Preview of our top selling Product Development Agreement
Smithkline Beecham / Targacept - Product Development And Commercialization Agreement
Exhibit 10.1
[********] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
PRODUCT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
BETWEEN
SMITHKLINE BEECHAM CORPORATION, D/B/A
GLAXOSMITHKLINE AND
GLAXO GROUP LIMITED
AND TARGACEPT, INC.
PRODUCT DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT
This PRODUCT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the " Agreement" ) is entered into and made effective as of the 27th day of July 2007 (the " Effective Date" ) by and between Targacept, Inc., a Delaware corporation having its principal place of business at 200 East First Street, Winston-Salem, North Carolina 27101 (" Targacept" ), on the one hand, and SmithKline Beecham Corporation, doing business as GlaxoSmithKline, a Pennsylvania corporation having a principal place of business at One Franklin Plaza, Philadelphia, PA 19101 (" SB" ), and Glaxo Group Limited, a company existing under the laws of England and Wales, having its registered office at Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex, UB6 0NN, England (" GGL" ), on the other hand. SB and GGL are referred to herein collectively as " GSK ." Targacept and GSK are each referred to herein by name or as a " Party" or, collectively, as " Parties ."
RECITALS WHEREAS, Targacept possesses proprietary technology and know-how related to the research, discovery, identification, synthesis and development of small molecule drug candidates targeting NNRs;
WHEREAS, GSK possesses expertise in the pharmaceutical research, development, manufacturing and commercialization of human pharmaceuticals, and GSK is interested in developing such small molecule drug candidates as drug products; WHEREAS, GSK desires to engage in a collaborative effort with Targacept pursuant to which Targacept shall, subject to the terms and conditions set forth herein, carry out six (6) research and development Programs with respect to specified combinations of NNR Subtypes;
WHEREAS, GSK shall have exclusive options, exercisable at GSK' s sole discretion, to further develop and commercialize on an exclusive basis for any and all uses in the Field and in the Territory certain Licensed Products resulting from each of such Programs, all subject to the terms and conditions set forth herein;
WHEREAS, upon exercise of each of its options to such compounds by GSK, Targacept desires to grant and will grant to GSK, and GSK desires to obtain and will obtain, an exclusive license in the Territory and in the Field, subject to the terms and conditions set forth herein; and
EXECUTION VERSION
WHEREAS, contemporaneously with the execution of this Agreement, the Parties have executed a Stock Purchase Agreement pursuant to which GSK shall purchase shares of the common stock of Targacept (the " Stock Purchase Agreement" ).
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth in this Article 1. All references to " Dollars" mean U.S. Dollars. The use of the singular form of a defined term also includes the plural form and vice versa, except where expressly noted: 1.1 " Acceptance" means the earliest date the FDA (or foreign Regulatory Authority) notifies GSK that it has accepted for filing the relevant regulatory submission ( e.g., NDA) with respect to a Licensed Product.
1.2 " Additional Indication" shall mean, with respect to the Indication of any Program, any other indication or condition.
1.3 " Affiliate" shall mean any Person, whether de jure or de facto , which directly or indirectly through one (1) or more intermediaries controls, is controlled by or is under common control with a Party. A Person shall be deemed to " control" another Person if it: (a) owns, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock (or such lesser percentage which is the maximum allowed to be owned by a Person in a particular jurisdiction) of such other Person, or has equivalent ownership interest with respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities or otherwise, to direct the management and policies of the Person. For purposes of this Agreement, a " Person" shall mean any corporation, firm, partnership or other entity recognized as having a separate existence under the law.
1.4 " Backup Compound" shall mean, with respect to the Leading Compound (which may be, if applicable, the Development Candidate) in a given Program, any other Collaboration Compound in such Program, which (i) is not an ester, salt, crystalline polymorph, hydrate or solvate of such Leading Compound or of any other Backup Compound or Follow-On Compound with respect EXECUTION VERSION -2-
to such Leading Compound, (ii) possesses substantially the same Mechanism of Action at the Protein Target Profile as such Leading Compound and (iii) [********] such Leading Compound. Backup Compounds shall be nominated by Targacept as and determined to be by or pursuant to a process agreed by the JSC and updated as necessary from time to time, but consistent with the foregoing definition. For clarity, any Lead, Development Candidate or Product Candidate may become a Backup Compound (if otherwise qualifying) as a result of a substitution hereunder. 1.5 " Breaching Party" shall have the meaning assigned to such term in Section 12.2.1. 1.6 " Calendar Quarter" shall mean a period of three (3) consecutive months ending on the last day of March, June, September or December.
