Research, Development And Commercialization Agreement

EXHIBIT 10.38


RESEARCH, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT


BETWEEN


3-DIMENSIONAL PHARMACEUTICALS, INC.


AND


CENTOCOR, INC.


**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


TABLE OF CONTENTS
Page


ARTICLE 1 DEFINITIONS...................................................1


ARTICLE 2 GRANT OF LICENSE RIGHTS......................................11


2.1 License for Direct Thrombin Inhibitors and Licensed Products....11


ARTICLE 3 BACK-UP RESEARCH PROGRAM.....................................12


3.1 Generally.......................................................12


3.2 The Research Plan...............................................12


3.3 The JRC.........................................................13


3.4 Information and Reports.........................................13


3.5 Collaboration Tangible Research Products........................14


3.6 Dedicated FTEs..................................................14


3.7 Support of FTEs.................................................15


3.8 Research Audit..................................................15


3.9 Extension of the Research Term..................................15


3.10 Additional Extension by Mutual Consent..........................16


3.11 Ownership of Tangible Research Products.........................16


3.12 Ownership of Collaboration Tangible Research Products...........16


ARTICLE 4 DEVELOPMENT OF LICENSED PRODUCTS.............................16


4.1 Centocor's Right to Select Direct Thrombin Inhibitors...........16


4.2 3DP's Responsibilities..........................................16


4.3 Development Observer............................................17


4.4 Centocor Development Efforts....................................17


4.5 Development Responsibility and Costs............................18


4.6 Regulatory Responsibilities and Costs...........................18


4.7 3DP Co-Development in the United States for Deep Vein
Thrombosis (DVT) ...............................................18


4.8 Joint Steering Committee........................................19


4.9 Responsibilities for Co-Developed Licensed Product..............22


4.10 3DP Right to Terminate..........................................22


4.11 Centocor Development and Commercialization......................22


ARTICLE 5 COMMERCIALIZATION OF LICENSED PRODUCTS.......................23


5.1 Manufacture of Licensed Product.................................23


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


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5.2 Commercial Responsibilities.....................................23


5.3 Marking.........................................................23


5.4 Centocor's Marketing Obligations For Licensed Products..........23


5.5 Co-Promotion Option of 3DP......................................23


5.6 Trademarks......................................................26


ARTICLE 6 FINANCIAL PROVISIONS.........................................26


6.1 License Fee.....................................................26


6.2 First Licensed Product Development Milestone Payments...........26


6.3 Development Milestone Payments for Replacement Compositions.....27


6.4 Development Milestone Payments for Subsequent Compositions......27


6.5 Approval Milestone Payments For Additional Indications..........28


6.6 Royalty Rate for Licensed Products Developed and Commercialized
by Centocor.....................................................28


6.7 Royalty Rate Reduction..........................................28


6.8 Royalty Adjustment for Cost of Goods............................30


6.9 Currency Restrictions...........................................30


6.10 Royalty Period..................................................30


6.11 Mode of Payment.................................................31


6.12 Timing of Payments..............................................31


6.13 Quarterly Royalty Reports.......................................31


6.14 Royalty Payment Due Date; Accrual...............................32


6.15 Royalty Report Timing...........................................32


6.16 Financial Records...............................................32


6.17 Currency Exchange...............................................32


6.18 Audit...........................................................32


6.19 Interest Due....................................................33


6.20 Tax Withholding.................................................33


ARTICLE 7 CONFIDENTIAL INFORMATION.....................................34


7.1 Confidentiality Obligations.....................................34


7.2 Written Assurances and Permitted Uses of Confidential
Information.....................................................34


7.3 Authorized Disclosure...........................................35


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


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7.4 Publication.....................................................36


