Lead Generation Collaboration Agreement

LEAD GENERATION COLLABORATION AGREEMENT


This LEAD GENERATION COLLABORATION AGREEMENT (the "Agreement"), effective as of July 18, 2001 (the "Effective Date"), is made by and between Array BioPharma Inc., a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array"), and Takeda Chemical Industries, Ltd., a Japanese corporation having a place of business at 1-1, Doshomachi 4-Chome, Chuo-ku, Osaka 540-8645, Japan ("Takeda").


BACKGROUND


A. Array has developed novel, proprietary methods for the discovery,
generation and optimization of lead compounds;


B. Takeda and Array desire to collaborate to identify lead compounds that
have activity in the Field (as defined below); and


C. Takeda wishes to develop and commercialize the Products (as defined
below) in the Field, on the terms and conditions herein;


NOW, THEREFORE, for and in consideration of the covenants, conditions and undertakings hereinafter set forth, it is agreed by and between the parties as follows:


1. DEFINITIONS


As used herein, the following terms will have the meanings set forth below:


1.1 "Affiliate" shall mean any corporation or other entity which is directly or indirectly controlling, controlled by or under common control of a party hereto for so long as such control exists. For the purposes of this Section 1.1, "control" shall mean the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity to elect directors, or if not meeting the preceding the maximum voting right that may be held by the particular party under the laws of the country where such entity exists.


1.2 "Array Technology" shall mean (i) all information, data, know-how, patents and patent applications that are necessary to conduct the Research Program, and (ii) any divisions, continuations, continuations-in-part, reissues, reexaminations, or extensions, thereof and any substitutions, confirmations or registrations of any of the foregoing, in each case, which is owned or Controlled by Array.


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1.3 "Collaboration Compound" shall mean any Lead Compound, or any Derivative Compound that has been selected by Takeda for further development.


1.4 "Collaboration Technology" shall mean (i) all information, data, know-how, patents and patent applications the subject of which is an invention conceived and reduced to practice solely or jointly by Array and/or Takeda personnel in the course of performing, or in connection with, the Research Program, including without limitation any such inventions comprising a Compound or Derivative Compound, or method of use or process for the synthesis thereof or composition-of-matter containing such Compound or Derivative Compound, and (ii) any divisions, continuations, continuations-in-part, reissues, reexaminations, extensions or other governmental actions which extend any of the subject matter of the patent applications or patents in (i) above, and any substitutions, confirmations, registrations or revalidations of any of the foregoing.


1.5 "Compound" means a chemical entity synthesized by or on behalf of Array and delivered to Takeda in the course of the Research Program.


1.6 "Consumer Price Index" or "CPI" means the Consumer Price Index, All Urban Consumers, as published by the U.S. Bureau of Labor Statistics.


1.7 "Control," "Controls" or "Controlled" means possession of the ability to grant licenses or sublicenses to the other party hereto (other than by virtue of this Agreement and the licenses granted herein), without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party.


1.8 "Derivative Compound" shall mean any chemical entity made by or on behalf of Takeda which:


(a) results from a chemical synthesis program based on one or more
Compounds;


(b) is based on structure-activity data relating to a Compound in the
Field; or


(c) is covered by the claims of any patent application or patent filed
by Takeda, in accordance with Section 6.2(a) and 6.2(b) below, which patent
application or patent discloses any compound in subsection (a), or (b)
above.


"Derivative Compound" also includes any compound made based on, derived from, or related to another Derivative Compound in any way set forth in subsections (a), (b) or (c) above.


1.9 "Extension Period" shall have the meaning set forth in Section
2.4.


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1.10 "Field" shall mean the discovery, and development of small molecule therapeutics for the treatment [***] in humans through the use of a compound, the mechanism of action of which is [***].


1.11 "FTE" shall mean a full-time person dedicated to the Research Program, or in the case of less than a full-time dedicated person, a full-time, equivalent person year, based upon a total of one thousand eight hundred eighty (1,880) hours per year of work in connection with the Research Program.


1.12 "Initial Term" shall mean the period commencing on the Effective Date and [***].


1.13 "Lead Compound" shall mean any Compound which demonstrates activity in the Field in accordance with the criteria set forth on Exhibit 1.


1.14 "Lead Product" shall mean any therapeutic or prophylactic product for use in the Field, incorporating as an active ingredient a Lead Compound without any covalent modification.