1.7 " Candidate Selection Stage" means, with respect to any compound, the stage of pharmaceutical product development whereby the activities included in the Development Candidate Activities are first completed and (i) the Development Candidate Criteria are achieved or (ii) the JSC determines such compound to be a Development Candidate or, if such compound had previously been determined to be a Follow-On Compound, confirms that such compound remains a Follow-On Compound.
1.8 " cGMP" shall mean the principles (i) detailed in the U.S. Current Good Manufacturing Practices, 21 CFR Parts 210 and 211, and The Rules Governing Medicinal Products in the European Union, Volume IV Good Manufacturing Practice for Medicinal Products, as each may be amended from time to time, or (ii) promulgated by any governmental or regulatory body having jurisdiction over the manufacture of a Collaboration Compound in the form of laws or regulations.
1.9 " Clinical Studies" means human studies designed to evaluate the safety, efficacy, tolerability or appropriate dosage of a Progressed Compound, Product Candidate or Licensed Product, as the context requires, including, without limitation, Phase 1 Clinical Trials, Phase 2 Clinical Trials (including the PoC Trial) or Phase 3 Clinical Trials. Clinical Studies shall include, without limitation: (a) any clinical studies that Targacept determines is necessary or useful to conduct in the Territory in the Early Development Programs; or (b) any clinical studies that GSK determines are necessary or useful to conduct in the Territory for Product Candidates or Licensed Products to achieve or maintain Marketing Approvals. EXECUTION VERSION -3-
1.10 " Collaboration Compound" shall mean TC-2696, TC-6499 or any compound owned or Controlled by Targacept that has been or is identified or created by or on behalf of Targacept as of the Effective Date or during the Research Term or Early Development Term and meets the Protein Target Profile for a Program; provided that, notwithstanding the foregoing, in no event shall any " Collaboration Candidate," " Licensed Derivative," " Additional Compound" or " Excluded Zone Compound," in each case as defined in the Existing TRGT Collaboration Agreement, be a Collaboration Compound (including, for clarity, a Hit, Lead, Development Candidate, Option Compound, Backup Compound, Follow-On Compound, Related Compound or Product Candidate). 1.11 " Collaboration Know-How" means any Information or Invention that relates specifically (but not necessarily exclusively) to a Collaboration Compound that is discovered, developed, conceived or created solely by or on behalf of a Party or by the Parties jointly, or by their respective Affiliates, in each case pursuant to work conducted during the Collaboration Term under any Research Program or Early Development Program or under the Product Candidate Commercialization Program.
1.12 " Collaboration Patent" means any Patent owned or Controlled by either or both of Targacept and GSK that claims Collaboration Know-How.
1.13 " Collaboration Technology" means, collectively, Collaboration Know-How and Collaboration Patents.
1.14 " Collaboration Term" means the period from the Effective Date until the end of (i) the Early Development Term or (ii) if there are no Early Development Programs, the last Research Term.
1.15 " Combination Product" shall mean a Product that includes at least one other active pharmaceutical ingredient (whether co-formulated or co-packaged with the Collaboration Compound in such Product) which is not a Collaboration Compound. To be a Combination Product, the Product must be invoiced as one product. Notwithstanding the foregoing, drug delivery vehicles, adjuvants, and excipients shall not be deemed to be " active pharmaceutical ingredients," and their presence shall not be deemed to create a Combination Product. 1.16 " Competitive Infringement" shall have the meaning assigned to such term in Section 8.5.1. EXECUTION VERSION -4-
1.17 " Compound Exclusivity Period" shall have meaning assigned to such term in Section 7.1(d).
1.18 " Compound Patents" shall have meaning assigned to such term in Section 8.2.4(a).
1.19 " Confidential Information" shall have the meaning assigned to such term in Section 9.1. 1.20 " Contract Year" shall mean a period of 365 consecutive days (or 366 consecutive days in a leap year) beginning on the Effective Date or an annual anniversary thereof.
1.21 " Control," " Controls," " Controlled" or " Controlling" shall mean possession of the legal right and ability to grant the respective licenses or sublicenses as provided herein without violating the terms of any agreement or other arrangement with any Third Party. A Party shall be deemed to Control Collaboration Technology to the extent of its individual or joint interest therein, as applicable.
