Collaboration Discoverry & Lead Optimiz. Agreement

Exhibit 10.1


NOTE: Certain portions of this Collaborative Discovery and Lead Optimization Agreement and its appendix, which are identified by the symbol "[* *]", have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.


COLLABORATIVE DISCOVERY AND
LEAD OPTIMIZATION AGREEMENT REGARDING [* *]


This Collaborative Discovery and Lead Optimization Agreement (the "Agreement") is made and effective as of August 12, 2002 (the "Effective Date"), by and between 3-Dimensional Pharmaceuticals, Inc., a corporation having its principal place of business at Three Lower Makefield Corporate Center, 1020 Stony Hill Road, Suite 300, Yardley, PA 19067, U.S.A. ("3DP"), and Bristol-Myers Squibb Company, a Delaware corporation having its principal place of business at Route 206 & Province Line Road, P.O. Box 4000, Princeton, New Jersey 08543 ("BMS"). 3DP and BMS may be referred to herein as a "Party" or, collectively, as the "Parties."


WHEREAS, 3DP is engaged in discovery research for a variety of biologically active compounds and the development of technologies to facilitate such research, and 3DP has patented systems for generating chemical compounds having desired pharmaceutical properties;


WHEREAS, BMS is engaged in research and development of human therapeutic products;


WHEREAS, 3DP and BMS have been engaged in a research and development collaboration to identify and develop compounds active against certain targets pursuant to the DiscoverWorks(TM) Drug Discovery Collaboration Agreement entered into by and between the Parties as of July 7, 2000, as amended (the "Existing Discovery Collaboration Agreement").


WHEREAS, 3DP and BMS desire to enter into a research and development collaboration to optimize qualified lead compounds that Directly Modulate human [* *] and that are suitable for commercial development by BMS;


WHEREAS, 3DP and BMS desire to allocate and, from time to time, to reallocate FTEs between the research program under the Existing Discovery Collaboration Agreement (the "Existing Discovery Program") and the Research Program under this Agreement.


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 in places throughout this Agreement.


1.1 "Active Compound" means a Research Compound or a Derivative Compound that has been selected by BMS for preclinical development.


1.2 "Affiliate" means (i) any corporation or business entity of which at least fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by 3DP or BMS; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds at least fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of 3DP or BMS.


1.3 "Agreement" means the present agreement including its Appendices.


1.4 "Confidential Information" means all information that has or could have commercial value or other utility in a Party's business, or the unauthorized disclosure of which could be detrimental to the Party's interests, including without limitation research, technical, clinical development, manufacturing, marketing, financial, personnel and other business information and plans, proprietary information, inventions, know-how, data, and biological and other materials; which relate to the Research Program or BMS's research activities in the Field. "Confidential Information" shall also include without limitation Research Compounds, Derivative Compounds, Qualified Lead Compounds, Active Compounds, Licensed Products, and any research results and data associated with any of the foregoing (including without limitation structure/activity data).


1.5 "Combination Product" means a Licensed Product which includes one or more active ingredients other than Active Compounds.


1.6 "Derivative Compound" means any compound other than a Research Compound, but which Directly Modulates the Target, the making, using or selling of which is covered by a Valid Claim of a Research Program Patent and which is first synthesized by either Party during the 3 year period that immediately follows the expiration or termination of the Research Program.


1.7 "DirectedDiversity(R) Chemical Library" means a computer-generated library of compounds containing integrated structure-activity and synthesis data.


1.8 "Directly Modulates" means that a compound (i) has an [* *] for the Target of [* *] or less; and (ii) for which the demonstrated mechanism of action for the compound's intended therapeutic, prophylactic or diagnostic effect is binding to and thereby modulating the activity of the Target, as determined by an assessment of available data by the JSMC.


1.9 "Effective Date" means the effective date of this Agreement as set forth above.


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1.10 "Field" means all therapeutic, prophylactic and diagnostic uses of compounds that Directly Modulate the Target, including but not limited to the therapeutic, prophylactic or diagnostic indications identified in the Research Plan approved by the JSMC.


1.11 "First Commercial Sale" shall mean, with respect to a given Licensed Product, the first sale for use or consumption by the public of such Licensed Product in a country after all required approvals, including regulatory, marketing and pricing approvals, have been granted by the applicable governmental drug regulatory agency of such country.


