Discoverworks Drug Discovery Collaboration Agreement

EXHIBIT 10.47


CONFIDENTIAL


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


DISCOVERWORKS(R)
DRUG DISCOVERY COLLABORATION AGREEMENT


THIS DISCOVERWORKS(R) DRUG DISCOVERY COLLABORATION AGREEMENT is made as of the Effective Date by and between 3-Dimensional Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at Three Lower Makefield Corporate Center, 1020 Stony Hill Road, Suite 300, Yardley, PA 19067, USA ("3DP"), and Janssen Pharmaceutica, N.V., having its place of business at Turnhoutseweg 30, 2340 Beerse, Belgium and The R.W. Johnson Pharmaceutical Research Institute, a division of Ortho-McNeil Pharmaceutical, Inc. having a place of business at U.S. Route 202, Raritan, NJ 08869, USA (collectively, with its Affiliates, referred to herein as "Janssen"). 3DP and Janssen may be referred to herein as a "Party" or, collectively, as the "Parties." Reference to a Party herein shall include its Affiliates (as hereinafter defined) unless otherwise indicated.


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 developed and is patenting systems for identifying and generating chemical compounds having desired pharmaceutical properties;


WHEREAS, Janssen is engaged in research, development and commercialization of biologically-active compounds for the treatment of human diseases; and


WHEREAS, 3DP and Janssen desire to enter into a research collaboration to allow Janssen and 3DP to identify Prototype Compounds (as defined herein) active against selected targets that may be developed and commercialized by Janssen.


NOW, THEREFORE, in consideration of the mutual promises and undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, 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 compound(s) claimed by a Valid Claim
of a 3DP Patent, Joint Patent or Research Program Patent
Right.


1.2 "Affiliate" means, with respect to either Party, any
corporation or other business entity, which controls, is
controlled by, or is under common control with such Party. A
corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or
indirectly controls at least fifty percent (50%) of the voting
stock or other ownership interest of the other corporation or
entity (or alternatively, such lesser percentage which is the
maximum allowed to be owned by a foreign corporation in a
particular jurisdiction), or if it possesses, directly or
indirectly, 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 fifty percent (50%) of
the members of the governing body of the corporation or other
entity.


1.3 "Agreement" means this DiscoverWorks(R) Drug Discovery
Collaboration Agreement, including its Schedules, as may be
amended from time to time.


1.4 "Back-up Compound" means a compound selected from the Focused
Library which has activity against a Target, that is reserved
as a back-up for an Active Compound or Licensed Product having
activity against the same Target, and is not intended to be
developed or commercialized unless development and/or
commercialization of such Active Compound or Licensed Product
is terminated and such compound becomes a Replacement
Compound.


1.5 "Combination Product" means a Licensed Product that includes
one or more active ingredients in addition to an Active
Compound.


1.6 "Confidential Information" means all confidential and
proprietary technical and/or commercial information that has
or could have value or utility in a Party's business, or the
unauthorized disclosure of which could be detrimental to the
Party's interests, including information, inventions,
Know-how, data and materials relating to the Research Program
or to the Licensed Products, and shall include, without
limitation, research, technical, clinical development,
manufacturing, marketing, financial, personnel and other
business information and plans, whether in oral, written,
graphic or electronic form, except to the extent that it can
be established by the Receiving Party (as defined in Section
7.1) that such Confidential Information: (a) was already known
to the Receiving Party, other than under an obligation of
confidentiality from the Disclosing Party (as defined in
Section 7.1); (b) was generally available to the public or
otherwise part of the public domain at the time of its
disclosure to the Receiving Party; (c)


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became generally available to the public or otherwise part of
the public domain after its disclosure and other than through
any act or omission of the Receiving Party in breach of this
Agreement; (d) was subsequently lawfully disclosed to the
Receiving Party by a Third Party; (e) can be shown by written
records to have been independently developed by or for the
Receiving Party without reference to the Confidential
Information received from the Disclosing Party and without
breach of any of the provisions of this Agreement; or (f) is
information that the Disclosing Party has specifically agreed
in writing that the Receiving Party may disclose.


1.7 "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.