1.22 " Co-promote" or " Co-promotion" shall mean, with respect to Targacept, to engage in the agreed upon promotional activities for a Co-promotion Product in the United States, as further described in Section 5.4.
1.23 " Co-promotion Agreement" has the meaning assigned to such term in Section 5.4.1(a).
1.24 " Co-promotion Product" shall mean only TC-2696, TC-6499 and, with the [********], any Licensed Product resulting from [********]. In determining whether [********] for any Licensed Product resulting from [********] to be a Co-promotion Product would be [********] (i) the [********] and other [********] takes into account in determining [********] and (ii) the extent to which [********] with regard to the [********], if applicable, or otherwise has a [********] that would be expected to be [********] at least [********] shall be taken into account. 1.25 " Co-promotion Right" shall have the meaning assigned to such term in Section 5.4.1(a). EXECUTION VERSION -5-
1.26 " Derivative" shall mean a compound that is derived in one or more steps from a Collaboration Compound and that has, or is intended at the time of its synthesis to have, pharmacological (i.e., pharmacodynamic and not pharmacokinetic) properties substantially similar to, or superior to, the properties of the compound from which it was derived.
1.27 " Develop" or " Development" shall mean activities relating to obtaining Regulatory Approval of Licensed Products or developing manufacturing capabilities for Licensed Products. Development includes, but is not limited to, Preclinical Activities, pharmacology studies, biomarker studies, toxicology studies, formulation, manufacturing process development and scale-up (including, without limitation, bulk compound production), quality assurance and quality control, technical support, pharmacokinetic studies, Clinical Studies and regulatory affairs activities.
1.28 " Development Candidate" shall mean TC-2696, TC-6499 and any other Collaboration Compound (i) that is nominated by Targacept after completion of the Development Candidate Activities and (ii) for which the JSC determines that all or substantially all of the material Development Candidate Criteria have been achieved. For clarity, a Backup Compound or Follow-On Compound may become a Development Candidate, in which case it shall either be a second Development Candidate for the applicable Program or, if substituted for a previously determined Development Candidate, shall no longer be a Backup Compound or Follow-On Compound.
1.29 " Development Candidate Activities" shall mean the non-clinical studies and assessments identified by the Parties as of the Effective Date as Development Candidate Activities, as updated by the JSC from time to time.
1.30 " Development Candidate Criteria" shall mean, for each Program, the criteria established and updated from time to time by the JSC to be met upon completion of the Development Candidate Activities to support the determination of a Development Candidate by the JSC.
1.31 " Development Candidate Pursuit Conditions" shall have the meaning assigned to such term in Section 3.1.1(b).
1.32 " Diligent Efforts" shall mean, as follows:
1.32.1 For Targacept : Targacept shall apply commercially reasonable efforts in the conduct of all research and EXECUTION VERSION -6-
Development activities and obligations for which Targacept is responsible for each (i) Research Program in accordance with the activities and obligations that are set forth in the applicable Research Plan, and (ii) Early Development Program in accordance with the activities and obligations that are set forth in the applicable Early Development Plan. With respect to any particular Collaboration Compound subject to a Research Program or Early Development Program, such efforts shall at all times be consistent with the manner and degree in which Targacept would apply efforts for a compound which is a potential development candidate, a development candidate or a clinical stage compound (as applicable) in its own pipeline, at a similar stage of development and with similar technical, safety, medical, regulatory and scientific profiles, characteristics and challenges, a similar level of development and commercialization complexity and difficulty, and a similar potential commercial or strategic value (taking into account, without limitation, stage of development, product life, profit and market potential and patent position and, following [********] for the applicable Program [********], such value relative to other indications) as compared to such Collaboration Compound.