1.12 "FTE" means a full time equivalent scientist (i.e., one full-time or multiple part-time scientists aggregating to one full-time scientist) employed by 3DP and assigned to work on the Research Program with such time and effort to constitute one scientist working on the Research Program on a full time basis consistent with normal business and scientific practice (at least 40 hours per week of dedicated effort; on an annual basis, at least 40 hours per week of dedicated effort for at least 48 weeks per year). In no event, does an FTE include a subcontractor.


1.13 "Hit" shall have the meaning assigned to such term in Section 2(a) of Appendix A.


1.14 "Joint Steering and Management Committee" or "JSMC" shall have the meaning set forth in the Existing Discovery Collaboration Agreement, as such has expressly been amended by Article 3 of this Agreement.


1.15 "Licensed Derivative Product" means any commercial product that is not a Licensed Research Product and that contains one or more Derivative Compounds as active ingredients.


1.16 "Licensed Product" means Licensed Derivative Product and Licensed Research Product.


1.17 "Licensed Research Product" means any commercial product containing one or more Research Compounds as active ingredients, including without limitation such product that also contains one or more Derivative Compounds as active ingredients in combination with such Research Compounds.


1.18 "NDA" means an application for the final approval required for authorization for marketing of a Licensed Product in a given country (including applicable regulatory, marketing and pricing approval) in accordance with the applicable laws and regulations of a given country. In the U.S., NDA means a New Drug Application or its equivalent in the Food and Drug Administration or successor agency.


1.19 "Net Sales" means the aggregate gross invoiced sales price of Licensed Product sold in the Territory by BMS, its Affiliates and any licensees or sublicensees, to an independent Third Party, including but not limited to distributors, in bona fide, arms-length transactions, after deduction of the following items (to the extent actually incurred or reasonably estimated and accrued and to the extent not already deducted in the amount invoiced): (i) customary trade, quantity and cash discounts, wholesaler-charge backs, or rebates (including without limitation


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rebates to governmental agencies); (ii) customary credits or allowances for rejection or return of previously sold Licensed Products; (iii) any direct tax, duties, surcharges or government charge (other than an income tax) levied on the sale, transportation or delivery of a Licensed Product and borne by the seller thereof; (iv) retroactive price reductions; and (iv) any charge for freight or insurance if separately stated.


The disposition of Licensed Products in reasonable quantities by BMS, its Affiliates or licensees as part of a compassionate use program, indigent care program, as bona fide samples, or as donations to non-profit institutions or government agencies for non-commercial purposes and for which BMS receives no consideration shall be excluded from Net Sales and no royalties shall be due in connection with any such disposition.


In the circumstance where all the active ingredients of a Combination Product are also sold separately and in identical strengths to those contained in the Combination Product, then the following shall apply:


Net Sales shall be calculated as set forth above on the basis of the gross invoice price of a Licensed Product containing the same weight of Active Compound sold independently ( A ) divided by the sum of the gross invoice price of each of the active ingredients contained in the Combination Product sold independently ( B + A ), multiplied by the gross invoice price of the Combination Product, as shown by the following formula:


Net Sales = ( A ) x (gross invoice price of the Combination Product)
---------
( B + A )


In the event the Active Compound and/or any of the other active ingredients of a Combination Product are not sold separately in identical strengths to those contained in the Combination Product, then the Parties agree to negotiate in good faith the calculation of Net Sales with regard to such Combination Product based upon the relative value of the active ingredients as determined by the Parties hereto in good faith.


1.20 "Patents" means all U. S. patent applications or issued patents, including without limitation provisionals, divisionals, continuations, continuations-in-part, reissues and extensions derived therefrom, such as patent term restorations, supplementary protection certificates, etc., as well as all foreign patents and foreign patent counterparts to the foregoing.


1.21 "Qualified Lead Compound" means a Research Compound or a Derivative Compound that satisfies the criteria established by the JSMC from time to time, which initially shall be the criteria set forth in Section 2(b) of Appendix A.


