Product Development And Commercialization Agreement

EXHIBIT 10.1


NOTE: CERTAIN PORTIONS OF THIS PRODUCT DEVELOPMENT AND COMMERCIALIZATION 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.


PRODUCT DEVELOPMENT AND

COMMERCIALIZATION AGREEMENT

THIS PRODUCT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the "Agreement" ) is executed as of June 11, 2003 ("Execution Date" ) by and between POZEN INC ., a Delaware corporation ("POZEN" ), and Glaxo Group Ltd. , a corporation organized under the laws of England, doing business as GlaxoSmithKline ("GSK" ). POZEN and GSK are sometimes referred to herein each individually as a "Party" and collectively as the "Parties ."

RECITALS

WHEREAS , POZEN is a pharmaceutical development company that is developing products for migraine therapy and controls certain patents and know-how relating to combinations of triptans and NSAIDs, including MT 400, a proprietary combination of sumatriptan and [* *];

WHEREAS , GSK is a pharmaceutical company and possesses expertise in the commercialization of therapeutic products for the migraine market; and


WHEREAS , GSK desires to obtain, and POZEN wishes to grant to GSK, the right to commercialize such products on an exclusive basis in the United States and Puerto Rico, with certain co-promotion activities potentially to be undertaken by POZEN, all as more specifically set forth herein.


NOW THEREFORE , based on the foregoing premises and the mutual covenants and promises set forth below, the Parties agree as follows:

AGREEMENT

1. DEFINITIONS.

The following terms will have the following meanings as used in this Agreement:


1.1 "Affiliate" means a corporation or non-corporate business entity that controls, is controlled by, or is under common control with a Party to this Agreement. A corporation or non-corporate business entity will be regarded as in control of another corporation if: (a) it owns or directly or indirectly controls at least 50% of the voting stock of the other corporation or such lesser maximum percentage permitted in those jurisdictions where majority ownership by foreign entities is prohibited; or (b) it possesses, directly or indirectly, the power to direct or cause the

direction of the management and policies of the corporation or non-corporate business entity, as applicable, whether through the ownership or control of voting securities, by contract or otherwise.


1.2 "Applicable Law" means the laws, rules, and regulations, including any statutes, rules, regulations, guidelines, or other requirements that may be in effect from time to time and apply to the development, manufacture, registration, and marketing of a Collaboration Product in the Territory.

1.3 "Blocking Patent" means a Patent Controlled by a Third Party claiming an invention that is necessarily practiced in connection with the manufacture, use or sale of an invention claimed in the POZEN Patents as practiced in connection with the manufacture, use or sale of a Collaboration Product.


1.4 "cGMP" means current Good Manufacturing Practices as contained in 21 CFR Parts 210 and 211 as amended from time to time.


1.5 "Clinical Trial Materials" means the Lead Product in the Formulation developed by POZEN under this Agreement formulated in accordance with the applicable specifications, matching placebo and matching individual active ingredients, each packaged and labeled for use in the applicable clinical trial.


1.6 "Collaboration Product(s)" means any Product(s) developed either by GSK or POZEN or Commercialized by GSK under this Agreement, including the Lead Product.

1.7 "Commercial Launch" means the nationwide launch of commercial sale, promotion and distribution of a Collaboration Product in the Territory following receipt of Final Regulatory Approval.

1.8 "Commercialization" means (i) pre-launch market development activities conducted in anticipation of Final Regulatory Approval (subject to POZEN's approval prior to transfer of the NDA to GSK) and (ii) the marketing, promotion, advertising, selling or distribution of a Collaboration Product after Final Regulatory Approval has been obtained. The term " Commercialize" has a correlative meaning.


1.9 "Commercialization Plan" has the meaning set forth in Section 5.2(c).

1.10 "Commercially Necessary Patent" means a Patent Controlled by a Third Party claiming an invention applicable to the manufacture, formulation, use or sale of a Collaboration Product, which invention is [* *] of such Collaboration Product in the Territory.


1.11 "Commercially Reasonable Efforts" means the level of efforts and [* *]."Commercially Reasonable" has an analogous meaning.