7.5 Public Announcements............................................36


ARTICLE 8 PATENTS AND INTELLECTUAL PROPERTY............................36


8.1 Ownership; Inventions...........................................37


8.2 Disclosure of Patentable Inventions.............................37


8.3 3DP Patentable Inventions and Know-How..........................37


8.4 Centocor Patentable Inventions and Know-How.....................38


8.5 Jointly Owned Program Patents...................................38


8.6 Initial Filing if Made Outside of the United States.............39


8.7 Infringement Claims by Third Parties............................39


8.8 Patent Assignment...............................................40


8.9 Infringement Claims Against Third Parties.......................40


8.10 Notices Relating to the Act.....................................41


8.11 Patent Term Extensions..........................................42


8.12 Rights to Research Compounds....................................42


ARTICLE 9 INDEMNIFICATION..............................................43


9.1 Research and Development Indemnification........................43


9.2 Indemnification for Direct Thrombin Inhibitors and Licensed
Products .......................................................43


9.3 Insurance Proceeds..............................................44


9.4 Insurance.......................................................44


ARTICLE 10 TERM AND TERMINATION.........................................45


10.2 Termination of this Agreement by Centocor for any Reason........45


10.3 Termination for Breach..........................................45


10.4 Termination for Bankruptcy......................................45


10.5 Effect of Termination...........................................45


10.6 No Waiver.......................................................46


10.7 Consequences of Termination.....................................46


10.8 Results of Termination by Centocor for Cause....................46


10.9 Survival of Obligations.........................................46


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


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10.10 Termination Not Sole Remedy.....................................46


10.11 3DP Change of Control...........................................46


ARTICLE 11 REPRESENTATIONS AND WARRANTIES...............................47


11.1 Authority.......................................................47


11.2 No Conflicts....................................................48


11.3 No Existing Third Party Rights..................................48


11.4 Patents and Know-How Warranties.................................48


11.5 Control of Know-How.............................................48


11.6 Development Material............................................48


11.7 Disclaimer of Warranties........................................48


11.8 Continuing Representations......................................48


ARTICLE 12 DISPUTE RESOLUTION...........................................48


12.1 Dispute Resolution and Arbitration..............................48


12.2 Arbitration.....................................................49


ARTICLE 13 MISCELLANEOUS PROVISIONS.....................................49


13.1 Entire Agreement................................................49


13.2 Further Actions.................................................49


13.3 Binding Effect..................................................49


13.4 Assignment......................................................49


13.5 No Implied Licenses.............................................49


13.6 No Waiver.......................................................50


13.7 Force Majeure...................................................50


13.8 Independent Contractors.........................................50


13.9 Notices and Deliveries..........................................50


13.10 Restrictions on Unsolicited Activities..........................51


13.11 Headings........................................................51


13.12 Severability....................................................51


13.13 Applicable Law..................................................51


13.14 Advice of Counsel...............................................52


13.15 Counterparts....................................................52


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


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13.16 Waiver..........................................................52


13.17 Bankruptcy......................................................52


13.18 Compliance with Laws............................................52


13.19 Guaranty........................................................52


ARTICLE 14 HSR FILING...................................................52


14.1 HSR Filing......................................................52


14.2 HSR-Related Definitions.........................................53


14.3 HSR Denial......................................................53


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


RESEARCH, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT


This Agreement is made and effective as of December 29, 2000 (the "Execution Date"), by and between 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation having a principal place of business at Eagleview Corporate Center, 665 Stockton Drive, Suite 104, Exton, PA 19341 ("3DP"), and Centocor, Inc., a Pennsylvania corporation having a principal place of business at 200 Great Valley Parkway, Malvern, PA 19355-1307 ("Centocor"). Johnson & Johnson, a New Jersey corporation, having its place of business at One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933, USA (hereinafter referred to as "J&J") is a party to this Agreement as a guarantor of the performance under this Agreement of Centocor and its Affiliates. 3DP and Centocor may be referred to individually herein as a "Party" or together as the "Parties" and all references to "3DP" and "Centocor" shall include their respective Affiliates, unless otherwise indicated.


