 29.18
):
|
Compugen USA, Inc.
260 East Grand Ave.
South San Francisco, California 94080
Attention: John Hunter
(Prior to Lease Commencement Date)
And
|
Compugen USA, Inc.
250 East Grand Avenue, Suite 65
South San Francisco, California 94080
Attention: John Hunter
(After Lease Commencement Date)
|
|
11. Address of Landlord
(
Section 29.18
):
|
See
Section 29.18
of the Lease.
|
12. Broker
(
Section 29.24
):
|
CBRE, Inc.
|
13. Guarantor (
Section 29.32
):
|
Compugen, Ltd.
|
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
|
LEASE TERM; OPTION TERM
|
ADDITIONAL RENT
|
USE OF PREMISES
|
SERVICES AND UTILITIES
|
REPAIRS
|
ADDITIONS AND ALTERATIONS
|
INSURANCE
|
DAMAGE AND DESTRUCTION
|
ASSIGNMENT AND SUBLETTING
|
SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES
|
DEFAULTS; REMEDIES
|
SIGNS
|
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
|
MISCELLANEOUS PROVISIONS
|
LANDLORD
:
BRITANNIA POINTE GRAND LIMITED PARTNERSHIP
,
a Delaware limited partnership
By:
/s/
Jonathan M. Bergschneider
Jonathan M. Bergschneider
Executive Vice President
|
TENANT
:
COMPUGEN
USA, INC.
,
a Delaware
corporation
By:
/s/ Anat Cohen - Dayag
Anat Cohen - Dayag
Print Name
Its:
Director, President & CEO
By:
/s/ John Hunter
John Hunter
Print Name
Its:
Site Head & VP
|
1.
|
Based on DES floor plan dated 11/21/13 for Office & Lab space
|
|
2.
|
(9) skylights & sheetrock wells
|
|
3.
|
VCT at all Labs 1 & 2, TC Labs 1, 2 & 3, Shipping/Receiving, Chem. Storage, Lab Storage, Cold Room, Equipment Room, Freezer Room, FACS Lab, Protein Production Lab, Lab Hallway, IT/Server Room, Storage Room, Break Room and Janitor’s Closet.
|
|
4.
|
Carpet tiles at Lobby, Open Office Area, Private Offices, Shared Offices, Conference Room, Board Room, Small Storage closet adjacent to Board Room, and Copy Room.
|
|
5.
|
New Men’s and Women’s Restrooms with (1) shower each, wet walls and ceramic tile floors.
|
|
6.
|
11 foot ceilings with standard 2×4 ceiling tiles and 2×4 lighting throughout.
|
|
7.
|
Rough-in for data; cabling by tenant.
|
|
8.
|
Window coverings for exterior windows.
|
|
9.
|
All HVAC units to be replaced.
|
10.
|
Lobby/Reception; furniture by tenant.
|
|
11.
|
Open Office with space for (20) 6’×8’ cubicles (cubicles by tenant). Junction boxes provided at ceiling (cubicle connection by tenant). Rough-in for data (cabling by tenant).
|
|
12.
|
Area for (6) workstations (furniture by tenant). Power and data provided for connection to furniture system.
|
|
13.
|
(6) Private Offices each with glass wall, standard power and rough-in for data.
|
|
14.
|
(4) Shared Offices each with glass wall, standard and rough-in for data.
|
|
15.
|
CEO Office with glass wall.
|
|
16.
|
Conference Room with two doors and one glass wall, standard power and rough-in for data. Manual mecho shade.
|
|
17.
|
Board Room with glass wall and Storage Closet, standard power and rough-in for data. Manual mecho shade.
|
|
18.
|
Break Room: Upper and lower cabinetry with one sink, disposal and water line for coffee maker and water line for refrigerator. Countertop adjacent to window facing hallway. Dishwasher included; Refrigerator, coffee maker and furniture by Tenant, Doorway to open office hallway, and (1) door to lab hallway.
|
|
19.
|
Copy area with upper and lower cabinetry. Standard power and rough-in for data.