1.12 "Confidential Information" has the meaning set forth in Section 11.1.


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1.13 "Control" means, with respect to a particular intellectual property right, the possession of the ability to grant a license or sublicense as provided for herein under or with respect to such intellectual property right without violating the terms of any agreement or other arrangement with any Third Party.


1.14 "Co-Promotion Agreement" has the meaning set forth in Section 5.3(a).


1.15 "Co-Promotion Option" has the meaning set forth in Section 5.3(a).

1.16 "Development Plan" means the Initial Development Plan as may be amended from time to time pursuant to the terms of this Agreement.


1.17 "Development Program" means the activities undertaken by each of POZEN and GSK to develop, manufacture and seek regulatory registration for the Collaboration Products in the Territory.


1.18 "Development Timeline" has the meaning set forth in Section 3.2.

1.19 "Dosage Strength" means a [* *].


1.20 "Effective Date" has the meaning set forth in Section 2.7.

1.21 "Execution Date" has the meaning set forth in the Preamble.

1.22 "FDA" means the United States Food and Drug Administration, or any successor entity thereto.


1.23 "Field" means prescription therapeutics for the treatment, palliation and/or prevention of human diseases.


1.24 "Final Regulatory Approval" means all approvals and master files, establishment licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for the promotion, manufacture, use, storage, transport or sale of a Collaboration Product in the Territory (including NDA Approvals and approvals of Product Labeling).


1.25 "First Commercial Sale" means the date of first commercial sale of a Collaboration Product by GSK to a Third Party in the Territory following the receipt of Final Regulatory Approval.

1.26 "Formulation" means the formulation that is developed by GSK for the Lead Product as provided in the Development Plan.


1.27 "FTE Rate" means the per hour rate for work conducted by an employee of POZEN, possessing the skills and experience necessary to carry out the activities undertaken by such employee. For purposes of this Agreement, POZEN's FTE Rate is [* *].

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1.28 "Generic Equivalent" means a Third Party's marketed generic version of a particular Collaboration Product marketed by GSK, approved by the FDA under an Abbreviated New Drug Application (" ANDA") or any equivalent approval as may be available at the time, which generic version contains all and only the same active ingredients and in the same Presentation as such Collaboration Product marketed by GSK.

1.29 "Generic Erosion" means achievement by all Generic Equivalents of a prescription market share equal to [* *] or greater in the aggregate of the total prescriptions for the particular Collaboration Product plus its Generic Equivalent(s), assessed on a moving annual total basis, as calculated pursuant to Section 7.5.


1.30 "GSK Development Activities" has the meaning set forth in Section 3.2.


1.31 "GSK Formulation Technology" means any Patent or Know-How Controlled by GSK necessary to develop, make, use or sell the Formulation.

1.32 "GSK Inventions" means an Invention conceived and reduced to practice by GSK in connection with its activities under this Agreement from the Execution Date until the expiration or termination of the Term (whether or not patentable) necessary or useful to discover, develop, make, use or sell any Product, including any new or improved formulation, or method of manufacture or use, of any Product.


1.33 "GSK Know-How" means all Know-How solely created by GSK or by a Third Party on behalf of GSK from the Execution Date until the expiration or termination of the Term in the course of conducting activities under this Agreement related to the manufacture, development, testing or use of a Product, including but not limited to, biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, analytical and stability information and data other than such Know-How which is or becomes the subject of a GSK Patent or of a provisional or filed GSK patent application.

1.34 "GSK Patent" means any Patent that claims a GSK Invention.

1.35 "GSK Sumatriptan Patents" means U.S. Patent Number [* *] and U.S. Patent Number [* *] (including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof) together with any claim claiming Sumatriptan in a Patent then Controlled by GSK that would be infringed by the development, manufacture, use, sale or export/import of MT 400 in the Dosage Strength, Formulation and Presentation developed under this Agreement and other Collaboration Products in the dosage strength, formulation and Presentation as developed under this Agreement; provided , however , that the foregoing will exclude the GSK Formulation Technology and Product Specific Improvements.


1.36 "IND" means an Investigational New Drug Application filed with the FDA in conformance with applicable laws and regulations.