RECITALS


WHEREAS, 3DP has identified and developed certain Direct Thrombin Inhibitors with potential application in the prevention and treatment of human disease;


WHEREAS, Centocor is engaged in research, development and commercialization of pharmaceutical products for the prevention and treatment of human disease;


WHEREAS, 3DP has a proprietary position in such Direct Thrombin Inhibitors; and Centocor wishes to obtain from 3DP certain licenses to the patent applications, patents and know-how relating to such Direct Thrombin Inhibitors and 3DP is willing to grant such licenses to Centocor on the terms and subject to the conditions hereinafter set forth; and


WHEREAS, the Parties wish to collaborate on certain additional research activities with respect to certain follow-up compositions to such Direct Thrombin Inhibitors using technology contributed by either Party and Developed pursuant to this Agreement on the terms and subject to the conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the various promises and undertakings set forth herein, the Parties agree as follows:


ARTICLE 1


DEFINITIONS


The terms in this Agreement with initial letters capitalized, whether used in the singular or the plural, shall have the meaning set forth below or, if not listed below, the meaning designated where first used in this Agreement.


1.1 "Additional Indication" means an Indication other than the first
Indication to receive Regulatory Approval as referenced in Section
6.5.


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


1.2 "Affiliate" means, with respect to any Party, any corporation or
other business entity, which directly or indirectly controls, is
controlled by, or is under common control with such Party. For the
purposes of this definition, the term "control" (including, with
correlative meanings, the term "controlled by" and "under common
control with") as used with respect to any Party, shall mean the
possession of at least 50% of the voting stock or other ownership
interest of the other corporation or entity, or the power to direct
or cause the direction of the management and policies of the
corporation or other entity or the power to elect or appoint at
least 50% of the members of the governing body of the corporation or
other entity through the ownership of the outstanding voting
securities or by contract or otherwise.


1.3 "Agreement" means this agreement, including its schedules and
exhibits, as the same may be amended from time to time.


1.4 "Centocor Know-How" means Information which (a) Centocor discloses
to 3DP under this Agreement or under the Confidentiality Agreements
between the Parties dated April 5, 1999 and June 2, 1999 as amended
on October 27, 1999 and (b) is within the Control of Centocor during
the Term of the Agreement.


1.5 "Centocor Patent" means the rights granted by any governmental
authority under a Patent owned or Controlled by Centocor during the
Term of this Agreement claiming a method, apparatus, material,
manufacture or business method relating to a Direct Thrombin
Inhibitor or Licensed Product, including its interest in Program
Patents. A list of Centocor Patents is appended hereto as Exhibit
1.5 and will be updated periodically to reflect additions thereto
during the course of this Agreement.


1.6 "Co-Develop" means Development of Licensed Product for DVT under an
arrangement wherein 3DP pays for all Development costs or where 3DP
and Centocor share Development costs for Development of Licensed
Product for DVT in accordance with Section 4.7.


1.7 "Collaboration Tangible Research Product" means any composition of
matter or other tangible asset, including but not limited to
compounds, natural products immunoglobulin molecules, proteins and
peptides made or synthesized by either Party pursuant to the
Research Plan in the course of the Research Program, including
Research Compounds.


1.8 "Combination Product" means a Licensed Product that includes one or
more active ingredients in addition to a Direct Thrombin Inhibitor.


1.9 "Commercialize" or "Commercialization" means any and all activities
directed to marketing, promoting, manufacturing, packaging and
distributing Licensed Product, offering for sale and selling of
Licensed Product or importing Licensed


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


Product for sale. When used as a verb, "Commercialize" means to
engage in Commercialization.


1.10 "Completion of a [**]" means fifteen (15) days after receipt by
Centocor of a draft report containing all [**].


1.11 "Control" or "Controlled" means possession of the ability to grant a
license or sublicense of Patents, know-how or other intangible
rights as provided for herein without violating the terms of any
contract or other arrangements with any Third Party.


1.12 "Co-Promote" or "Co-Promotion" means to promote a Licensed Product
for DVT through 3DP's sales force alone or together with Centocor's
sales force under a single trademark in the United States.


1.13 "Co-Promotion Net Sales" are as defined in Paragraph 19 of Exhibit
5.5.1.


1.14 "Details" or "Detailing" shall mean sales presentations made to
surgeons and other medical professionals who provide health care
services to patients for Licensed Product for DVT in the United
States.