1.8 "DirectedDiversity(R)Technology" means the technology
described in: (a) the 3DP Patents identified in Schedule 1.8,
------------
and (b) associated proprietary 3DP know-how used to identify
Hits, Prototype Compounds, and Active Compounds.


1.9 "DiscoverWorks(R) Technology" means 3DP's full panoply of drug
discovery and compound and library synthesis technologies,
including without limitation the technologies currently known
as DirectedDiversity(R) Technology, ThermoFluor(R) Technology,
3DP Synthetically Accessible Libraries and 3DP Probe
Libraries, notwithstanding that all such technologies and
resources may not be utilized under this Agreement.


1.10 "Effective Date" means December 28, 2001.


1.11 "Extended Research Term" means a period of time, mutually
agreed upon by the Parties, following conclusion of the Stage
A Term or Stage B Term or of an earlier Extended Research
Term, during which the Research Program is conducted. An
Extended Research Term may apply to either or both the Stage A
Term and the Stage B Term and is part of the Research Term.


1.12 "Field" means the research, development and commercialization
of compounds for use in therapeutic, prophylactic and
diagnostic products in humans or animals. The Field shall
specifically exclude [* *].


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


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1.14 "Focused Library" means a library of compounds selected from
the 3DP Synthetically Accessible Library using
DirectedDiversity(R)Technology and synthesized by 3DP.


1.15 "FTE" means a full time equivalent employee (i.e., one
full-time or multiple part-time employees aggregating to one
full-time employee) employed by 3DP and assigned to work on
the Research Program with such time and effort to constitute
one employee working on the Research Program on a full-time
basis consistent with normal business and scientific practice
(at least forty (40) hours per week of dedicated effort; on an
annual basis, at least forty (40) hours per week of dedicated
effort for at least forty-eight (48) weeks per year).


1.16 "Generic Equivalent" means a pharmaceutical product that is
being sold in a country without infringing a claim of a Patent
Right covering a Licensed Product being sold hereunder by
Janssen, which would have infringed such claim of a Patent
Right, or which would have prevented a Third Party from
selling the same Active Compound that is part of the Licensed
Product, if such claim of a Patent Right were in force in that
country.


1.17 "Hit" means a compound in the 3DP Probe Library having a
confirmed structure that (i) is identified from the screening
of a Target; (ii) modulates [* *], as measured using
ThermoFluor(R) Technology, and (iii) passes the ThermoFluor(R)
validation tests set forth on Schedule 1.17.


1.18 "IND" means an investigational new drug application filed with
the U.S. Food and Drug Administration or successor agency
("FDA") as more fully defined in 21 C.F.R.ss.312.3, a CTX, or
their respective equivalents in any country.


1.19 "Initiation of Prototype Compound Optimization" means the
receipt of written notice from Janssen to 3DP indicating that
Prototype Compound Optimization activities have been initiated
by Janssen for a Prototype Compound. Such notice shall, among
other things, specifically identify the Prototype Compound and
its Target, the project champion, and the site at which work
is being conducted.


1.20 "Janssen Know-how" means any and all technical information,
inventions, developments, discoveries, software, know-how,
methods, techniques, formulae, data, processes and other
proprietary ideas, whether or not patentable or copyrightable,
that are first conceived, discovered, developed or reduced to
practice in the conduct of Prototype Compound Optimization or
the Janssen Research Program.


1.21 "Janssen Patent" means those Patent Rights that claim
discoveries or inventions that (i) were conceived and/or
reduced to practice solely by Janssen employees or by a Third
Party acting under authority of Janssen prior to the Effective
Date; or (ii) were conceived and/or reduced to practice solely
by Janssen employees or by


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a Third Party acting under authority of Janssen during the
Term but after the completion of the Research Program and the
[* *] period following the Initiation of
Prototype Compound Optimization for each Prototype Compound,
on a compound-by-compound basis; and (iii) claiming a method,
apparatus, composition of matter, material, manufacture or
business method relating to Hits, Prototype Compounds, Active
Compound or Licensed Products.