1.15 "Net Sales" shall mean the gross invoice price by Takeda or its Affiliates or licensees, as the case may be, for all Lead Products sold by Takeda, its Affiliates or licensees ("Selling Party"), under this Agreement in arm's length sales to Third Parties less reasonable deductions allowed to the Third Party customer by the Selling Party to the extent actually taken by such Third Party customer, on such sales for: (a) trade, quantity, and cash discounts; (b) credits, rebates (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 retroactive price reductions affecting such Product; (c) freight, postage and duties; (d) sales and excise taxes, other consumption taxes, customs duties and compulsory payments to governmental authorities and any other governmental charges imposed upon the sale of such Lead Product to Third Parties and (e) any other deductions to the extent actually taken by such Third Party customer. Notwithstanding the foregoing, Net Sales shall not include sales among Takeda, its Affiliates and licensees for resale, provided that such resale shall be included within Net Sales.


1.16 "Product" shall mean any therapeutic or prophylactic product for use in the Field, incorporating as an active ingredient a Collaboration Compound.


1.17 "Research Program" shall mean the research activities undertaken by the parties pursuant to Article 2 below.


1.18 "Research Plan" shall mean the written research plan governing the effort of the parties in conducting the Research Program, which may be amended, from time to time by the parties, as they deem necessary or appropriate. The initial Research Plan is attached hereto as Exhibit 2.


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1.19 "Research Term" shall mean the term of the Research Program, as provided in Section 2.4 below.


1.20 "SAR Information" shall mean information relating to the relationship between the biological activity of a chemical entity and its molecular structure.


1.21 "Scaffold" shall mean a core chemical structure, synthesized by a conserved chemistry process.


1.22 "Takeda Technology" shall mean (i) all information, data, know-how, patents and patent applications that claim an invention comprising Takeda's Scaffolds or other chemical techniques that are necessary to conduct the Research Program, and (ii) any divisions, continuations, continuations-in-part, reissues, reexaminations, or extensions, thereof and any substitutions, confirmations or registrations of any of the foregoing, in each case, which is owned or Controlled by Takeda.


1.23 "Third Party" shall mean any person or entity other than Array and Takeda, and their respective Affiliates.


2. RESEARCH PROGRAM


2.1 Goal. The goal of the Research Program is the generation of Compounds and the identification of Lead Compounds within the Field.


2.2 Research Plan. The Research Plan specifies the Array personnel to conduct activities with respect to the Research Program. If Array desires to change some Array personnel, alternative personnel shall be proposed by Array and approved by Takeda, such approval not to be unreasonably withheld. Takeda shall have the option, at its own expense, to interview such proposed personnel; provided, however, that Takeda shall use diligent efforts to conduct such interviews as expeditiously as possible to avoid delay of the Research Program. The Research Plan may be modified as mutually agreed by Array and Takeda.


2.3 Research Program Activities. Subject to the terms and conditions set forth herein, the parties agree to conduct research under the Research Plan. During the Research Term, Array and Takeda shall each use their commercially diligent efforts to identify Lead Compounds in accordance with the Research Plan.


(a) Array Responsibilities. Array shall use reasonable efforts to
perform the Research Program, in view of the Array personnel resources to
be devoted to the Research Program in accordance with the Research Plan,
with the goal of generating Compounds from the Scaffolds and/or the
screening results of Compounds fed back from Takeda which may be
antagonists against [***], and providing necessary amount of such
Compounds, together with related information including without limitation,
structural information to Takeda for screening in order to


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identify Lead Compounds in accordance with the Research Plan. Array shall
purify each synthesized Compound to at least [***] purity, as analyzed by
liquid chromatography-mass spectroscopy, and to provide Takeda with at
least [***] of each Compound to enable Takeda to conduct its activities
under the Research Plan. Risk of loss for and title to the Compounds
provided by Array to Takeda under this Agreement shall pass from Array to
Takeda upon delivery by Array to the shipping agent in the United States
designated by Takeda. During the Research Program, Array will provide [***]
FTEs to conduct the Research Program, or such greater number as the parties
may agree.


(b) Takeda Responsibilities. Takeda shall use reasonable efforts to
promptly screen Compounds provided by Array against the [***]. In addition,
Takeda shall provide Array with such support and assistance as Array may
reasonably request, including without limitation, providing Array with SAR
Information and other Takeda Technology.


