Research Collaboration Agreement

RESEARCH COLLABORATION AGREEMENT


BETWEEN THE


CTRC


RESEARCH FOUNDATION


AND


SANOFI


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TABLE OF CONTENTS


ARTICLE I -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II--RESEARCH PROGRAM/PROGRAM COUNCIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE III--CONSIDERATION - TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE IV - OPTION RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE V--CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE VI--PUBLICATION AND PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE VII--TERMINATION OR EXTENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VIII--INVENTIONS AND PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE IX--WARRANTIES AND INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE X--INDEPENDENT CONTRACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE M--ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE XIII--GOVERNING LAW AND ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE XIV--NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ARTICLE XIV--MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 LIST OF CTRC RESEARCH PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 RESEARCH BUDGET SANOFI DIRECTED PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26


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RESEARCH COLLABORATION AGREEMENT


THIS AGREEMENT, effective as of December 12, 1995 (the "Effective Date") is by and between SANOFI, a French corporation (societe anonyme), having its principal place of business at 32-34 rue Marbeuf, 75008 France (hereinafter called SANOFI, which expressions includes its affiliates, subsidiaries, successors and assignees), represented by its President, Jean- Francois DEHECQ and the CTRC RESEARCH FOUNDATION of 8122 Datapoint, Suite 600, San Antonio, Texas 78229, U.S.A., Texas non profit corporation (hereinafter called "CTRC", which expression includes its successors and assignees) represented by Chief Operating Officer, Institute for Drug Development, Mr. David HIRSCH.


WHEREAS STERLING WINTHROP Inc. (STERLING) and CTRC have previously entered into a Research Collaboration Agreement and an Option Agreement dated October 1, 1992;


WHEREAS STERLING and CTRC have entered into an Amendment 1 to the Research Collaboration Agreement and an Amendment 1 to the Option Agreement, both to the purpose of extending these Agreements through December 31, 1996, and making certain changes to the rights and obligations of the Parties for said calendar year 1996;


WHEREAS, CTRC and STERLING have entered into a License and Development Agreement dated as of October 1, 1992 concerning the anticancer compound known as MGBG,


WHEREAS STERLING, CTRC and BIOVENSA (which has changed its name to ILEX Oncology Inc. (ILEX)) have entered into a Consent, Acknowledgement and Waiver Agreement dated September 1994 in which CTRC, with STERLING's prior consent, has assigned to ILEX and ILEX has accepted to assume various assets, rights and obligations, including those of CTRC under the "MGBG License and Development Agreement" and those of CTRC concerning the anti-cancer compound known as Crisnatol Mesylate (Crisnatol Project);


WHEREAS SANOFI has acquired STERLING and subsequently SANOFI has acquired all rights and obligations pertaining to the aforementioned Agreements, and SANOFI has decided to discontinue the Crisnatol Project;


WHEREAS CTRC and SANOFI (jointly called the Parties) are desirous of entering into a new Research Collaboration Agreement (the Agreement) which reflects, the Parties' current needs and abilities and which, subject to terms and conditions of this Agreement replaces and supersedes all prior Agreements including the above mentioned Amendments between the Parties. Subsequently SANOFI, according to the terms and conditions set forth under article IV of this Agreement may decide, at its discretion, to enter into a License Agreement and will study, on a case by case basis, the possibility to provide CTRC with a related development work plan which shall be agreed upon between the Parties.


NOW, THEREFORE, in consideration of the mutual covenants contained herein, SANOFI and CTRC agree as follows:


ARTICLE I -- DEFINITIONS


1.1 The following words and phrases shall have the following meanings:


1) (( ACQUISITION COSTS )) shall mean those necessary out-of-pockets
costs (applicable to the Field of Use)


3 4 incurred or paid by CTRC to third party from whom Commercial Rights are acquired, to obtain Commercial Rights to any Licensed Compound or Licensed Technology including any licensing fees, future royalty, milestone or other payment obligations.


2) (( ANALOGUE AND COUNTERPART )) shall mean all members of a chemical class covered by a composition of matter patent, with respect to a Lead Compound.


3) (( ANNIVERSARY DATE )) shall mean January 1, 1996 and every January 1st thereafter throughout the term of this Agreement, including extensions thereof.


4) (( BUSINESS DAY )) shall mean a day on which banks are open for
business in Paris, France.


5) (( COMMERCIAL RIGHTS )) shall mean CTRC's legal right by patent, contract, agreement, copyright, trademark, or other means to make, have made, sell or have sold in any country any Compound, material, technology or know-how within the Field of Use for commercial purposes, including Inventions, Know-How or Compounds. Effective January 1, 1996 Commercial Rights shall be limited to Commercial Rights arising from the Research Program.


6) (( COMPOUND(S) )) shall mean all agents, substances or materials which embody, in part or whole, the Inventions, Patents, Patent Application or Know-How.