1.32.2 For GSK: Upon the exercise of each of its Program Options, GSK shall apply commercially reasonable efforts in the conduct of all activities and obligations for which GSK is responsible with respect to the further development of the Product Candidate(s) that are the subject of such Program Option into Licensed Product(s) and commercialization thereof. With respect to any particular Product Candidate or Licensed Product, such efforts shall at all times be consistent with the manner and degree in which GSK would apply efforts for a compound in its own pipeline, at a similar stage of development (in the case of a Product Candidate) and with similar technical, safety, medical, regulatory and scientific profiles, characteristics and challenges, a similar level of development and commercialization complexity and difficulty, and a similar potential commercial or strategic value (taking into account, without limitation, stage of development, product life, profit and market potential and patent position) as compared to such Product Candidates or Licensed Products. Notwithstanding the foregoing, with respect to the application of Diligent Efforts to any decision to launch or to the commercialization of any particular Licensed Product in any particular Major Country, neither [********] such Licensed Product [********] in such Major Country nor [********] shall be taken into account. 1.32.3 A Party that is required to use Diligent Efforts with respect to an obligation must (unless, in each case, to do so would constitute a higher degree of effort than would be consistent with Diligent Efforts as provided above): (a) promptly assign EXECUTION VERSION -7-
responsibility for such obligation to specific employee(s) who are held accountable for progress and monitor such progress on an ongoing basis, (b) establish and consistently seek to achieve specific, meaningful and measurable objectives for carrying out such obligation, and (c) consistently make and implement decisions and allocate sufficient human and financial resources designed to advance progress with respect to such objective.
1.33 " Disclosing Party" shall have the meaning assigned to such term in Section 9.1.
1.34 " DSM IV" means the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, published by the American Psychiatric Association, as amended and as supplemented or superseded by subsequent editions published from time to time. 1.35 " Early Development Program" shall have the meaning assigned to such term in Section 3.2. For clarity, if any Program has more than one Early Development Plan, all such Early Development Plans together shall constitute such Program' s Early Development Program.
1.36 " Early Development Plan" shall have the meaning assigned to such term in Section 3.7.
1.37 " Early Development Program Term" shall have the meaning assigned to such term in Section 3.2.3.
1.38 " Early Development Term" shall have the meaning assigned to such term in Section 3.2.4.
1.39 " EMEA" shall mean the European Medicines Agency and any successor entity thereto.
1.40 " European Union" or " EU" shall include Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom, and any such other country or territory that may officially become part of the European Union after the Effective Date. 1.41 " Exclusivity Compound" shall have the meaning assigned to such term in Section 7.1(d). EXECUTION VERSION -8-
1.42 " Executive Officers" shall have the meaning assigned to such term in Section 2.3.4.
1.43 " Existing TRGT Collaboration Agreement" shall mean the Collaborative Research and License Agreement by and between Targacept and AstraZeneca AB dated December 27, 2005, as amended and as may be further amended. For clarity, Targacept' s right [********] Existing TRGT Collaboration is subject to [********] hereof.
1.44 " Experts" shall have the meaning assigned to such term in Section 14.1.2(a). 1.45 " FDA" shall mean the U.S. Food and Drug Administration and any successor entity thereto. 1.46 " Field" shall mean any use or purpose, including without limitation the treatment, palliation, and/or prevention of any human or animal disease, disorder or condition; provided, however, that Field hereunder shall specifically exclude those diseases, disorders and conditions included from time to time in the terms " Field" and " Schizophrenia" as defined in the Existing TRGT Collaboration Agreement.
1.47 " First Commercial Sale" shall mean, with respect to each Product and each country, the first sale for which payment has been received for use or consumption by the general public of such Product in any country in the Territory after all Regulatory Approvals have been granted by the applicable Regulatory Authority, or such sale is otherwise lawful, in such country, excluding registration samples and compassionate use.
1.48 " Follow-On Compound" shall mean, with respect to the Leading Compound (which may include, if applicable, the Development Candidate) in a given Program, another Collaboration Compound in such Program which (i) is not an ester, salt, crystalline polymorph, hydrate or solvate of such Leading Compound, any Backup Compound with respect to such Leading Compound or, in the case of the Pain 2 Program, any other Follow-On Compound, (ii) has a Mechanism of Action at the applicable Protein Target Profile that is not substantially the same as the Mechanism of Action at such Protein Target Profile of such Leading Compound (or of any other Follow-On Compound in such Program in the case of the Pain 2 Program) and (iii) is or is reasonably be expected to be [********] such Leading Compound, [********] any Backup Compound with respect to such Leading Compound and, in the case of the Pain 2 Program, [********] any other Follow-On Compound; provided that a Collaboration Compound EXECUTION VERSION -9-
nominated by Targacept as and determined by the JSC to be a Follow-On Compound with respect to a Leading Compound prior to [********] (A) shall not continue thereafter to be a Follow-On Compound unless, [********], it is determined by the JSC to be or to be expected to be [********] such Leading Compound, [********] any Backup Compound with respect to such Leading Compound and, in the case of the Pain 2 Program, [********] any other Follow-On Compound and (B) that does not continue to be a Follow-On Compound [********] as provided in clause (A) above shall no longer be a Progressed Compound. For clarity, any Lead, Development Candidate or Product Candidate may become a Follow-On Compound (if otherwise qualifying) as a result of a substitution hereunder.