1.37 "Initial Development Plan" means the first plan describing the development of a solid oral dose of MT 400 in the Dosage Strength.


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1.38 "Inventions" means those inventions and discoveries described in Section 8.1(a).


1.39 "Joint Project Team" means the project team formed in accordance with Section 4.2.


1.40 "Know-How" means all non-public information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, skill, experience, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data.

1.41 "Lead Product" means (a) a solid oral dose of MT 400 in the Formulation and Dosage Strength; (b) an Other Product designated as the new Lead Product pursuant to Section 3.3; or (c) solely for the purpose of the payment obligations described in Article 7 hereof, either MT 400 or an Other Product developed as a Collaboration Product under this Agreement (and not otherwise substituted pursuant to Section 3.3), when compared to other Collaboration Products being developed or Commercialized pursuant to this Agreement at the relevant time, is, most advanced in the clinical development and regulatory process and is the subject of continued development or Commercialization and/or is the first to be Commercially Launched.

1.42 "Letter Agreement" means that certain letter agreement made by and between the Parties dated as of June 11, 2003, which includes the Initial Development Plan and the Strategic Plan for MT 400 in a solid oral dose of the Formulation.

1.43 "Manufacturing Cost" means, with respect to any bulk Collaboration Product or finished Collaboration Product, the actual fully allocated cost of manufacturing such Collaboration Product determined in accordance with U.S. generally accepted accounting principles applied consistently throughout the organization of the Party determining such costs, which consists of the direct and indirect cost of any raw materials, packaging materials and labor (including benefits) utilized in such manufacturing (including formulation, filling, finishing, quality control and stability testing, labeling and packaging, as applicable) plus an appropriate share of all factory overhead, both fixed and variable, allocated to such Collaboration Product being manufactured, in accordance with the normal accounting practices for all other products manufactured in the applicable facilities.


1.44 "Material Amendment" has that meaning ascribed to such term in Section 3.2(b) below.

1.45 "MT 400" means any combination of Sumatriptan and [* *].

1.46 " [* *]" means the chemical compound known as [* *], whose more specific chemical name is [* *], and all esters, salts, hydrates, solvates, polymorphs and isomers thereof.


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1.47 "Naratriptan" means the chemical compound known as naratriptan, whose more specific chemical name is 1H-Indole-5-ethanesulfonamide, N-methyl-3-(1-methyl-4-piperidinyl), [* *], and all esters, salts, hydrates, solvates, polymorphs and isomers thereof.


1.48 "NDA" means a New Drug Application filed with the FDA in compliance with applicable laws and regulations, to obtain approval to market a pharmaceutical product in the United States.

1.49 "NDA Approval" means the issuance by the FDA of an action letter indicating that an NDA is approved. For avoidance of doubt, NDA Approval does not mean that the FDA issues an action letter indicating that an NDA is approvable.

1.50 "Net Sales" means with respect to any Collaboration Product, [* *] by GSK or its Affiliates from Third Party customers for sales of a Collaboration Product, less the following deductions made by GSK or its Affiliate in accordance with its standard business practices as consistently applied to its other products: (a) [* *]; (b) the [* *], to the extent such [* *];

(c) [* *] in connection with the [* *];

(d) [* *], including, but not limited to, [* *]; and

(e) any [* *], provided that such [* *].


Notwithstanding the foregoing, if a Collaboration Product is [* *] for such Collaboration Product; then the [* *] of such Collaboration Product [* *] of such Collaboration Product for [* *] of such Collaboration Product (other than those described in the preceding clause) [* *] such Collaboration Product was [* *]. "Net Sales" excludes any amounts invoiced or received in connection with any transfers of a Collaboration Product between GSK and its Affiliates.


1.51 "NSAID" means non-steroidal anti-inflammatory drug, [* *].

1.52 "Other Marketed Product" means any Other Product where the [* *] of such Other Product [* *] of such Other Product.


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1.53 "Other Novel Product" means any Other Product where [* *] of such Other Product [* *] of such Other Product.


1.54 "Other Product" means any product, other than MT 400, containing (a) Sumatriptan or Naratriptan on the one hand, and any NSAID on the other hand, or (b) any [* *].


