Research, Development And License Agreement

EXHIBIT 10.1


RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT


by and between


WARNER-LAMBERT COMPANY


and


LIGAND PHARMACEUTICALS INCORPORATED


dated


September 1, 1999


TABLE OF CONTENTS


ARTICLE 1 - DEFINITIONS.................................. 3


ARTICLE 2 - RESEARCH PROGRAM ............................ 9


ARTICLE 3 - MANAGEMENT OF THE RESEARCH PROGRAM .......... 13


ARTICLE 4 - DEVELOPMENT PROGRAM ......................... 14


ARTICLE 5 - LICENSES -- RESEARCH, DEVELOPMENT,
MARKETING AND MANUFACTURING ................. 15


ARTICLE 6 - ROYALTIES, MILESTONES AND OTHER PAYMENTS..... 17


ARTICLE 7 - INFRINGEMENT ACTIONS BY THIRD PARTIES........ 22


ARTICLE 8 - CONFIDENTIALITY.............................. 22


ARTICLE 9 - PUBLICATION ................................. 23


ARTICLE 10 - PATENTS AND INVENTIONS....................... 24


ARTICLE 11 - REPRESENTATIONS AND WARRANTIES............... 26


ARTICLE 12 - TERM AND TERMINATION ........................ 28


ARTICLE 13 - FORCE MAJEURE................................ 31


ARTICLE 14 - ASSIGNMENT................................... 31


ARTICLE 15 - REGULATORY MATTERS .......................... 31


ARTICLE 16 - SEVERABILITY................................. 32


ARTICLE 17 - INDEMNIFICATION ............................. 32


ARTICLE 18 - MISCELLANEOUS ............................... 33


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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT


THIS RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT, (this "Agreement"), effective the 1st day of September , 1999 (the "Commencement Date"), is by and between WARNER-LAMBERT COMPANY, a Delaware corporation, having its principal place of business at 201 Tabor Road, Morris Plains, New Jersey 07950 ("Warner-Lambert"), and LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation, having its principal place of business at 10275 Science Center Drive, San Diego, California 92121 ("Ligand"). Warner-Lambert and Ligand may be referred to herein individually as a "Party" or collectively as the "Parties".


R E C I T A L S


WHEREAS, Ligand has developed certain expertise and acquired certain proprietary rights relating to the discovery and development of pharmaceutical products for the treatment and prevention of diseases, which products act through the estrogen receptors;


WHEREAS, Warner-Lambert has certain expertise in the discovery, development, marketing and sales of pharmaceutical products;


WHEREAS, Warner-Lambert and Ligand desire to engage in a joint research and development effort to discover and/or design small molecule compounds which act through the estrogen receptors and to develop pharmaceutical products from such compounds (the "Collaboration"); and


WHEREAS, in conjunction with such joint research and development, Warner-Lambert desires to sponsor certain research and development activities to be carried out by Ligand, and Ligand and Warner-Lambert desire that Warner-Lambert commercialize products resulting from the joint research and development;


NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, Warner-Lambert and Ligand agree as follows:


ARTICLE 1


DEFINITIONS


For the purposes of this Agreement, the terms defined in this Article 1 shall have the respective meanings set forth below:


"Act" shall have the meaning set forth in Section 10.5.


"Affiliate" shall mean, with respect to a Party, any other business entity which directly or indirectly controls, is controlled by, or is under common control with, such Party. As used in this definition of "Affiliate", the term "control" shall mean direct or indirect beneficial ownership of more than 50% of the voting or income interest in such business entity.


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"Affiliated Customer" shall mean, with respect to a Party, any Affiliate or Sublicensee.


"ANDA" shall have the meaning set forth in Section 10.5.


