Product Development And License Agreement

Exhibit 10.35


DETECTION OF ANALYTES
PRODUCT DEVELOPMENT AND LICENSE AGREEMENT


This Detection of Analytes Product Development and License Agreement ("Agreement") is signed on June 19, 1998 by and between Cygnus, Inc., a Delaware corporation, with its principal place of business at 400 Penobscot Drive, Redwood City, California 94063 ("Cygnus"), and E.I. du Pont de Nemours & Co., a Delaware corporation, with its principal place of business at 1001 Market Street, Wilmington, Delaware 19898 ("DuPont").


WHEREAS, Cygnus has substantial knowledge and expertise in and owns certain technology relating to the development, manufacture and sale of transdermal monitoring systems;


WHEREAS, DuPont has substantial knowledge and expertise in and owns certain technology relating to the development, manufacture and sale of thick film materials commonly referred to as "inks" or "pastes";


WHEREAS, the parties desire each other's assistance in developing certain technologies related to [Confidential Treatment Requested], including without limitation transdermal monitoring systems and the use, composition and manufacture of thick film materials;


WHEREAS, the parties desire to provide such development assistance to each other; and


WHEREAS, the parties also desire to enter into a separate supply arrangement with respect to Thick Film Materials (as defined below).


NOW THEREFORE, in consideration of the above premises and the mutual covenants contained herein, the parties hereto agree as follows:


1. DEFINITIONS. When used in this Agreement, each of the following terms shall have the meaning provided below:


a. "Development Plan" means the development plan, specifications, Milestones and schedule specified in Exhibit A including amendments thereto established by the Development Committee pursuant to Section 2.e below.


b. "Diagnostics Field" means all applications for the [Confidential Treatment Requested] in connection with the diagnosis and treatment of disease in humans, including but not limited to diabetes and complications of diabetes; however currently available, whether through publication or commercialization, invasive diagnostics applications are not included within the definition of Diagnostics Field.


c. "Initial Milestones" means Milestones established within sixty (60) days


following the Signing Date of this Agreement and includes, without limitation, [Confidential Treatment Requested].


d. "Milestones" means [Confidential Treatment Requested].


e. "Parties" means DuPont and Cygnus and, when used in the singular, means either of them.


f. "Thick Film Technology" means all Technology and improvements thereto relating solely to the composition and manufacture of Thick Film Materials (but not applications thereof) (i) arising out of work done by either Party in connection with the Project, or (ii) owned or developed by or for DuPont and specifically listed by DuPont Product Number on Exhibit C attached hereto.


g. "Project" means the Development Plan and the collaboration between the Parties after the Effective Date of this Agreement.


h. "Thick Film Materials" means thick film materials, commonly referred to as "inks" or "pastes," such materials [Confidential Treatment Requested].


i. "Sensor Technology" means all Technology and improvements thereto within the Diagnostics Field other than Thick Film Technology (but including, without limitation, all applications of Thick Film Technology) arising out of work done by either Party in connection with the Project.


j. "Supply Agreement" means the Supply Agreement signed of even date herewith by the Parties.


k. "Technology" means all foreign and domestic patents, patent applications, patent rights, know-how, trade secrets, copyrights, trademarks, technical data, inventions (whether patentable or not), discoveries, designs, specifications, plans, notebooks, works of authorship, techniques, methods, regulatory information, compliance information, clinical data, processes, test procedures and all other scientific or technical information or materials, in whatever form.


l. "Transfer Letter" means a document as described in Exhibit B attached hereto.


m. "Effective Date" of the Agreement is March 22, 1995.


n. Signing Date" of the Agreement refers to the date indicated on page 1 of the Agreement.
2. PROJECT DEVELOPMENT.


a. JOINT PROGRAM. For a period commencing on the Effective Date and terminating as provided in Section 7 below, the Parties shall act in good faith in a joint program to develop at