1.55 "Patent" means: (a) an unexpired patent which has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof; and (b) pending patent applications, including without limitation any provisional, converted provisional, continued prosecution application, continuation, divisional or continuation-in-part thereof.


1.56 "Phase III Clinical Trial" means a clinical trial in human beings, conducted in accordance with 21 C.F.R. 312.21(c), that is conducted after preliminary evidence suggesting effectiveness has been obtained, that is of appropriate size and design to establish that a pharmaceutical product is safe and effective for its intended use, to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed, and to support Final Regulatory Approval of such pharmaceutical product. The Phase III Clinical Trials for a Collaboration Product will be identified as such in the applicable Development Plan.

1.57 "POZEN Development Activities" has the meaning set forth in Section 3.2.


1.58 "POZEN Inventions" means an Invention conceived and reduced to practice by POZEN throughout the course of conducting the Development Program during the Term (whether or not patentable) necessary or useful to discover, develop, make, use or sell any Product, including any new or improved formulation, or method of manufacture or use, of any Product.

1.59 "POZEN Know-How" means, to the extent necessary or useful for purposes of the development, manufacture, use or sale of any Product, Know-How that POZEN Controls as of the Effective Date or at any time during the Term, other than such Know-How which is or becomes the subject of a POZEN Patent or of a provisional or filed POZEN patent application.


1.60 "POZEN Patents" means all Patents Controlled by POZEN in the Territory during the Term that would be infringed, in the absence of a license, by the manufacture, use, sale, offer for sale or importation of a Product, including without limitation any Patents that claim POZEN Inventions. The POZEN Patents as of the Execution Date are listed on Exhibit A attached to this Agreement. During the Term, POZEN will update Exhibit A with regard to other POZEN Patents that are included within this definition as they are identified.


1.61 "POZEN Technology" means the POZEN Know-How and the POZEN Patents.


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1.62 "Presentation" means the method of administration of a pharmaceutical substance into the human body, including solid oral (including tablets, capsules, gelcaps and caplets), other oral (including suspension and solution), parenteral (including intramuscular, subcutaneous and intravenous), suppository or intranasal.


1.63 "Product(s)" means: (a) MT 400 and (b) any Other Product.


1.64 "Product Failure" means the failure of the Lead Product to meet the primary endpoints of any Phase III Clinical Trial necessary for NDA Approval as described in the Development Plan.


1.65 "Product Labeling" means (a) the full prescribing information for any Collaboration Product, as approved by the FDA, including any required patient information; and (b) all labels and other written, printed or graphic matter relating to a Collaboration Product itself (or a component thereof) or any container, wrapper or any package insert utilized with or for any Collaboration Product required to be approved by the FDA, in each case solely to the extent required for commercial launch.


1.66 "Product Launch Timeline" has the meaning set forth in Section 5.2.


1.67 "Product Specific Improvements" means any claim in a GSK Patent the practice of which would infringe at least one of the POZEN Patents, and any GSK Know-How that is necessary for the practice of such GSK Patents. Product Specific Improvements do not include any GSK Formulation Technology.


1.68 "Project Activities" means any activities performed by POZEN in connection with (a) MT 400 and not otherwise described as POZEN Development Activities in the Initial Development Plan (including, activities undertaken in connection with any Material Amendment or Regulatory Amendment); (b) any Other Product substituting MT 400 as the Lead Product subject to the terms of Section 3.3(b); or (c) an Other Product.


1.69 "Project Costs" means POZEN's direct and indirect costs and expenses incurred in carrying out its responsibilities in connection with activities conducted by it in connection with any Project Activities, calculated in accordance with generally accepted accounting principles consistently applied and POZEN's cost accounting systems. Project Costs include, without limitation, POZEN FTEs at the FTE Rates and all reasonable, documented out-of-pocket costs, such as materials and outside services, attributable to development of any Collaboration Product.