(c) Takeda Participation. During the term of the Research Program,
each party shall keep the other informed of its activities in the Field.
The parties shall meet in person at least quarterly at mutually agreed
locations, with Array's travel, accommodation and other expenses actually
incurred for such meetings to be reimbursed by Takeda [***]. It is
understood that the conduct of the Research Program will take place
primarily at Array's facilities. To ensure participation by Takeda, the
parties' respective personnel shall hold at least bi-weekly project
meetings, in person or by telephone or videoconference, to exchange
information with respect to the Research Program. [***] during the term of
the Agreement and subject to Array's approval (with such approval not
unreasonably withheld), upon fifteen (15) days written notice to Array,
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2.4 Extension of Research Program Term.


(a) Option to Extend. Takeda shall have the right to extend the term
of the Research Program for up to [***] successive [***] terms beyond the
Initial Term (each an "Extension Period"). To exercise such option, Takeda
shall so notify Array in writing at least ninety (90) days prior to the end
of the Initial Term or the first Extension Period, whichever is applicable
and then, Array and Takeda shall negotiate for the amendment of the
Research Plan.


(b) Extension Terms. During each Extension Period, Takeda shall
continue to fund the same number of Array FTEs conducting activities under
the amended Research Program as Takeda funded at the end of the Initial
Term or first Extension Period, whichever is applicable or such other
greater number as the parties may agree.


2.5 Identification of Lead Compounds.


(a) General. The parties have established that a chemical entity,
which meets the guidelines set forth in Exhibit 1, shall be deemed a Lead
Compound. Takeda shall promptly notify Array of the identification from the
Compounds of any Lead Compound.


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2.6 Exclusivity. Except as set forth herein, during the Initial Term, any Extension Periods and for [***] afterwards, Array shall not, without Takeda's consent, conduct, participate in, or fund, directly or indirectly, alone or with an Affiliate or a Third Party, compound discovery research specifically directed to the Field, except pursuant to the Agreement.


2.7 Substitute Targets. If, during the Initial Term or any Extension Periods, Takeda determines there is insufficient progress toward identification of Lead Compounds in the Field, Takeda may propose, under a separate confidentiality agreement, a substitute target against which Takeda may screen the Compounds without paying any additional consideration. Within [***] days after receipt of Takeda's proposal, Array shall notify Takeda whether such substitute target may be pursued without a conflict with or breach of Array's existing agreements with Third Parties and that Array agrees to pursue such substitute target. Upon Takeda's receipt of Array's agreement to pursue such substitute target, (i) so much of the first sentence of Section 1.10 as reads [***] shall be replaced by the disease state and the identity of the substitute target, respectively. In the event that Array cannot pursue such substitute target proposed by Takeda, then Takeda shall propose another substitute target under this Section 2.7.


2.8 Records; Inspection. Array and Takeda shall maintain records of the Research Program (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved in the performance of the Research Program (including all data in the form required under any applicable governmental regulations).


3. LICENSES; OPTION


3.1 License to Takeda.


(a) Research License. Subject to the terms and conditions of this
Agreement, Array agrees to grant and hereby grants to Takeda under Array's
Technology and Array's interest in Collaboration Technology, a
non-exclusive, non-transferable, non-sublicensable, royalty-free license,
without the right to grant sublicenses, solely to conduct the Research
Program.


(b) Further Activity. Array hereby grants to Takeda under Array's
interest in Collaboration Technology, a non-exclusive, royalty-free
license, without the right to grant and authorize sublicenses, to exploit
the same for purposes inside and outside the Field. Notwithstanding the
foregoing, Takeda shall have the right to grant sublicenses for the
purposes of making, or having made Compounds and/or Derivative Compounds.


3.2 Licenses to Array.


(a) Research License. Subject to the terms and conditions of this
Agreement, Takeda agrees to grant and hereby grants to Array under Takeda
Technology and Takeda's interest in Collaboration Technology, a
non-exclusive, non-transferable, non-sublicensable, royalty-free license,
without the right to grant sublicenses, solely to conduct the Research
Program.


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(b) Activities Outside Field. Takeda hereby grants to Array under
Takeda's interest in Collaboration Technology, a non-exclusive,
royalty-free license, with the right to grant and authorize sublicenses, to
exploit the same for purposes outside the Field, provided however, that
such license shall not extend to the composition of matter and the method
of use of any Compounds and/or Derivative Compounds.


3.3 No Implied Licenses. Only the licenses granted pursuant to the express terms of this Agreement shall be of any legal force or effect. No other license rights shall be created by implication, estoppel or otherwise.


4. PAYMENTS


4.1 Research Program Funding.


(a) Research Phase Payment Schedule. Takeda agrees to pay Array
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