7) (( CTRC AFFILIATE )) shall mean any present or future firm, company, joint venture or other entity which directly or indirectly is controlled by or is under the common control of CTRC. "Control" shall mean the legal power to direct or cause the direction of the general management and policies of such entity whether through ownership of at least [**] percent of voting securities, by contract or otherwise.


8) (( CTRC INFORMATION )) shall mean information developed or otherwise acquired by or for CTRC, including all animal and human laboratory and clinical data, technical information, Know-How, inventions, techniques, processes, technology, systems, formulae, results of experimentation, designs, statistics and records which pertain to Compounds and Technology that are subject to SANOFI's Option Right set forth in this Agreement, and all information relating to the contents of this Agreement, including Data Information Packages, which is necessary to effectuate the grant of license to SANOFI. Effective January 1, 1996 CIRC Information sham be limited to CTRC Information arising from the Research Program.


9) (( DATA/INFORMATION PACKAGES )) shall mean those documents which CTRC shall submit to SANOFI in accordance with the terms of this Agreement, if SANOFI decides to exercise its Option Right, (described under article IV of this Agreement) and generally will be in the following Compound/Technology categories:


(i) Compounds which have been tested in human clinical trials.
Data/Information packages will include summaries of and access to all
regulatory filings, clinical studies to date, a description of all
Commercial Rights, preclinical data, clinical, manufacturing and
controls data and all regulatory correspondence.


(ii) Compounds which are, in CTRC's opinion, suitable for human
clinical evaluation. The Data/Information Package is intended to have
such content and quality as to be suitable for filing of an
Investigation New Drug Application (IND) with the Food and Drug
Administration (FDA) with the reasonable expectation of initiating
Phase I clinical trials in human volunteers, and will also include a
description of all Commercial Rights.


(iii) Technology which may be applied in the research and
development of Compounds within the Field of Use. For Technology to
be offered for license there should exist one or more Patent or Patent
Applications and scientific data to indicate that the technology can
immediately be applied to the discovery


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and development of Compounds within the Field of Use.
Notwithstanding, the above, non-patented technology, including
know-how, may make up, in whole or in part, a Data/Information
Package.


10) ((DATE OF FIRST INVENTION )) shall mean the date as listed in the scientific notebook code signifying the day in which the concept was first developed and described.


11) (( FIELD OF USE )) shall mean all applications of a Licensed Compound or Licensed Technology in the treatment and/or mitigation of cancer in humans.


12) (( FIRST COMMERCIAL SALE )) shall mean the first commercial sale in any country after the date the New Drug Application (NDA), Compound License Agreement (CLA) or equivalent application for a Licensed Compound is approved.


13) (( FULL PROJECT FUNDING )) is defined as the funding for the total costs to support each project as outlined in the Research Project Plan. Full SANOFI funding is defined as the Full Project Funding outlined in the Research Project minus external grants.


14) (( FUNDING PERIOD )) shall mean each twelve (12) month calendar period during which SANOFI makes payments under Article III of this Agreement. The first Funding Period shall start January 1st, 1996 to December 31, 1996.


15) (( INVENTION )) shall mean any invention or discovery (whether or not patented or patentable) in the Field of Use which is originated or conceived or first reduced to practice. Effective January 1, 1996, Inventions shall be limited to inventions or discoveries (whether or not patented or patentable) arising from the Research Program.


16) (( KNOW-HOW )) shall mean all technical and other information arising from the Research Program, including, but not limited to all data, and information related to, results of experiments, formulae, specification, procedures, tests, Compounds, cell lines, cultures, constructs, vectors, development strains, micro-organisms, assay systems, assay protocol and assay supporting material, fermentation and purification material and techniques.


17) (( LEAD COMPOUND )) shall mean those Compounds emerging from the Research Program designated by the Program Council for advance scientific evaluation.


18) (( LICENSE )) shall mean an exclusive license to a Licensed Compound or Licensed Technology under this Agreement.


19) (( LICENSE AGREEMENT )) shall mean an agreement executed between the Parties which sets forth the terms under which a Licensed Compound or Licensed Technology shall be licensed, which agreement shall comply with the provisions of this Agreement.


20) (( DEVELOPMENT AGREEMENT )) shall mean an agreement executed between the Parties which sets forth the terms under which a Licensed Compound or Licensed Technology shall be developed, which agreement shall comply with the provisions of this Agreement.


21) (( LICENSED COMPOUND )) shall mean a Compound upon which SANOFI has exercised its Option Right under this Agreement.


22) (( LICENSED TECHNOLOGY )) shall mean a technology or Know-How upon which SANOFI has exercised its Option Right under this Agreement.