1.22 "Janssen Research Program" means activities of Janssen during
the Term that are intended to lead to the discovery of
compounds having activity against a Target, and the further
optimization, identification and/or discovery of such
compounds, excluding any activities of Janssen which occur
prior to the Effective Date or after the [* *] period
following the Initiation of Prototype Compound Optimization
for each Prototype Compound, on a compound-by-compound basis.


1.23 "Joint Patent" means those Patent Rights that claim
discoveries or inventions that (i) were conceived and/or
reduced to practice jointly by Janssen and 3DP employees or by
a Third Party acting under authority of Janssen or 3DP during
the Term but after completion of the Research Program and the
[* *] period following the Initiation of Prototype Compound
Optimization for each Prototype Compound, on a
compound-by-compound basis; and (ii) claiming a method,
apparatus, composition of matter, material, manufacture or
business method relating to Hits, Prototype Compounds, Active
Compound or Licensed Products.


1.24 "Joint Steering and Management Committee" or "JSMC" shall have
the meaning and roles ascribed to it in Article 4.


1.25 "Know-how" means unpatented technical and other information,
including information comprising or relating to concepts,
discoveries, inventions, data, designs, formulae, ideas,
methods, models, assays, research plans, procedures, designs
for experiments and tests and results of experimentation and
testing (including results of research or development)
processes (including manufacturing processes, specifications
and techniques), laboratory records, chemical,
pharmacological, toxicological, clinical, analytical and
quality control data, trial data, case report forms, data
analyses, reports or summaries and information contained in
submissions to, and information from, ethical committees and
regulatory authorities.


1.26 "Licensed Product" means a pharmaceutical product containing
an Active Compound, a Prototype Compound, a Replacement
Compound or a Back-Up Compound as an active ingredient.


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1.27 "Major Country" means the United States, Japan, the United
Kingdom, France, Germany, or Italy.


1.28 "NDA" means a new drug application filed pursuant to 21 U.S.C.
Section 505(b)(1) including all documents, data and other
information concerning a Licensed Product which are necessary
for or included in, FDA approval to market a Licensed Product
and all supplements and amendments, including supplemental new
drug applications, that may be filed with respect to the
foregoing as more fully defined in 21 C.F.R. ss.314.50 et.
seq.


1.29 "Net Sales" means the gross amounts invoiced by Janssen, its
Affiliates or sublicensees for sales of Licensed Product in
finished package form (ready for use by the ultimate consumer)
in the Territory to a Third Party, including, but not limited
to, sales to wholesalers or other customers typical in each
country in bona fide, arm's length transactions. In the event
Janssen does not sell directly to such customers in one or
more countries, electing instead to utilize another party as a
distributor to those customers, it is understood that Net
Sales shall include sales by the distributor rather than
Janssen's sales to the distributor. In determining Net Sales,
certain deductions may be taken against the gross amount
invoiced. These allowable deductions are:


1.29.1 (i) discounts, including cash discounts, discounts to
managed care or similar organizations or government
organizations, administrative fees paid to pharmacy
benefits managers; (ii) rebates paid or credited,
including government rebates such as Medicaid
chargebacks or rebates; (iii) retroactive price
reductions or allowances actually allowed or granted
from the billed amount; and (iv) commercially
reasonably promotional allowances actually granted to
customers as reflected on the same invoice as for the
sale of Licensed Product;


1.29.2 credits or allowances actually granted upon claims,
rejections or returns of such sales of Licensed
Products, including government mandated recalls and
recalls that Janssen reasonably believes are in the
best interest of the consumer, it being understood
that if the recalled Licensed Product is resupplied,
Net Sales shall be calculated based on the resupplied
quantities at the price previously charged, provided
that the cause of the recall was not due to the
negligence of Janssen;


1.29.3 taxes, duties or other governmental charges levied on
or measured by the billing amount when included in
billing, as adjusted for rebates, charge-backs and
refunds; and


1.29.4 freight, postage, shipping and insurance charges to
the extent included on the same invoice by Janssen or
its Affiliates or sublicensee for delivery of such
Licensed Products.