1.70 "Promotional Materials" means all written, printed, graphic, electronic, audio or video matter, including but not limited to journal advertisements, sales visual aids, leave-behind items, formulary binders, reprints, direct mail, direct-to-consumer advertising, internet postings, broadcast advertisements, and sales reminder aides (for example, note pads, pens and other such items) intended for use or used by a Party in connection with any promotion of any Collaboration Product by or on behalf of a Party.


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1.71 "Regulatory Amendment" has that meaning ascribed to such term in Section 3.2(b) below.


1.72 "Strategic Plan" means the first plan describing the commercialization strategy for a Lead Product.

1.73 "Sumatriptan" means the chemical compound known as sumatriptan, whose more specific chemical name is 1H-Indole-5-methanesulfonamide, 3-(2-(dimethylamino)ethyl)-N-methyl, its prodrugs and metabolites, and all esters, salts, hydrates, solvates, polymorphs and isomers thereof.


1.74 "Term" has the meaning set forth in Section 12.1(a).

1.75 "Territory" means the United States and Puerto Rico.


1.76 "Third Party" means any entity other than POZEN or GSK or an Affiliate of either of them.

1.77 "Valid Claim" means any claim contained in (a) an issued and unexpired Patent included within POZEN Technology which has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through abandonment, reissue, disclaimer or otherwise or (b) a patent application encompassed within the POZEN Technology, such that the claim at issue has been under examination for less than five (5) years in any country in the Territory.


2. GRANT OF RIGHTS.


2.1 License to GSK.


(a) Subject to the terms of this Agreement, POZEN hereby grants to GSK an exclusive, royalty-bearing license under the POZEN Technology to make, use, offer to sell, sell and import Products in the Field in the Territory.


(b) Subject to the terms of this Agreement, POZEN hereby grants to GSK a non-exclusive, royalty-bearing license under the POZEN Technology to make, have made and export to the Territory (but not register or Commercialize) Collaboration Products outside the Territory for sale exclusively inside the Territory. During the Term, GSK covenants and agrees that it will not register or Commercialize, or license or grant rights to any Third Party to register or Commercialize outside the Territory any Collaboration Product that is manufactured by or on behalf of GSK outside the Territory for sale exclusively inside the Territory. The Parties agree that sales by a GSK Affiliate to another GSK Affiliate in accordance with Section 2.1(a) are permitted under this Section 2.1(b).


(c) The licenses granted under this Section 2.1 are non-sublicensable by GSK or its Affiliates (except for sublicenses granted to POZEN upon the exercise of its Co-Promotion Option); provided , however , that (i) GSK may enter into sublicenses with its Affiliates at any time without the consent of POZEN and (ii) GSK may engage its Affiliates or a Third Party


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contractor to conduct activities for the purpose of developing and Commercializing Products in the Territory on behalf of GSK at any time without the consent of POZEN, subject to Section 14.1. Notwithstanding the foregoing, the Parties agree that subject to the provisions of Section 2.2 below, POZEN may use itself (or a Third Party may use solely on POZEN's behalf) the POZEN Technology to develop, make, have made, use and export, but not register or Commercialize, Products in the Territory for sale exclusively outside the Territory. Any sublicense grant made to an Affiliate hereunder will be made subject to the terms of this Agreement and any action or omission by such sublicensee that would, if committed by GSK, constitute a breach of this Agreement, will be deemed a breach of this Agreement by GSK. GSK will impose on any sublicensee obligations corresponding to GSK's obligations hereunder.


2.2 Limitation of Rights outside the Territory.


(a) During the Term, POZEN will not develop, market, register, sell or otherwise Commercialize, nor license or grant rights to a Third Party to develop, market, register, sell or otherwise Commercialize in any country outside the Territory, [* *] pursuant to Section [* *].


(b) During the Term, POZEN will not develop, market, sell or otherwise Commercialize, nor license or grant other rights to a Third Party to develop, market, sell or otherwise Commercialize in any country outside the Territory any [* *]. In such a case the Parties agree to [* *] after the [* *] of the [* *].


(c) During the Term, POZEN covenants and agrees that it will not register or Commercialize, or license or grant rights to any Third Party to register or Commercialize in the Territory any product containing MT 400 that is manufactured by or on behalf of POZEN in the Territory for sale exclusively outside the T ...