"Background Technology" shall mean all technology, inventions, information, data, know-how, compounds and materials (whether or not patented or patentable) that (a) relate to the discovery, design, synthesis, delivery, development, testing, use, manufacture or sale of Collaboration Compounds, Collaboration Lead Compounds or Products for use in the Field, (b) exist as of the Commencement Date, (c) are owned or Controlled by a Party hereto, and (d) are necessary for the conduct of the Collaboration.


"Backup Compound" shall have the meaning set forth in Section 6.10.2.


"Claim" shall have the meaning set forth in Article 17.


"Clinical Development" shall mean the development of any Collaboration Compound in the Field from and after the filing of an IND, through and including product registration.


"Collaboration" shall have the meaning set forth in the third paragraph in the Recitals.


"Collaboration Compound" shall mean a compound which is first identified, first confirmed, first discovered, or first synthesized and identified by either Ligand or Warner-Lambert as having Field Activity during the Term of the Research Program or by Ligand or Warner-Lambert for *** thereafter. A Collaboration Compound whose Field Activity is first confirmed, discovered or identified when the compound is already in at least "preclinical development" outside the Field by Warner-Lambert (or an affiliate, licensee or collaborator of Warner-Lambert), shall not generate any obligation to Ligand in the form of royalties or milestone payments unless designated a Collaboration Lead Compound by Warner-Lambert during the Research Program or within .........*** thereafter. For the purpose of this definition, the term "preclinical development" means the commencement of a structure/activity relation program on or including the compound in question.


"Collaboration Lead Compound" shall mean a Collaboration Compound or Background Technology compound that, during the term of the Research Program or any extension thereof, has met criteria established by the JRC of safety and efficacy for advancement into Pre-Clinical Development and which is selected by Warner-Lambert as a Collaboration Lead Compound according to Section 4.1.


"Collaboration Technology" shall mean (a) all Collaboration Compounds and information related thereto; (b) such technology, inventions, information, data, know-how and materials (whether or not patented or patentable) that (i) a Party hereto owns or Controls, (ii) related to the Field and (iii) are conceived, generated or reduced to practice during the Term of the Research Program pursuant to the Research Program, including, without limitation, improvements on either Party's Background Technology; and (c) all patents, trade secrets and other intellectual property rights covering any of (a) or (b).


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"Commencement Date" shall mean the date of this Agreement first written above.


"Competing Product" shall mean, with respect to each specified Collaboration Compound or Product, (a) any other Collaboration Compound or Product which exhibits therapeutic or prophylactic activity which is similar to that exhibited by such specified Collaboration Compound or Product, or which is being developed for *** for which the specified Collaboration Compound or Product is also being developed, and (b) a compound which is not a Collaboration Compound, or a product which does not contain a Collaboration Compound, which is under active development by Warner-Lambert or that is actually being sold by Warner-Lambert and which exhibits therapeutic or prophylactic activity which is similar to such specified Collaboration Compound or Product.


"Confidential Information" shall have the meaning set forth in Section 8.2


"Control" or "Controlled" shall mean possession of the ability to grant the licenses or sublicenses as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.


"Cost of Goods" shall mean the cost of finished products sold and shall be computed in accordance with United States Generally Accepted Accounting Principles. Cost of Goods shall include Warner-Lambert's Cost of Manufacture of such finished products, as well as the net cost or credit of any value-added taxes actually paid or utilized in respect of the finished products, but shall not include any royalty owed to Ligand.


"Cost of Manufacture" shall mean the fully allocated cost of manufacturing of a product (in accordance with Good Manufacturing Practices), which includes the direct and indirect cost of any raw materials, packaging materials, and labor (including benefits) utilized in such manufacturing including formulation, filling, finishing, labeling, and packaging, (as applicable) plus an appropriate share of all factory overhead, both fixed and variable, allocated to the product being manufactured, in accordance with the normal accounting practices for all other products manufactured in the applicable facility.


"Designated Targets" shall mean the alpha and beta forms of the estrogen receptor and all splice variants thereof.