1.22 "Research Compound" means any compound (a) that is conceived or synthesized by 3DP during the conduct of the Research Program and that Directly Modulates the Target; (b) that is conceived or synthesized by 3DP in the conduct of research activities outside the Field and which is found to Directly Modulate the Target through 3DP's counterscreening activities against the Target undertaken during the term of the Research Program, that, at 3DP's sole discretion, becomes incorporated into the conduct of the Research Program; (c) that is conceived


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or synthesized by BMS in the conduct of BMS's research activities in the Field prior to the Effective Date or during the term of the Research Program, and that Directly Modulates the Target; (d) that is conceived or synthesized by BMS in the conduct of research activities outside the Field and which is found to Directly Modulate the Target through BMS's counterscreening activities against the Target undertaken prior to the Effective Date or during the term of the Research Program, that, at BMS's sole discretion, becomes incorporated into BMS's research activities in the Field or into the conduct of the Research Program; or (e) that Directly Modulates the Target and is first synthesized by either Party during the term of or within one year after the expiration or termination of the Research Program, and which is derived through iterative rational drug design based upon the biological activity of a Research Compound with respect to the Target.


1.23 "Research Plan" means the detailed description of the research and development activities of the Parties for the Target in the performance of the Research Program. The Research Plan shall be prepared by the JSMC and shall be updated in writing as changes are made to the Research Plan.


1.24 "Research Program" means the collaborative optimization activities of the Parties, as described in Article 2, that are intended to lead to the development of small molecule Qualified Lead Compounds and Active Compounds that have an agreed upon level of activity, Directly Modulate the Target and are suitable for commercial development by BMS.


1.25 "Research Program Patents" shall mean those Patents that claim discoveries or inventions that are conceived by either Party in the conduct of the Research Program and reduced to practice during either the term of this Agreement or a period of one-year following the expiration or termination of the Research Program, regardless of their ownership.


1.26 "Target" means [* *], whether discovered as of the Effective Date orat any time during the term of the Research Program or three years thereafter.


1.27 "Territory" means the entire world.


1.28 "Third Party" means an individual, corporation or other entity other than the Parties and their Affiliates.


1.29 "3DP DirectedDiversity(R)Technology" means 3DP Patents and proprietary know-how that relate to generating and utilizing a DirectedDiversity(R)Chemical Library, including but not limited to U.S. Patent Nos. 5,463,564; 5,574,656; and 5,684,711, 5,901,069; 6,421,612; and 6,295,514.


1.30 "3DP Patents" means any Patents owned or controlled by 3DP by assignment, license or otherwise, which 3DP has the right to license or sublicense to BMS, other than Research Program Patents.


1.31 "Valid Claim" means a claim of a Patent that has not lapsed or become abandoned or been declared invalid or unenforceable by a court or agency of competent jurisdiction from which no appeal can be or has been taken.


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Article 2. RESEARCH PROGRAM


2.1 General Project Description. The Parties contemplate that the Research Program will include the following steps and activities:


(a). BMS will furnish to 3DP the structure and activity data on compounds
developed or discovered by BMS prior to the Effective Date or during
the course of the Research Program that are to be tested against the
Target, including both compounds that are active against the Target,
including without limitation Hits, Research Compounds and Qualified
Lead Compounds, and compounds that are inactive against the Target.


(b). 3DP will perform lead optimization studies on Qualified Lead Compounds
with the objective of generating compounds which will be selected as
Active Compounds by BMS. 3DP will also carry out initial testing of
compounds in the primary biochemical assay as well as any secondary
assays, as determined by the JSMC.


(c). 3DP will supply to BMS between [* *] of each Qualified
Lead Compound in a manner to be determined by the JSMC for additional
in vitro testing at BMS as defined by the JSMC. These compounds will
meet a minimum purity of [* *] of the compounds
provided. Upon a reasonable request of BMS and approval by the JSMC,
3DP will provide additional quality control for individual compounds
as well as larger quantities of specific compounds for in vivo
evaluation, including, without limitation, with respect to Active
Compounds.


(d). 3DP will carry out protein expression and subsequent structural
studies with the Target (along with bound ligand as appropriate) as
defined by the JSMC.


(e). 3DP will provide BMS with a password-protected internet based
communication channel in order to share activity or other compound
related data with BMS.


2.2 Development of Active Compounds. BMS will conduct the preclinical and clinical tests as it deems appropriate for the commercial development of Active Compounds in the Field that are developed from Qualified Lead Compounds.