1.49 " Framework" means the structural framework of a compound determined in accordance with the guidelines set forth on Schedule 1.49.
1.50 " Generic Incursion" shall have the meaning assigned to such term in Section 6.6.1(f).
1.51 " Generic Product" means, with respect to any Licensed Product and any country, any pharmaceutical product sold by a Third Party, not authorized by GSK or an Affiliate or sublicensee of GSK, that includes the same active pharmaceutical ingredient(s) as such Licensed Product and is approved for marketing or sale by the applicable Regulatory Authority in such country in reliance on the approval of such Licensed Product on the basis of it being bioequivalent to and substitutable for such Licensed Product.
1.52 " GSK Diligence Failure Event" shall have the meaning assigned to such term in Section 12.2.2.
1.53 " GSK Know-How" shall mean any Information or Invention that [********] to a Collaboration Compound that (a) is Controlled by GSK or its Affiliates as of the Effective Date or during the Term (other than Collaboration Know-How) and (b) is necessary or reasonably useful for Targacept: (i) to conduct any Research Program or Early Development Program; (ii) to research, develop, have developed, make, have made, use, import, offer to sell and sell any Refused Candidate, Refused Candidate Product or Returned Licensed Product; or (iii) to conduct promotional activities for any Co-promotion Product with respect to which Targacept exercises its Co-promotion Rights.
1.54 " GSK Patents" shall mean all Patents in the Territory owned or Controlled by GSK or its Affiliates as of the Effective Date or during the Term (other than Collaboration Patents) that contain a claim that [********] to a Collaboration Compound and is EXECUTION VERSION -10-
necessary or reasonably useful for Targacept: (a) to conduct any Research Program or Early Development Program; (b) to research, develop, have developed, make, have made, use, import, offer to sell or sell any Refused Candidate, Refused Candidate Product or Returned Licensed Product; or (c) to conduct promotional activities for any Co-promotion Product with respect to which Targacept exercises its Co-promotion Right.
1.55 " GSK Reverse Royalties" shall have the meaning set forth in Section 6.7.2.
1.56 " GSK Technology" shall mean, collectively, (i) GSK Patents and GSK Know-How and (ii) any Collaboration Technology owned or Controlled by GSK either solely or jointly with Targacept.
1.57 " Hit" means, with respect to a particular Program, a Collaboration Compound that meets criteria set by the JSC from time to time for such Program, but generally to include [********] criteria plus relevant [********] criteria.
1.58 " HSR" shall have the meaning assigned to such term in Section 4.3.1(a). 1.59 " ICD 10" means the International Statistical Classification of Diseases and Related Health Problems, Tenth Edition, published by the World Health Organization, as amended and as supplemented or superseded by subsequent editions published from time to time.
1.60 " IND" shall mean any investigational new drug application filed with the FDA pursuant to Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any amendments thereto. References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. (such as, without limitation, a Clinical Trial Authorization in the European Union).
1.61 " IND Studies" means Preclinical Activities undertaken by Targacept to support the filing of an IND.
1.62 " Indemnitee" shall have the meaning assigned to such term in Section 11.3.
1.63 " Indication" means each of Pain, Parkinson' s Disease, Smoking Cessation, Obesity and Addiction, in each case as more particularly defined below. " Pain" means relief of the signs and symptoms of pain associated with any of the painful medical conditions defined in ICD 10. EXECUTION VERSION -11-
" Parkinson' s Disease" means treatment of the motor symptoms of Parkinson's disease as described as of the Effective Date in [********].
" Smoking Cessation" means aiding treatment of nicotine dependence as described as of the Effective Date in [********].
" Obesity" means management of obesity due to excess calories as described as of the Effective Date in [********], including weight loss and maintenance of weight loss in conjunction with a reduced caloric diet and exercise.
" Addiction" means aiding in the treatment of alcohol dependence as described as of the Effective Date in [********], or the blockade of the reward effects (i.e., craving, as described as of the Effective Date on [********]) of exogenously administered substances as described as of the Effective Date in [********], or the blockade of the reward effects of impulse control disorders as described as of the Effective Date on [********] (i.e., kleptomania, pyromania or pathological gambling).
