Collaboration Agreement

DRUG DISCOVERY COLLABORATION AGREEMENT


BETWEEN


ARRAY BIOPHARMA CORPORATION


AND


ICOS CORPORATION


JULY 31, 2000


[ * ] = 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 406 of the Securities Act of 1933, as amended.


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THIS DRUG DISCOVERY COLLABORATION AGREEMENT (the "Agreement") is entered into and made effective as of July 31, 2000 (the "Effective Date"), by and between ARRAY BIOPHARMA INC, a Delaware corporation having its principal offices located at 1885 33rd Street, Boulder, CO 80301 ("Array") and ICOS CORPORATION, a Delaware corporation having its principal offices located at 22021 20th Avenue S.E., Bothell, Washington 98021 ("ICOS").


WHEREAS, Array has skills, expertise and experience in multi-parallel synthesis and purification methods, developing and preparing chemical libraries suitable for high throughput biological screening assays and medicinal chemistry;


WHEREAS, as of the Effective Date, ICOS and its Affiliates have developed and own, among other things, certain know how and intellectual property rights, assays, methods and lead compounds that may be potential drug candidates directed to PDE4, [ * ] and the Optimization Targets, (as defined below) (collectively "ICOS Technology");


WHEREAS, ARRAY and ICOS have entered that certain Lead Optimization Agreement ("LO Agreement") dated December 22, 1998, for the optimization of, among other things, such lead compounds directed against PDE4;


WHEREAS, ARRAY and ICOS have entered into that certain Cell Cycle Checkpoint Optimization Agreement ("C3 Agreement) dated April 6, 1999, for the optimization of, among other things, such lead compounds directed against [ * ];


WHEREAS, ARRAY and ICOS desire to consolidate the optimization programs initiated pursuant to the LO and C3 Agreements with an optimization program against the Optimization Targets;


WHEREAS, ARRAY and ICOS have mutually agreed to cancel and terminate the LO Agreement and the C3 Agreement in their entirety and to release each other from all obligations, accrued or outstanding, under the LO Agreement and the C3 Agreement, all under the terms and conditions as set forth herein below;


NOW, THEREFORE, the Parties agree as follows:


1. DEFINITIONS


1.1 "Active Target" means an Optimization Target for which ICOS has provided reasonable written notice to Array as de scribed in Section 3.1 of this Agreement, that such Optimization Target shall be included in the Optimization Program and for which an Optimization Plan shall be produced. For the purpose of this definition reasonable notice shall be [ * ] days


[ * ] = 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 406 of the Securities Act of 1933, as amended. 3


unless the parties have agreed to a shorter period of notice either by written agreement or by the Parties' performance.


1.2 "Affiliate" of a Party means any corporation or other business entity controlled by, controlling or under common control with, such Party. For this purpose "control" shall mean direct or indirect beneficial ownership of more than fifty percent (50%) of the voting securities or income interest in such corporation or other business, or if not meeting the preceding requirements, any company owned or controlled by or owning or controlling such Party at the maximum control or ownership right permitted in the country where such company exists.


1.3 "Array Compound" means a chemical compound that is proprietary to Array, or whose use or manufacture is proprietary to Array.


1.4 "Array Patents" means all Patents which claim any Array Technology and that are Controlled by Array during the Exclusivity Period, but shall exclude any claims of an Optimization Patent. For purposes of this definition, "controlled" shall mean the ability to grant a license or sublicense as provided for in Section 8.1 below.


1.5 "Array Technology" means certain know-how, intellectual property or patents (i) developed, licensed and/or owned by Array, prior to the Effective Date or (ii) developed licensed and/or owned by Array outside of the Optimization Program and used by Array in the Optimization Program, or (iii) developed during the Optimization Program and not having solely specific or novel application to the Optimization Program (i.e. such know-how, intellectual property, or patents having application outside of the development, manufacture, use, sale, or importation of Optimization Compounds or Products). Array Technology shall not include Daughter Libraries or Optimization Compounds.


1.6 "Confidential Information" shall mean:


(a) all information and materials received by
either Party from the other Party pursuant
to this Agreement which is confidential
under Section 10;


(b) all information and materials received by
either Party from the other Party in
connection with the Optimization Program
during the Optimization Period, including,
without limitation, structures of lead
compounds provided by ICOS to Array, to the
extent the same is confidential under
Section 10; and


(c) the financial terms of this Agreement and
the identity of the Optimization Targets, to
the extent the same are confidential under
Section 10.


[ * ] = 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 406 of the Securities Act of 1933, as amended.


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1.7 "Daughter Libraries" shall mean the compound libraries which are designed and synthesized as a part of the Optimization Program by Array.


1.8 "Derivative" shall mean a compound (or compounds) which has resulted from chemical synthesis by ICOS in connection with the Optimization Program or which is derived from an Optimization Compound.


1.9 "Exclusivity Period" means the Optimization Period for any Active Target plus [ * ].


1.10 "Field" means all indications for any Optimization Target against which an Optimization Compound or Products may be directed.


1.11 "FTE" shall mean a full-time equivalent employee of Array having the skills, support, services and resources to fulfill Array's obligations under this Agreement. For purposes of this Agreement, the FTEs shall include synthetic and analytical chemists and upon approval by ICOS may also include Array employees with the skills required to facilitate a structure based drug design program.


1.12 "Milestone Compound" shall have the meaning set forth in Section 7.2.