2.3 Alternative Targets. BMS, through the JSMC, shall have the option to propose changing Targets, subject to mutual agreement of both Parties.


2.4 Research Efforts. Each Party shall use good faith commercially reasonable and diligent efforts (as defined below) to perform its responsibilities for the Research Program as set forth in the Research Plan. BMS will provide funding to 3DP as set forth in the Existing Discovery Collaboration Agreement and in accordance with Section 3.1(g), which funding shall be used by 3DP solely to support qualified FTEs at 3DP as allocated pursuant to this Agreement to perform the Research Program. As used herein, the term "commercially


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reasonable and diligent efforts" shall mean, unless the Parties agree in writing otherwise, those efforts consistent with the exercise of prudent scientific and business judgment in accordance with industry standards, as applied by each Party, respectively, to other of its programs of similar scientific and commercial potential.


Throughout the term of this Agreement, including any extensions thereof, 3DP shall assign the number of FTE qualified scientists specified in the Research Plan to perform the work set forth in the Research Plan. The mixture of education and experience of such FTEs shall be appropriate to the scientific objectives of the Research Program and 3DP shall provide reasonable aggregated information about the composition of such FTEs to the JSMC upon request. In the event that BMS has reasonable concerns regarding the staffing of the Research Program by 3DP, such concerns shall be communicated to and discussed by the JSMC. The JSMC may make recommendations to 3DP regarding such Research Program staffing concerns for 3DP's consideration.


Other than the research funding provided by BMS to 3DP under the Existing Discovery Collaboration Agreement and in accordance with Section 3.1(g), and except as otherwise specifically agreed in writing by 3DP and BMS, each Party shall be responsible for all costs and expenses it incurs in its performance of the Research Program.


2.5 3DP's Disclosure of Results; Reports; Progress Meetings. The results of all work performed by the Parties as part of the Research Program shall be disclosed to the other Party as soon as practical after such results are obtained. The Parties will exchange at a minimum quarterly written reports (with copies to the JSMC) presenting a meaningful summary of the work performed on the Research Program. Progress with respect to the Research Plan milestones and goals shall be included in the report. In addition, on reasonable request by BMS, 3DP will make presentations of its activities under this Agreement to inform BMS of the details of the work done under this Agreement. To better facilitate communication and collaboration between the Parties, scientists from 3DP and BMS who are conducting work relating to the collaboration will meet monthly in a manner convenient to all attendees to discuss the progress of the Research Program. Such research team meetings should be scheduled as on-site meetings with appropriate attendees from 3DP and BMS. As provided in Article 6, know-how and other information regarding the Research Program disclosed by one Party to the other Party pursuant hereto may be used only in accordance with the rights granted under this Agreement. Within 30 days following the end of each calendar quarter, the Parties shall each exchange and provide to the JSMC a written report summarizing in reasonable detail the work performed by it under the Research Program during the preceding calendar quarter.


2.6 BMS's Disclosure of Efforts. Following the end of the Research Program, for so long as BMS undertakes development or commercialization activities with respect to Active Compounds or Licensed Products, BMS shall provide 3DP with periodic reports summarizing such activities.


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Article 3. RESEARCH PROGRAM GOVERNANCE


3.1 Joint Steering and Management Committee. 3DP and BMS agree that the Joint Steering and Management Committee established under the Existing Discovery Collaboration Agreement shall, in addition to its responsibilities under the Existing Discovery Collaboration Agreement, be responsible for:


(a). Adopting, reviewing and amending the Research Plan to implement the
Research Program, subject to BMS approval. The Research Plan for the
Target agreed to by the Parties is described in Appendix A.


(b). Monitoring the progress of research in the Research Program.


(c). Proposing any change in Target selection, such change being subject to
mutual agreement of the Parties.


(d). Agreeing on and adopting criteria for the designation of Qualified
Lead Compounds and Active Compounds.


(e). Selecting Qualified Lead Compounds to be advanced for secondary in
vitro and in vivo biological testing.


(f). Reviewing and approving publications and other public disclosures
related to the subject matter of the Research Program.


(g). From time to time, reviewing and determining the allocation of the
[* *] FTEs specified in the Existing Discovery
Collaboration Agreement, as between the Research Program and the
Existing Discovery Program; such FTEs to be allocated optimally
between the Research Program and the Existing Discovery Program to
maximize the benefits to both Parties, given the available resources.
Until changed by a decision of the JSMC, the initial allocation of
FTEs to the Research Program shall be [* *] FTEs.