It is understood and agreed that, where any Indication (e.g., Pain associated with cancer) is specifically associated with another disease, disorder or condition that is recognized by general consensus in the medical community as being distinctly defined, diagnosed or treated (e.g., cancer), the other disease, disorder or condition (e.g., cancer) is not an Indication or otherwise subject to any obligation of exclusivity hereunder.
1.64 " Indication Exclusivity Period" shall have the meaning assigned to such term in Section 7.1(a).
1.65 " Information" means all tangible and intangible information, techniques, trade secrets, technical information, methods, processes, know-how, data, results (including, without limitation, pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions. Notwithstanding the foregoing, in no event shall Information include Pentad Technology. As used herein, " clinical test data" shall be deemed to include all information related to Clinical Studies, including, without limitation, patient report forms, investigators' reports, biostatistical, pharmaco-economic and other related analyses, regulatory filings and communications and the like. EXECUTION VERSION -12-
1.66 " Initial Term" shall have the meaning set forth in Section 3.1.1(a).
1.67 " Initiation" or " Initiate" shall mean the first dosing of the first subject in a Clinical Study.
1.68 " Invention" shall mean any new or useful process, composition of matter or method of use or manufacture, whether patentable or unpatentable; provided that, notwithstanding the foregoing, in no event shall (i) Invention include Pentad Technology and (ii) any Information be an Invention. 1.69 " Joint Collaboration Patent" shall have the meaning assigned to such term in Section 8.2.2. 1.70 " Joint Patent Committee" shall have the meaning assigned to such term in Section 2.3.7(b). 1.71 " Joint Program Subcommittee" or " JPS" shall have the meaning assigned to such term in Section 2.3.7(a).
1.72 " Joint Steering Committee" or " JSC" shall have the meaning assigned to such term in Section 2.3.
1.73 " Lead" means, with respect to a particular Program, a Hit that meets criteria set by the JSC from time to time, but generally to include [********] activity in [********] criteria. For clarity, a Backup Compound or Follow-On Compound may become a Lead, in which case it shall either be a second or, as the case may be, third Lead for the applicable Program or, if substituted in place of a previously determined Lead that had been the Leading Compound under the Program, shall no longer be a Backup Compound or Follow-On Compound. 1.74 " Lead Criteria" means the criteria for a Lead determined by the JSC from time to time, subject to Section 2.3.4(a). For clarity, a Backup Compound or Follow-On Compound, although not a Lead, may satisfy Lead Criteria.
1.75 " Leading Compound" means, at any particular point in time, the furthest advanced Collaboration Compound under a given Program. For clarity, (i) a Leading Compound may in some cases also be a Lead and (ii) it is contemplated that, for any particular Program, the Leading Compound may change from time to time. EXECUTION VERSION -13-
1.76 " Licensed Product" shall mean any product, including any formulation or dosage or delivery form thereof, containing or comprising a Product Candidate, including any metabolite, prodrug, ester, salt, crystalline polymorph, hydrate or solvate of any such Product Candidate. 1.77 " Licensed Product Term" shall have the meaning assigned to such term in Section 12.1. 1.78 " Losses" shall have the meaning assigned to such term in Section 11.1. 1.79 " Major Country" shall mean (i) the United States, Japan, France, Germany, Italy, Spain, and the United Kingdom, and (ii) [********] if and after such time as annual total ethical pharmaceutical sales in such country exceeds [********] Dollars ($[********]) as measured by [********] or an equivalent industry standard. 1.80 " Major Indication" shall mean any non-orphan indication or condition that would reasonably be projected by [********] to have worldwide peak year sales of greater than [********] Dollars ($[********]) and (i) that is included in ICD 10 or DSM IV, or (ii) that is recognized as a distinct diagnosable condition by general consensus in the medical community in the United States or EU or (iii) for which a product has received Regulatory Approval from the FDA or the EMEA; provided, however, that, for purposes of Section 6.4.1 and 6.5, (a) all types of pain within a particular Pain Sub-Indication shall be a single Major Indication such that (b) the Pain Sub-Indications represent [********] Major Indications.
1.81 " Marketing Approval" shall mean, with respect to any particular jurisdiction and any particular Product, any and all Regulatory Approvals and, in Europe, national approval of price and reimbursement for such Product in such jurisdiction. " Marketing Approval" for any Product shall be deemed to occur in any jurisdiction upon first receipt of notice from the applicable Regulatory Authority that marketing or sale of such Product has been approved.