|
|
20.
|
IT/Server Room with ductless split system and VCT flooring
|
|
21.
|
Office Storage Room with VCT flooring.
|
|
22.
|
New exterior glass door to match existing adjacent to Conference Room and Shared Office.
|
23.
|
Lab #1: With mobile benches, (3) sinks, (2) doors, and clerestory windows at hallway. Power outlets for Freezers and Refrigerator (equipment and flammable cabinet by tenant). (3) VAC outlets.
|
|
24.
|
Lab #2: With mobile benches, (2) sinks, (1) fume hood, (2) doors, and clerestory windows at hallway. Power outlets for Freezers and Incubators (equipment and flammable cabinet by tenant). (4) VAC outlets.
|
|
25.
|
TC Lab #1: Mobile benches, (1) sink, 4 biosafety cabinets (by tenant), (2) doors, and clerestory windows at hallway. Power outlets for Freezers, Refrigerators and Incubators (equipment by tenant).
|
|
26.
|
TC Lab #2: Mobile benches, (1) sink, (2) biosafety cabinets (by tenant), (1) door, and clerestory windows at hallway. Power outlets for Freezers and Incubators (equipment by tenant). (4) VAC outlets.
|
|
27.
|
TC Lab #3: Mobile benches, (1) sink, (1) door, (1) biosafety cabinet (by tenant). Clerestory window at hallway. Power outlets for Freezers and Incubators (equipment by tenant). (2) VAC outlets.
|
|
28.
|
Protein Production lab with (1) sink, and mobile benches. Clerestory window at hallway. (1) VAC outlet.
|
|
29.
|
Installation of (7) tenant furnished biosafety cabinets in TC Labs 1, 2 and 3. Power supply for biosafety cabinets. No ventilation required to exterior.
|
30.
|
FACS Lab with (1) sink and mobile benches.
|
31.
|
Chemical Storage Room with (1) 6’ fume hood and storage for flammable cabinets (cabinets by tenant).
|
32.
|
Lab Storage Room
|
33.
|
Shipping and Receiving with CO2 tank rack and changeover manifold (tanks by tenant). Process piping for CO2 only to incubators at TC #1, TC #2 and TC #3. Door to exterior loading area.
|
34.
|
Equipment Room for VAC and CDA. VAC outlets at labs including: (4) at TC #2, (2) at TC #3, (3) at Lab #1, (4) Lab #2 and (1) at Protein Production Lab.
|
35.
|
Freezer Room for Freezers, LN2 and Ice machine. Water and power provided for ice machine. Ice machine, freezers, and LN2 tank by tenant.
|
36.
|
Cold Room with direct access to S/R.
|
37.
|
Distilled water tap at (1) sink per lab.
|
38.
|
Glass lites at all lab doors.
|
39.
|
(3) Eyewash /Safety Shower combinations.
|
40.
|
Positive pressure at TC Labs.
|
41.
|
Recirculated air at all lab areas.
|
42.
|
Emergency power including: Equipment Room, all refrigerators and freezers in Labs and (4) emergency outlets at each lab.
|
43.
|
Epoxy sinks with domestic cold water & domestic hot water as depicted on floor plan.
|
44.
|
Electrical Room
|
EXCLUDES:
|
|
1.
|
IT Cabling
|
2.
|
Furniture
|
3.
|
Ceiling service panels, specialty gas piping/outlets/gas manifolds, free-standing lab equipment (freezers, etc.) depicted on floor plan, unless otherwise noted above
|
4.
|
Signage, other than code required
|
5.
|
Security system
|
To:
|
_______________________
|
|
_______________________
|
|
_______________________
|
|
_______________________
|
|
Re:
|
Lease dated ____________, 20__ between ____________________, a _____________________ ("
Landlord
"), and _______________________, a _______________________ ("
Tenant
") concerning Suite ______ on floor(s) __________ of the building located at ___________________________, California.
|
|
1.
|
The Lease Term shall commence on or has commenced on _____________ for a term of _______________ ending on _______________.
|
|
2.
|
Rent commenced to accrue on ____________, in the amount of ____________.
|
|
3.
|
If the Lease Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Lease.
|
|
4.
|
Your rent checks should be made payable to __________ at ______________.
|
|
5.
|
The exact number of rentable/usable square feet within the Premises is _________ square feet.
|
|
6.
|
Tenant's Share as adjusted based upon the exact number of usable square feet within the Premises is ____________%.
|
"Landlord":
________________________________,
a_______________________________
By:_______________________________
Its:___________________________
|
Agreed to and Accepted as
of____________ 20_
.