1.13 "Optimization Compound(s)" means a compound (or compounds) which is (i) synthesized by Array following the Effective Date in the course of performing the Optimization Program for the purpose of screening against an Active Target, (ii) was synthesized by Array, for the purpose of screening against an Active Target, in the course of performing lead compound optimization under the LO agreement, or (iii) was synthesized by Array, for the purpose of screening against an Active Target, in the course of performing lead compound optimization under the C3 Agreement.


1.14 "Optimization Patent" means a Patent claiming and disclosing the composition of an Optimization Compound or the manufacture thereof, for which Array has made an inventive contribution to the subject invention in the course of performing the Optimization Program, as determined under U.S. Patent law. Notwithstanding the foregoing, Optimization Patents shall only include Patents to the extent the same (i) is entitled to a first effective filing date for priority purposes (i.e., for priority purposes under 35 USC, or the corresponding laws of the country in which such Patent is filed) after the Effective Date and (ii) claims subject matter reduced to practice (either actual or constructive) prior to the date [ * ] after the end of the Optimization Period.


1.15 "Optimization Period" means the term of the Optimization Program as provided in Section 9 of this Agreement.


[ * ] = 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 406 of the Securities Act of 1933, as amended.


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1.16 "Optimization Plan" means the Optimization Plan for each Optimization Target to be prepared by Array approved and accepted by ICOS, which describes in agreed detail the research activities to be performed by Array for each Active Target.


1.17 "Optimization Program" means the research and activities for each Optimization Target to be conducted under this Agreement as described in the Optimization Plan and as set forth in Sections 3.1 and 3.2 of this Agreement.


1.18 "Optimization Target" means any [ * ] biomolecular entities described in Appendix B, at execution of this Agreement, or as substituted by mutual written agreement of the Parties, and unless otherwise specified may include Active Targets, and shall in each case be selected from Appendix B.


1.19 "Project Team" shall have the meaning set forth in Section 3.1(c).


1.20 "Party" means Array or ICOS, as the case may be, including their respective permitted assigns of this Agreement under Section 13 below.


1.21 "Patent" means (a) valid and enforceable U.S. or non U.S. Patent, and any non-U.S. equivalent, including any extension (including Supplemental Protection Certificates), registration, confirmation, reissue, continuation, divisionals, continuation-in-part, reexamination or renewal thereof, or (b) pending applications for any of the foregoing.


1.22 "Product(s)" means any product containing an Optimization Compound or Derivative with such compound as the active ingredient or one of the active ingredients, which is the subject of one or more claims under an Optimization Patent and which is granted regulatory approval by the governing health regulatory authority of the applicable country for marketing in the Field.
1.23 "Restored Active Target" means an Active Target which has ceased to be an Active Target either by Agreement of the Parties or by operation of the Optimization Program, and which, by reasonable written notice has been again designated as an Active Target. For the purposes of this definition reasonable notice shall be [ * ] unless the Parties have agreed to a shorter period of notice either by written Agreement or by parties performance.


1.24 "Territory" means the entire world.


1.25 "Third Party" means an entity other than Array or ICOS or their respective Affiliates.


[ * ] = 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 406 of the Securities Act of 1933, as amended.


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2. CANCELLATION AND TERMINATION


2.1 Cancellation and Termination. As of the Effective Date of this Agreement, Array and ICOS hereby irrevocably cancel and terminate the LO Agreement in its entirety. Array and ICOS also hereby irrevocably cancel and terminate the C3 Agreement in its entirety Except as expressly set forth herein, (i) all rights and obligations of Array and ICOS under the LO Agreement and under the C3 Agreement are hereby canceled and terminated, (ii) all rights and licenses granted under the LO Agreement or the C3 Agreement shall revert to the party granting such right or license, and (iii) no terms and conditions of the LO Agreement or the C3 Agreement shall survive. For the avoidance of doubt, it is however intended by the parties that this consolidated Agreement shall give the same rights, obligations and duties to the parties for PDE4 and [ * ] as under the Lead Optimization Agreement and C3 Agreement respectively.


2.2 Settlement and Release. Each party hereto agrees that this Agreement represents settlement in full of all outstanding obligations owed to the other party under the LO Agreement and the C3 Agreement. Array and ICOS, on behalf of themselves, and their respective heirs, executors, officers, directors, employees, investors, shareholders, administrators, predecessor and successor corporations, and assigns, hereby fully and forever release each other and their respective heirs, executors, officers, directors, employees, investors, shareholders, administrators, predecessor and successor corporations, and assigns, of and from any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that any of them may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Agreement.


3. OPTIMIZATION PROGRAM


3.1 Array Responsibilities. Array shall with due diligence provide the following services and resources to ICOS and conduct the following activities in accordance with the Optimization Plan:


(a) During the Optimization Period, Array shall
(i) review data and information regarding
Active Targets and lead compounds provided
by ICOS; (ii) based on such data and
information design Daughter Libraries and
optimize the lead compounds supplied by ICOS
and (iii) synthesize compounds as provided
in Section 6.3 below;


(b) During the Optimization Period, Array shall
keep ICOS regularly informed of its
activities performed in connection with the
Optimization Program, including, without
limitation, providing ICOS with data and
information (and, upon ICOS's written
request, reasonable quantities of samples
pursuant to Section 6.3) regarding the
status of Array's work on Optimization
Compounds under the Optimization Plan;


[ * ] = 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 406 of the Securities Act of 1933, as amended. 7


(c) Subject to Sections 3.3, 4 and 7, and at all
times during the Optimization Period, Array
shall assign a project team ("Project
Team"), to conduct Array's activities under
the Optimization Plan. The initial Project
Team shall consist of [ * ] Array FTEs,
unless changed according to Sectio ...