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least one commercial product in the Diagnostics Field with initial work limited to detection of glucose levels. DuPont shall have responsibility for development of commercially suitable Thick Film Materials; Cygnus shall have responsibility for all other aspects in development of any commercial product for use in the Diagnostics Field. Each Party shall bear its own costs in the development.


b. DUPONT ASSISTANCE, TECHNICAL SUPPORT AND DEVELOPMENT. DuPont, at its own cost, shall act in good faith with the assistance of Cygnus to (i) develop Thick Film Materials and Thick Film Technology, (ii) meet in a timely fashion the Milestones set forth in Exhibit A, and (iii) collaborate with and assist Cygnus with the Sensor Technology. DuPont shall provide reasonable resources, technical information, and expertise, at its own cost and expense, to achieve the Milestones in accordance with the Development Plan. DuPont will keep Cygnus informed of its progress through regular communication between the Project Coordinators and through meetings of the Development Committee pursuant to Section 2.e below. The Development Committee shall periodically determine the number of DuPont technical personnel assigned to the Project.


c. CYGNUS ASSISTANCE, TECHNICAL SUPPORT AND DEVELOPMENT. Cygnus shall act in good faith: (i) to collaborate with and assist DuPont with the development of the Thick Film Materials and Thick Film Technology to accomplish the Milestones in accordance with the Development Plan, (ii) to provide data and technical support as reasonably requested by DuPont in connection with the Thick Film Materials and Thick Film Technology and the Project, (iii) to actively develop Sensor Technology, and (iv) to proceed promptly toward commercialization of commercial products in the Diagnostics Field. Cygnus, at its own cost and expense, will allocate sufficient resources to provide such assistance and support.


d. PROJECT COORDINATORS. Within thirty (30) days after the Signing Date of this Agreement, each Party shall designate one (1) individual as its representative to coordinate and generally oversee the development work and/or assistance to be performed by such Party hereunder and coordinate the Project (including but not limited to coordinating the Development Committee and meetings specified in Section 2.e below), and shall provide the name of such designated individual ("Project Coordinator") to the other Party in writing. Each Party shall promptly notify the other Party in writing of any change in its Project Coordinator.


e. DEVELOPMENT COMMITTEE. In addition to appointing Project Coordinators, the Parties will form a development committee (the "Development Committee") to monitor the progress of the Project development efforts referred to in this Section 2. Within sixty (60) days after the Signing Date of this Agreement, the Development Committee shall establish a detailed Development Plan which shall include the Initial Milestones, and which shall be deemed attached hereto as Exhibit A. For each Initial Milestone and subsequently introduced Milestone added to Exhibit A, the Development Committee shall specify the Thick Film Material(s) to which such Milestone pertains. Through the Development Committee, the Parties may establish additional Milestones and discuss and decide issues related to the Project, including, without limitation, technical issues, scheduling issues and cost issues arising from the above activities. Furthermore, the Development Committee may amend Exhibit C to include or substitute other


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DuPont Product Numbers, if it is in the best interests of the Parties to do so. The Development Committee shall also control, govern, and determine access to, release and exchange of technical information and data between the Parties and for purposes of regulatory applications and compliance. The Development Committee shall also decide when, during the process of development of a Thick Film Material, it is necessary for DuPont to prepare and maintain a Transfer Letter, which will contain information known by DuPont at that time and which will be periodically updated if the Development Committee so determines as more information becomes available, and to conduct an on-site demonstration for Cygnus of the relevant processes. If, however, a Thick Film Material is in the scale-up or pre-commercialization phase, a Transfer Letter shall be manditorily prepared and maintained by DuPont and an on-site demonstration shall be conducted for Cygnus. The Development Committee shall consist of an equal number of up to three (3) employees of each Party, including at a minimum for each Party, the Project Coordinator which may be a senior manager intimately involved with the subject matter of this Agreement. The Development Committee shall meet quarterly (or more frequently should the Development Committee decide such frequency is desirable), alternating between DuPont's and Cygnus' facilities. Each Party shall be responsible for the costs of its employees' attendance at meetings of the Development Committee. All decisions of the Development Committee shall require the consent of both Parties. Any disputes that cannot be resolved by the Development Committee shall be escalated for resolution to the President of Cygnus Diagnostics and the Director, Worldwide Microcircuit Materials of DuPont, or equivalent thereof.