"Tenant":
_______________________________
a ______________________________
By: ____________________________
Its:___________________________
|
"Tenant":
_____________________________,
a____________________________
By: __________________________
Its:__________________________
By: ____________________________
Its: __________________________
|
Property Name:
|
Property Address: |
2.1
|
Are any of the following materials handled on the Property?
|
Yes
o
No
o
|
|
(A material is handled if it is used, generated, processed, produced, packaged, treated, stored, emitted, discharged, or disposed.) If so, complete this section. If this question is not applicable, skip this section and go on to Section 5.0.
|
o |
Explosives
|
o |
Fuels
|
o |
Oils
|
|
o |
Solvents
|
o |
Oxidizers
|
o |
Organics/Inorganics
|
|
o |
Acids
|
o |
Bases
|
o |
Pesticides
|
|
o |
Gases
|
o |
PCBs
|
o |
Radioactive Materials
|
|
o |
Other (please specify)
|
2-2.
|
If any of the groups of materials checked in Section 2.1, please list the specific material(s), use(s), and quantity of each chemical used or stored on the site in the Table below. If convenient, you may substitute a chemical inventory and list the uses of each of the chemicals in each category separately.
|
Material
|
Physical State (Solid, Liquid, or Gas)
|
Usage
|
Container Size
|
Number of Containers
|
Total Quantity
|
2-3.
|
Describe the planned storage area location(s) for these materials. Please include site maps and drawings as appropriate.
|
3.1
|
Are any of the following wastes generated, handled, or disposed of (where applicable) on the Property?
|
o
Hazardous wastes
|
o
Industrial Wastewater
|
o
Waste oils
|
o
PCBs
|
o
Air emissions
|
o
Sludges
|
o
Regulated Wastes
|
o
Other (please specify)
|
3-2.
|
List and quantify the materials identified in Question 3-1 of this section.
|
WASTE GENERATED
|
RCRA listed Waste?
|
SOURCE
|
APPROXIMATE MONTHLY QUANTITY
|
WASTE CHARACTERIZATION
|
DISPOSITION
|
3-3.
|
Please include name, location, and permit number (e.g. EPA ID No.) for transporter and disposal facility, if applicable). Attach separate pages as necessary.
|
Transporter/Disposal Facility Name
|
Facility Location
|
Transporter (T) or Disposal (D) Facility
|
Permit Number
|
3-4.
|
Are pollution controls or monitoring employed in the process to prevent or minimize the release of wastes into the environment?
|
Yes
o
No
o
|
3-5.
|
If so, please describe.
|
4.0
|
USTS/ASTS
|
4.1
|
Are underground storage tanks (USTs), aboveground storage tanks (ASTs), or associated pipelines used for the storage of petroleum products, chemicals, or liquid wastes present on site (lease renewals) or required for planned operations (new tenants)?
|
Yes
o
No
o
|
Capacity
|
Contents
|
Year Installed
|
Type (Steel, Fiberglass, etc)
|
Associated Leak Detection / Spill Prevention Measures
*
|
*
Note:
|
The following are examples of leak detection / spill prevention measures:
|
Integrity testing
|
Inventory reconciliation
|
Leak detection system
|
Overfill spill protection
|
Secondary containment
|
Cathodic protection
|
4-2.
|
Please provide copies of written tank integrity test results and/or monitoring documentation, if available.
|
4-3.
|
Is the UST/AST registered and permitted with the appropriate regulatory agencies?
|
Yes
o
No
o
|
|
If so, please attach a copy of the required permits.
|
4-4.
|
If this Questionnaire is being completed for a lease renewal, and if any of the USTs/ASTs have leaked, please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial responses to the incident.
|
4-5.
|
If this Questionnaire is being completed for a lease renewal, have USTs/ASTs been removed from the Property?