"Development Costs" shall mean ***


***
***
***


***
***


***


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***
***


***
***.


General corporate overhead shall be excluded from Development Costs.


"Europe" shall mean France, Germany, Great Britain, Italy and Spain.


"Exploratory Term" shall have the meaning set forth in Section 2.2.


"Extension Term" shall have the meaning set for the in Section 2.2.


"FDA" shall mean the United States Food and Drug Administration or any successor entity thereto.


"Field" shall mean the discovery, characterization, design and development of small molecule compounds for the treatment or prevention of diseases and whose beneficial effects are mediated through the Designated Targets.


"Field Activity" shall mean the ability of a particular compound to inhibit, stimulate or otherwise modulate activity of a Designated Target with an *** of less than *** and which has at least a ***selectivity for the Designated Target compared to *** *** . The JRC may amend the criteria which are used to define Field Activity.


"FTEs" shall mean one or more researchers with appropriate qualifications employed by Ligand or Warner-Lambert and assigned to work on the Collaboration with such time and effort to constitute one such researcher working on the Collaboration on a full time basis for no less than *** hours per year.


"IND" shall mean an Investigational New Drug Application as defined in the United States Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any corresponding foreign equivalent.


"Indemnified Group" shall have the meaning set forth in Article 17.


"Invention" shall have the meaning set forth in Section 10.2.


"Inventor" shall have meaning set forth in Section 10.2.


"Joint Research Committee" or "JRC" shall mean the joint research committee composed of representatives of Ligand and Warner-Lambert described in Section 3.1 hereof.


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"NDA" shall mean a New Drug Application as defined in the United States Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any corresponding foreign equivalent.


"Net Sales" shall mean with respect to a Product, or product subject to royalty under this Agreement , the gross amount invoiced to Non-Affiliated Customers for all units of such Product, or product subject to royalty under this Agreement , sold by Warner-Lambert (or in the case of a product subject to royalty under Section 12.3, by Ligand) and its Affiliated Customers, after deduction for the following items ***
***
***
***
***
***
***
***
***.


"Non-Affiliated Customer" shall mean any purchaser of Product who is not an Affiliated Customer.


"Patent Rights" shall mean, with respect to Warner-Lambert or Ligand (a) all patent applica-tions heretofore or hereafter filed in any country within the Territory owned or Controlled by or licensed to Ligand or Warner-Lambert during the Term of this Agreement, together with any and all United States and foreign patents that have issued or in the future issue therefrom, and (b) all divisionals, continuations, continuations-in-part, reexaminations, reissues, renewals, substitutions, confirmation, registrations, revalidations, extensions or additions to any such patents and patent applications and patents issuing thereon; all to the extent and only to the extent that Ligand or Warner-Lambert now has or hereafter will have the right to grant licenses or other rights thereunder.


"Phase I", "Phase II", and "Phase III" shall mean Phase I (or Phase I/II), Phase II and Phase III clinical trials, respectively, in each case as prescribed by the applicable Regulatory Agency's regulations.


"Pre-Clinical Development" shall mean, after selection of a Collaboration Lead Compound under Section 4.1, all activities undertaken to develop the Collaboration Lead Compound in the Field up to and including the filing of an IND on such Collaboration Lead Compound, which are determined by the JRC or Warner-Lambert to be necessary or desirable to file an IND on such Collaboration Lead Compound, including the preparation and filing of an IND.


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"Primary Screening" shall mean conducting any assay, screen or other test on a compound under the Research Program to determine initially whether such compound exhibits Field Activity, including without limitation such assays, screens and other tests set forth in the Research Plan and which Ligand currently has in its possession.


"Product" shall mean a pharmaceutical product which has as one of its active ingredients a Collaboration Lead Compound that has been approved by the applicable Regulatory Agency for marketing in a country for treatment, palliation or prevention of disease in the Field.


"Project Leader" shall have the meaning set forth in Section 3.3.