f. Neither Party shall have any further obligations under this Section 2 provided Cygnus purchases in commercial quantities Thick Film Material from DuPont under any obligations it may have under the separate Supply Agreement and DuPont has met all Milestones set forth in Exhibit A. However, following such Cygnus purchases and DuPont meeting the Milestones, the Parties agree to discuss whether to continue additional development and cooperation obligations under this Section 2 (and to amend the Agreement accordingly) for any additional development projects or improvements to the Thick Film Materials.


g. SITE VISITS. For purposes of reviewing progress of the Project, the Parties may facilitate an exchange of technical personnel to work on-site at each other's facilities. Either Party shall be free to visit those portions of the facilities of the other Party where work on the Project is being conducted. Such visits shall be at reasonable intervals following reasonable notice during regular business hours. DuPont shall pay the expenses of its staff visiting Cygnus; Cygnus shall pay the expenses of its staff visiting DuPont. Each Party shall indemnify and hold the other Party harmless from and against any liability arising from the activities of its employees in the other Party's facilities.


h. PROJECT DELAYS. If at any time during the course of the Project, DuPont anticipates that it will not be able to complete a Milestone by the date set forth on Exhibit A (or applicable date established by the Development Committee) despite DuPont's good faith efforts to do so, DuPont shall so notify Cygnus in writing specifying the reasons for delay. From and after such notice, the Parties shall cooperate and use diligent efforts to solve the problems identified. Such Project Delays shall not constitute a breach of this Agreement under Section 7.c.


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i. TRANSFER OF TECHNICAL INFORMATION. The Parties shall act in good faith to freely share with each other technical information in connection with their respective Thick Film Technology and Sensor Technology and other technical information in connection with the Project, including, without limitation, information necessary to enable a Party to file a patent application and information necessary to enable Cygnus to obtain FDA approval.


j. TECHNICAL ASSISTANCE. DuPont, at no cost to Cygnus, will provide a reasonable level of technical support to Cygnus and Cygnus' subcontractors to ensure the Thick Film Materials can be printed effectively.


k. SUPPLY OF THICK FILM MATERIALS TO CYGNUS. Any supply of Thick Film Material by DuPont and purchase of such Material by Cygnus shall be governed by a separate Supply Agreement, provided that each Thick Film Material developed pursuant to a Milestone under the Development Plan shall be made available to Cygnus for purchase under the terms of the Supply Agreement.


l. RIGHT OF FIRST REFUSAL. During the term of this Agreement, DuPont shall have a right of first refusal to participate in any additional development projects of Cygnus relating to Thick Film Materials in the Diagnostics Field. Cygnus shall inform DuPont in writing of each new Thick Film Material or Milestone which Cygnus intends to develop or have developed during the term of this Agreement, and Cygnus shall give DuPont a written notice setting forth the specifications for each such development project. Cygnus shall offer DuPont the right to develop each new Thick Film Material subject to the terms and conditions of this Agreement. If DuPont does not respond or DuPont and Cygnus are unable to agree in good faith upon the applicable milestones, specifications or other terms and conditions for the development project within sixty (60) days of Cygnus' written notice, then Cygnus shall be free to offer the development project to a third party developer. The failure of DuPont to agree to undertake any specific new development project shall not affect its rights of first refusal under this paragraph for any subsequent development project. It is understood that any additional development project of Cygnus relating to Thick Film Materials pursuant to this paragraph shall involve the following:


(i) a Thick Film Material which substantia ...