If yes, please provide any official closure letters or reports and supporting documentation (e.g., analytical test results, remediation report results, etc.).
|
Yes
o
No
o
|
4-6.
|
For Lease renewals, are there any above or below ground pipelines on site used to transfer chemicals or wastes?
|
Yes
o
No
o
|
For new tenants, are installations of this type required for the planned operations?
|
Yes
o
No
o
|
6-1.
|
Does the operation have or require a National Pollutant Discharge Elimination System (NPDES) or equivalent permit?
|
Yes
o
No
o
|
|
If so, please attach a copy of this permit.
|
6-2.
|
Has a Hazardous Materials Business Plan been developed for the site?
|
Yes
o
No
o
|
|
If so, please attach a copy.
|
Signature: | ||
Name: | ||
Title: | ||
Date: | ||
Telephone: |
To Guarantor:
|
[
NOTE TO GUARANTOR – PLEASE PROVIDE
____________________________
____________________________
]
|
|
To Landlord:
|
Brittania Pointe Grand Limited Partnership
|
|
c/o HCP, Inc.
|
|
3760 Kilroy Airport Way, Suite 300
|
|
Long Beach, CA 90806
|
|
Attention: Legal Department
|
4
|
||
7
|
||
9
|
||
9
|
||
15
|
||
20
|
||
21
|
||
22
|
||
24
|
||
24
|
||
26
|
||
27
|
||
27
|
||
28
|
||
31
|
||
32
|
||
32
|
||
32
|
||
33
|
||
34
|
||
35
|
||
35
|
||
35
|
||
36
|
||
36
|
||
37
|
||
37
|
||
37
|
||
38
|
Page(s)
|
|
Abatement Event
|
21
|
Advocate Arbitrators
|
8
|
Affiliate Assignee
|
30
|
Alterations
|
22
|
Applicable Laws
|
36
|
Base Rent
|
9
|
Brokers
|
41
|
Building
|
4
|
Common Areas
|
5
|
Comparable Buildings
|
8
|
Contemplated Effective Date
|
29
|
Contemplated Transfer Space
|
29
|
Direct Expenses
|
10
|
Effective Termination Date
|
5
|
Eligibility Period
|
21
|
Emergency Generator
|
20
|
Estimate
|
14
|
Estimate Statement
|
14
|
Estimated Direct Expenses
|
14
|
Excluded Expenses
|
9
|
Existing Hazardous Materials
|
17
|
Expense Year
|
10
|
First Offer Commencement Date
|
6
|
First Offer Notice
|
6
|
First Offer Rent
|
6
|
First Offer Space
|
6
|
Force Majeure
|
39
|
Force Majeure Delay
|
5
|
Intention to Transfer Notice
|
29
|
Landlord
|
1
|
Landlord Parties
|
24
|
Lease
|
1
|
Lease Commencement Date
|
7
|
Lease Expiration Date
|
7
|
Lease Term
|
7
|
Lease Year
|
7
|
Lines
|
35
|
Mail
|
40
|
Neutral Arbitrator
|
8
|
Nine Month Period
|
29
|
Notices
|
40
|
Objectionable Name
|
36
|
Operating Expenses
|
10
|
Option Rent
|
7
|
Original Tenant
|
5
|
Outside Agreement Date
|
8
|
Outside Date Termination Notice
|
5
|
Permitted Transfer
|
30
|
Permitted Transferee
|
30
|
Premises
|
4
|
Subsidiary
|
Jurisdiction
|
Compugen USA, Inc.
|
Delaware
|
/s/ Kost Forer Gabbay & Kasierer
|
|
February 18, 2014
|
KOST FORER GABBAY & KASIERER
|
Tel-Aviv, Israel
|
A Member of Ernst & Young Global
|