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In the case of discounts on packages of products or services
which include Licensed Product in those countries of the
Territory in which such is legally permissible ("Packages"),
the discount applied to Licensed Product within the Package
shall be no greater than the discount determined by
discounting the list price of the Licensed Product in the
Package by the average percentage discount of list prices of
all products of Janssen in the same Package, calculated as
follows:


Average percentage ( A )
Discount on a = ( 1- --- ) x 100
Particular Package ( B )


where A equals the total discounted value of a particular
Package of products, and B equals the sum of the undiscounted
value of the same Package of products. Janssen shall provide
3DP with reasonable documentation supporting the percentage
discounts with respect to each product within such Package.


A "sale" of a Licensed Product is deemed to occur upon the
invoicing, or if no invoice is issued, upon the earlier of
shipment or transfer of title in the Licensed Product to a
Third Party.


With respect to Combination Products, Net Sales for such
Combination Product sold by Janssen shall be determined by the
Parties to this Agreement in good faith based on the relative
value of the Active Compound and the additional active
ingredients that are included in the Combination Product.


1.30 "Patent Rights" means all U. S. patent applications or issued
patents, including, but not limited to, provisionals,
divisionals, continuations, continuations-in-part, reissues,
reexaminations and extensions derived therefrom, such as
patent term restorations, supplementary protection
certificates, etc., as well as all foreign patents (including
PCTs) and foreign patent counterparts to the foregoing.


1.31 "Prototype Compound" means a compound discovered using
information obtained from a Hit in the course of Prototype
Compound Generation, as described in Section 2.2, having a
dissociation constant [* *] as determined in a dose response
experiment and which demonstrates a desired activity against a
Target in a molecular or cellular functional assay. Prototype
Compounds will have pharmaceutically acceptable properties as
determined by the JSMC prior to initiation of Prototype
Compound Generation and [* *]. Prototype Compounds will be
identified as Prototype Compounds by the JSMC within [* *] of
delivery of data [* *]. For purposes of clarity, the Janssen
may, at its discretion, select a compound as a Prototype
Compound even if such compound does not meet the criteria set
forth above.


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1.32 "Prototype Compound Generation" means a program for
discovering Prototype Compounds using information obtained
from Hits, and iterative rounds of chemistry and the 3DP
Synthetically Accessible Library to make Focused Libraries for
rescreening using ThermoFluor(R) Technology against such
Target as more fully described in Section 2.2.


1.33 "Prototype Compound Optimization" means a program conducted by
Janssen for further optimizing, identifying and/or developing
a Prototype Compound or a compound discovered in the course of
the Janssen Research Program, to improve the
structure-activity relationships, potency, selectivity,
pharmacokinetics, pharmacodynamics and acute safety of such
Prototype Compound or such compound discovered in the course
of the Janssen Research Program, to identify an Active
Compound.


1.34 "Replacement Compound" shall have the meaning attributed
thereto in Section 5.8.


1.35 "Replacement Target" shall have the meaning attributed thereto
in Section 2.3.


1.36 "Research Plan" means the description of the research
activities of the Parties for particular Targets in the
performance of the Research Program, including an allocation
of FTEs to be used for various tasks and a timeline for such
tasks. A draft of the Research Plan is attached hereto as
Schedule 1.36.
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1.37 "Research Program" means research activities of the Parties
during the Research Term, as described in Article 2, that are
intended to lead to the discovery of Hits and Prototype
Compounds, excluding Prototype Compound Optimization.


1.38 "Research Program Know-how" means Know-how conceived or
developed during the conduct of the Research Program.


1.39 "Research Program Patent Rights" means those Patent Rights
that claim discoveries or inventions that were conceived
and/or reduced to practice by Janssen or 3DP or jointly by
Janssen and 3DP or by a Third Party acting under authority of
Janssen or 3DP in the course of the Research Program or a
Janssen Research Program and during the [* *] period
following the Initiation of Prototype Compound Optimization
for each Prototype Compound on a compound-by-compound basis
and relating to the Research Program or Janssen Research
Program.


1.40 "Research Term" shall have the meaning attributed thereto in
Section 10.1.


1.41 "Stage A" means the research activities undertaken by the
Parties pursuant to Article 2 as part of the Research Program
with respect to the first and second Targets to be provided by
Janssen to 3DP.


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