1.82 " Mechanism of Action" or " MoA" means the results on the [********] criteria set forth on Schedule 1.82 (based on the corresponding measurement set forth on Schedule 1.82) at the applicable Protein Target Profile, taking each such criterion into account. A compound has " substantially the same" Mechanism of Action or MoA as another compound if (i) the two compounds have the same Protein Target Profile and the results of the first compound and the second compound on each of such measurements at [********] the NNR Subtypes included in the applicable Protein Target Profile are [********] for such measurement shown on Schedule 1.82 (provided that, where there are alternative measurements (or assays used to make such measurement) that may be EXECUTION VERSION -14-
applicable for a particular criterion (i.e., [********]) determination of whether any compound has substantially the same Mechanism of Action as another compound shall be made using the same measurement(s) (or assay(s)) as was used by Targacept to make such measurement with respect to such first compound) and (ii) neither compound has activity in any material respect [********] at which the other compound does not have activity in any material respect.
1.83 " MHLW" shall mean the Ministry for Health, Labor and Welfare of Japan or the Pharmaceutical and Medical Devices Agency (the " PMDA ," formerly known as IYAKUHIN SOGO KIKO), or any successor to either of them, as the case may be. 1.84 " Milestone Event" means each of the events identified as Milestone Events in the table in Section 6.5. 1.85 " MoA Exclusivity Period" shall have meaning assigned to such term in Section 7.1(c). 1.86 " NDA" shall mean a New Drug Application (as more fully defined in Title 21 of the U.S. Code of Federal Regulations, Section 314.50 et seq. or its successor regulation) filed with the FDA, or the analogous application filed with any analogous Regulatory Authority outside the United States (including, without limitation, the EMEA, MHLW and PMDA), and all amendments and supplements thereto.
1.87 " Net Sales" shall mean, with respect to any Product, the gross invoiced sales price of such Product sold by either (i) GSK, its Affiliates or Sublicensees or (ii) Targacept, its Affiliates or Sublicensees (in each case, the " Selling Party" ), in finished product form, packaged and labeled for sale, to Third Parties, less deductions allowed by the Selling Party and incurred, allowed, paid, accrued or specifically allocated as reported by the Selling Party in its financial statements in accordance with the International Financial Reporting Standards (" IFRS" ) for GSK (or any other Selling Party which accounts in accordance with IFRS) or U.S. Generally Accepted Accounting Principles for Targacept (or any other Selling Party which accounts in accordance with U.S. Generally Accepted Accounting Principles), applied on a consistent basis, for:
(a) customary and reasonable trade, quantity, and cash discounts and wholesaler allowances; provided that, in the case of pharmacy incentive programs, hospital performance incentive program chargebacks, disease management programs, similar programs or discounts and wholesaler allowances on " bundles" of products, all discounts, wholesaler allowances and the like shall be allocated EXECUTION VERSION -15-
among products on the basis on which such discounts, wholesaler allowances or the like were actually granted or, if such basis cannot be determined, in proportion to the respective list prices of such products;
(b) customary and reasonable credits, rebates and chargebacks (including those to managed-care entities and government agencies), and allowances or credits to customers on account of rejection or returns (including, but not limited to, wholesaler and retailer returns) or on account of [********] affecting such Product;
(c) freight, postage and duties, and customary and reasonable [********] relating to such Product, including [********] thereto;
(d) sales (such as [********] or its equivalent) and excise taxes, other consumption taxes, customs duties and compulsory payments to governmental authorities and any other governmental charges imposed upon the importation, use or sale of such Product to Third Parties (excluding any taxes paid on the income from such sales), to the extent the Selling Party is not otherwise entitled to a credit or a refund for such taxes, duties or payments made;
(e) fees paid to [********] (in each case, other than sales personnel, sales representatives and sales agents) employed or engaged by GSK or its Affiliates or sublicensees; and
(f) [********] (i.e., when such [********] is no longer [********]) specifically attributable to such Product.
Sales between GSK and its Affiliates or Sublicensees, or between Targacept and its Affiliates or Sublicensees, shall be excluded from the computation of Net Sales and no payments will be payable on such sales, except where any such Affiliate or Sublicensee is the last entity in the distribution chain for the Product and is purchasing it for its own commercial use. In addition, Product provided to patients for compassionate use will not be included in Net Sales.
The Parties agree that, in the event that either Party proposes that this d...
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