(h). Reviewing and determining whether the mechanism of action for a
compound's intended therapeutic, prophylactic or diagnostic effect has
been demonstrated as binding to and modulating the activity of the
Target, for purposes of satisfying the definition of "Directly
Modulates".


(i). Any other matter as may be mutually agreed from time to time.


3.2 JSMC Governance. As to the activities contemplated under this Agreement and the allocation of FTEs to the Research Program, the terms of Sections 4.1, 4.3, 4.4 and 4.6 of the Existing Discovery Collaboration Agreement shall apply to the JSMC; provided however, in the event, under Section 4.4 of the Existing Discovery Collaboration Agreement, the specified officers of 3DP and BMS cannot reach agreement within fifteen (15) days after a matter is referred to them for resolution, to the extent such matter pertains to reallocating FTEs


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between the Research Program and the Existing Discovery Program under Section 3.1(g), then no change in the number of FTEs shall become effective without the approval of 3DP, which approval shall not be unreasonably withheld or delayed; and provided further, that in the event formal dispute resolution is called for under such Section 4.4 of the Existing Discovery Collaboration Agreement relating to a deadlock of the JSMC under this Agreement, then the dispute resolution provisions of Article 12 of this Agreement shall apply. It is the intent of the Parties to allocate the work being performed by the FTEs to allow for the performance of all aspects of the Research Program and of the Existing Discovery Program in a manner that is equitable to both Parties.


3.3 Management of Matters Outside the Jurisdiction of the JSMC. Matters outside the scope of the Research Program are internal to each Party and are not under the purview of the JSMC. Such matters include, but are not limited to the following: internal personnel policies and programs, budgeting, finance, commercial and marketing strategies, and business decisions. However, the Parties agree to communicate with each other promptly on those matters which, while outside the scope of the Research Program, nevertheless may reasonably be expected to influence the conduct or term of this Agreement or the intended commercialization of any Qualified Lead Compounds under this Agreement.


Article 4. FINANCIAL TERMS


4.1 Milestone Payments. BMS agrees to make milestone payments as set forth below upon the first occurrence of each milestone event for each Research Compound and Derivative Compound. Subject to the conditions set forth below, the milestone payments as set forth below shall be paid only one time for each Research Compound or Derivative Compound (regardless, for example, of the number of clinical trials conducted and NDA approvals obtained for that particular Research Compound or Derivative Compound). The applicable milestone payments due for any Derivative Compound shall be [* *] of the milestone payment amounts set forth below (such reduction shall be noted with an asterisk (*) below):


(a). [* *] upon each determination that a Research Compound or
Derivative Compound* is an Active Compound, as determined in
the sole discretion of BMS. (For example, as of the Effective
Date, such determination for purposes of achievement of this
milestone would documented by BMS as an Early Candidate
Nomination, or ECN, but in the future may be referred to by
some other designation);


(b). [* *] upon the first initiation of a Phase I clinical
trial (or its equivalent or non-U.S. counterpart) for each
Research Compound or Derivative Compound*;


(c). [* *] upon the first initiation of a Phase III clinical
trial (or its equivalent or non-U.S. counterpart) for each
Research Compound or Derivative Compound*;


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(d). [* *] upon the first filing of an NDA for each
Research Compound or Derivative Compound*;


(e). [* *] upon the first approval of an NDA for each
Research Compound or Derivative Compound*.


The milestone payments under (a) and (b) above shall be subject to both of the following conditions: (1) The total amount of milestone payments under (a) and (b) above for all Research Compounds and Derivative Compounds shall in no event exceed [* *]; and (2) For all Research Compounds and Derivative Compounds, all milestone payments under (a) and (b) above after the first payment of each such milestone shall be deferred until the initiation of a Phase II clinical trial (or its equivalent or non-U.S. counterpart) for any Research Compound or Derivative Compound.


4.2 Royalty on Net Sales of Licensed Products. BMS agrees to pay a quarterly royalty based on Net Sales of Licensed Derivative Products and Licensed Research Products. Royalty payments shall be due within sixty (60) days of the end of each c ...