1.15 "Development" or "Develop" means preclinical and clinical drug
development activities, including, among other things: test method
development and stability testing, toxicology, formulation, process
development, manufacturing scale-up, development-stage
manufacturing, quality assurance/quality control development,
statistical analysis and report writing, clinical studies and
regulatory affairs, product approval and registration. For the
purposes of this Agreement, Development shall include, without
limitation, Pre-Phase I, Phase I, Phase II, Phase III, phase IIIB
and phase IV Clinical Trials. When used as a verb, "Develop" means
to engage in Development.


1.16 "Development Cost" shall mean the out of pocket costs paid to Third
Parties associated with Development of Direct Thrombin Inhibitors
and Licensed Products for DVT and a reasonable allocation of
internal personnel costs pursuant to such Development and other
costs included in the Development budget in accordance with the
Development Plan.


1.17 "Development Plan" means the plan and budget describing the proposed
Development of Direct Thrombin Inhibitors for DVT in the United
States, including, but not limited to, the Development activities
for obtaining Regulatory Approval.


1.18 "Direct Thrombin Inhibitor" means: [**] (i) [**] that are
discovered, synthesized or acquired (to the extent such composition
of matter is not encumbered at the time of its acquisition) by 3DP
or Centocor during the


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


Research Term, and up until [**] after the end of the Research Term
including, but not limited to, [**]; and (ii) [**].


[**]


1.19 "Dollars" means the legal currency of the United States.


1.20 "Drug Approval Application" means an application for Regulatory
Approval required before commercial sale or use of a Licensed
Product as a drug in a regulatory jurisdiction.


1.21 "DVT" means the prevention and/or treatment of deep venous
thrombosis.


1.22 "EMEA" means the European Medicines Evaluation Agency or any
successor agency.


1.23 "Execution Date" means the date of this Agreement as set forth
above.


1.24 "FDA" means the United States Food and Drug Administration or any
successor agency.


1.25 "Field" means the research, discovery, synthesis and identification
of Direct Thrombin Inhibitors, and the Development, use and
Commercialization of Licensed Product for therapeutic, prophylactic
or diagnostic use in humans or animals.


1.26 "First Commercial Sale" means, with respect to a given Licensed
Product, the first sale in an arms length transaction and shipment
of a Licensed Product to a Third Party by Centocor or its
Sublicensee in a country in the Territory following applicable
Regulatory Approval of the Licensed Product in such country.


1.27 "FTE" means a full time scientific person dedicated to the Research
Program, or in the case of less than a full-time dedicated
scientific person, a full-time, equivalent scientific person year,
based upon a total of forty-seven (47) weeks or one thousand eight
hundred eighty (1,880) hours per year of scientific work, on or
directly related to the Research Program, carried out by an employee
and/or consultant under contract and/or a Third Party under
contract.


1.28 "Generic Equivalent" means a Product that is being sold in a country
without infringing a claim of a 3DP Patent, Centocor Patent or
jointly owned Program Patent covering a Licensed Product being sold
hereunder by Centocor, which would have infringed such claim of a
3DP Patent, Centocor Patent or jointly owned Program Patent, or
which would have prevented a Third Party from selling the same
Direct Thrombin Inhibitor that is part of the Licensed Product, if
such claim of a 3DP Patent, Centocor Patent or jointly owned Program
Patent were in force in that country.


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**Certain portions of this exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


1.29 "IND" means an investigational new drug application filed with the
FDA as more fully defined in 21 C.F.R.ss.312.3 or its equivalent in
any country.


1.30 "Indication" means a recognized disease or condition as identified
in an NDA for a Licensed Product. Notwithstanding the foregoing for
the purposes of this Agreement, [**] will be considered separate
Indications even if they are included in the same NDA.


1.31 "Information" means all information including, but not limited to,
screens, models, inventions, practices, methods, knowledge,
know-how, skill, experience, test data including pharmacological,
toxicological and clinical test data, analytical and quality control
data ...