"Regulatory Agency" shall mean the FDA and agencies of other governments of other countries having similar jurisdiction over the development, manufacturing and marketing of pharmaceutical products.


"Research Plan" shall mean the research plan for the conduct of the collaboration, which is established and modified from time to time by the JRC.


"Research Program" shall mean the program of research in which Ligand and Warner-Lambert will participate and which is described generally in the Research Plan.


"Secondary Screening" shall mean conducting any assay, screen or other test using intracellular receptors on a Collaboration Compound, after the Primary Screening of such Collaboration Compound, for the purpose of confirming the results of the Primary Screening or to test such Collaboration Compound for cross-reactivity with other than the Designated Target.


"Sublicensee" shall mean any Third Party who is granted the right to sell a Product or a product subject to a royalty under Section 12.3.


"Term of the Research Program" shall have the meaning set forth in Section 2.2.


"Term of this Agreement" shall mean the period from the Commencement Date until, with respect to each Product, the expiration of the last royalty obligation owed by one Party to the other with respect to such Product, or until this Agreement is otherwise terminated pursuant to its terms.


"Territory" shall mean the entire world.


"Third Party" shall mean any party other than Warner-Lambert or Ligand or an Affiliate of either of them.


"Trigger Event" shall have the meaning set forth in Section 6.10.1.


"Valid Claim" shall mean a claim of an issued, unexpired and unabandoned patent included within the Patent Rights owned or Controlled by a Party, which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise.


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"Withheld Party" shall have the meaning set forth in Section 6.6.


"Withholding Party" shall have the meaning set forth in Section 6.6.


ARTICLE 2


RESEARCH PROGRAM


2.1. Conduct of Research. Each Party shall diligently conduct the work assigned to it in the Research Plan in a professional manner and in compliance with all requirements of applicable laws and regulations. Promptly after the Commencement Date, each Party shall disclose to the other all Background Technology then possessed by it which it deems to be relevant to the Field and which it deems to be necessary or helpful for the other Party to perform the work set out in the Research Plan. Each Party agrees to commit the qualified and experienced personnel, facilities, equipment, expertise and other resources necessary to perform its obligations under the Research Program.


2.2. Term of the Research Program. The term of the Research Program (the "Term of the Research Program"), shall be comprised of two components. The first component shall begin on the Commencement Date and shall terminate on the fifteen month anniversary of the Commencement Date (the "Exploratory Term"). If Warner-Lambert gives written notice to Ligand of its intention to sponsor the Extension Term no later than fourteen months after the Commencement Date, then the second component of the Term of the Research Program shall commence upon expiration of the Exploratory Term and shall terminate on the third anniversary of the Commencement Date (the "Extension Term"). If no notice is given by Warner-Lambert, or if notice is given after fourteen months from the Commencement Date, the Research Program shall terminate upon termination of the Exploratory Term unless otherwise agreed in writing by Ligand.


2.3. Allocation of Personnel. Unless otherwise recommended by the JRC, Ligand and Warner-Lambert shall allocate FTEs at the times, in the numbers and for the areas of activity set forth below:


(a) During the Exploratory Term:


(i) ***


Area of Activity Commencement Date March 1, 2000
to February 28, 2000 to November 30, 2000


*** *** ***


*** *** *** --------------
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*** *** ***


*** *** ***


(ii) ***


*** *** ***


(b) During the Extension Term


(i) ***


*** as determined by the JRC


(ii) ***


*** as determined by the JRC


Allocation of personnel not within the ranges of (b)(i) and (b)(ii) shall require the written consent of the JRC.


2.4. Screening Responsibility. Ligand shall be responsible for conducting *** and *** as set forth in the Research Plan and as designated by the JRC, and shall promptly inform Warner-Lambert and the JRC of the progress and results thereof (including providing Warner-Lambert with the screening methodology and all raw data on a monthly basis).


2.5. Transfer of Background Technology. Commencing after the Commencement Data, and from time to time thereafter, each Party shall disclose to the other Party such of its Background Technology as is reasonably necessary to enable the other Party to perform Collaboration activities hereunder in accordance with the Research Plan. During the Term of the Research Program, each Party will provide the other Party with reasonable technical assistance relating to the use and practice of such Party's Background Technology, solely to the extent permitted under the licenses granted to the other Party herein.


2.6. Subcontracts. Neither Ligand nor Warner-Lambert shall subcontract to Third Parties portions of the Research Plan to be performed by it or contract with consultants to provide services specifically relating to the Research Plan to any Third Party without the prior consent of the JRC, which consent shall not be unreasonably withheld. Any such subcontractor shall enter into a confidentiality agreement with the contracting Party which shall require such subcontractor to maintain Confidential Information in confidence, and any such subcontractor shall be required to comply in all material respects with all requirements of applicable laws and


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regulations, together with all applicable good laboratory practices and good manufacturing practices. The contracting Party shall negotiate and execute the applicable agreement with such Third Party, at its expense, and shall supervise and be responsible under this Agreement for such subcontracted work. All such subcontracts shall contain terms consistent with the terms of this Agreement.


2.7. Information and Reports Concerning Collaboration Technology. All Collaboration Technology made by either Party will be promptly disclosed to the other Party, with significant discoveries or advances being communicated as soon as practical after such information is obtained or its significance is appreciated. The Parties will exchange at least monthly verbal or written reports presenting a meaningful summary of their activities performed under this Agreement. In addition to the foregoing, each Party shall promptly provide to the other, as necessary, biological materials and the structures of all Collaboration Compounds prepared or developed by such Party pursuant to the Research Program.


2.8. Funding of the Research Program. In consideration for Ligand's performance of its obligations under the Research Program, Warner-Lambert shall pay Ligand an amount for the FTEs employed by Ligand in the Research Program according to the following schedule:


During the Exploratory Term: $ *** payable in 4 equal
quarterly installments due on
......... January 1, 2000, April 1, 2000,
......... July 1, 2000 and October 1, 2000


From commencement of the Extension
Term to December 31st, 2001: $ *** per FTE per year.


From January 1st 2002 to December 31, 2002: $ *** per FTE per year


*** ***


During the Extension Term, Warner-Lambert shall pay Ligand quarterly in advance for services to be performed by Ligand's FTEs under the Research Program. The first payment shall be due and payable on December 1, 2000 and shall include payment for any services rendered between December 1, 2000 and December 31, 2000 . Subsequent payments shall be due and payable on the first day of each calendar quarter starting with the calendar quarter starting on January 1, 2001. In the event Warner-Lambert elects not to extend the Term of the Research Program for the Extension Term as set forth in Section 2.2, Ligand shall reimburse Warner-Lambert for *** of the *** payments made by Warner-Lambert for FTEs for *** *** . Ligand shall apply the research funding it receives from Warner-


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Lambert under this Agreement solely toward paying the FTE's to conduct research with the goal of achieving the objectives of the Research Program.


2.9. Exclusivity. Except as permitted in Article 12, during the Term of the Research Program, neither Ligand nor Warner-Lambert shall engage in any pre-clinical (i.e, up to the filing of an IND) research activity independent of the Collaboration, alone or with a Third Party, in the Field; provided, however, that a Party shall have the right to engage in such pre-clinical research activity if it acquires all or substantially all of the assets, stock or ownership interest of a Third Party which is engaged in activities in the Field. A Party should not be deemed to be in violation of this provision if it conducts research of compounds or products outside the Field, including cross-reactivity testing using Designated Targets, if such compounds or Products have activity within the Field.


2.10 Records.


2.10.1 Records. Ligand and Warner-Lambert each shall maintain records, in sufficient detail and in accordance with recognized scientific practices appropriate for patent purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of the Research Program (including all data in the form required under all applicable laws and regu ...