23) (( NET SALES )) shall mean the total of all charges invoiced to
customers by SANOFI, any SANOFI


5 6 Affiliate, and/or its sub-licensees for Licensed Compound less: (a) normal trade and cas discounts actually allowed; (b) credits or refunds actually allowed for spoiled, damaged, out-dated, or returned goods; (c) sales and other excise taxes imposed and paid directly with respect to the sales; (d) transportation costs paid on behalf of the customer; and (e) commissions and rebates; provided, however, that sales between SANOFI and any Affiliate shall not be included in such computations. No sales of Licensed Compound to any person(s) shall be counted more than once in the calculation of Net Sales.


24) (( PATENT APPLICATIONS )) shall mean any patent applications with respect to an Invention.


25) (( PATENTS )) shall mean any patents containing a Valid Claim, granted on or pursuant to Patent applications, including any continuations, renewals, extensions or re-issues or any divisions thereof.


26) (( RESEARCH PROGRAM )) shall mean the research and pre-clinical development program as defined in the Research Program attached hereto under Exhibit A, funded by SANOFI and agreed to by the Parties, being as defined in the Research Program Plan.


27) (( RESEARCH PROGRAM PLAN )) shall mean a yearly research plan outlining the goals/objectives, costs, potential funding sources (both SANOFI requested and external grants), milestones, timelines, and status of intellectual property.


28) (( SANOFI AFFILIATE )) shall mean any present or future firm, company or joint venture or other entity which directly or indirectly controls, is controlled by or is under the common control of SANOFI. "Control" shall mean the legal power to direct or cause the direction of the general management and policies of such entity whether through ownership of at least [**] percent of voting securities, by contract or otherwise.


29) (( SANOFI INFORMATION )) shall mean any and all information and technology which is applied to or derived from activities conducted by or on behalf of SANOFI with respect to any Compounds, materials, technologies, or Know-How, the rights to which are owned by SANOFI.


30) (( SANOFI PROJECTS )) shall mean any work under the Research Program on Compounds, materials, technologies, or Know-How, the rights to which are owned by SANOFI, and to which SANOFI controls the decisions on funding and program protocols.


31) (( TECHNOLOGY )) shall mean all processes, methodologies, tools and procedures used to develop and/or analyze compounds including but not limited to cell lines, cultures, constructs, vectors, development strains, micro-organisms, assay systems, assay protocol and assay supporting material fermentation and purification material and techniques.


32) (( VALID CLAIM )) shall mean a claim of an issued Patent relating to a Licensed Compound or CTRC Information held by CTRC during the existence of the Patent together with any renewals or extensions thereof or a claim of a Patent Application, which claim has not been declared or rendered invalid by re-examination, re-issue, disclaimer or unappealable final judgment of a court of competent jurisdiction. If no Patent has issued within fifteen (15) years after the earliest filing date of an application, then the claims of such application will not be considered valid.


ARTICLE II -- RESEARCH PROGRAM/PROGRAM COUNCIL


2.1 During the term of this Agreement, CTRC shall conduct or procure the conduct of the Research Program under the direction and responsibility of the Program Council as outlined in the Research Program approved by the


6 7 Program Council.


2.2 During the period of tills Agreement, CTRC shall provide to SANOFI a written progress report on its work under the Research Program in the preceding three (3) month period within twenty (20) working days after the conclusion of such period.


2.3 CTRC and SANOFI shall each designate two (2) representatives to a council to plan and oversee all scientific and technical matters relating to the Research Program (the (( Program Council))). The Program Council will approve budgets and priorities for the work to be conducted under this Agreement, in accordance with the allocation formula set forth in Article III.


The representatives will elect a chairperson who will schedule at least two (2) meetings per year, prepare meeting agendas and issue minutes for each meeting. The Parties will use good faith efforts to reach a consensus on decisions affecting the Research Program budget and project priorities.


However failing to reach a consensus, it is understood that CTRC shall have a tie breaking vote for any budget decision up to an amount of [**]
dollars and that SANOFI shall have a tie breaking vote for any budget decision over [**] dollars. The Program Council representatives will deal in good faith at all times in attempting to reach Agreement.


2.4 Upon reasonable notice to CTRC, SANOFI's representative(s) shall have the fight to visit, at reasonable intervals, CTRC's research sites and observe CTRC's activities under the Research Program.


2.5 Upon or prior to the execution of this Agreement CTRC will submit to SANOFI a proposed Research Program including a written list of all current and proposed research projects within the Field of Use being conducted by CTRC, which proposal shall contain the approximate funding requirements for each research project to be considered by SANOFI for funding in calendar year 1996, said list being attached under Exhibit A. SANOFI will select the projects it wishes to fired according to the provisions in Article M and so notify CTRC in writing prior to November 15, 1995. Projects selected by SANOFI, including SANOFI Projects, shall constitute the Research Program for 1996. Parties should proceed according to the same terms in 1996 in order to set forth funding in calendar year 1997.


2.6 Any Acquisition Costs in excess of [**] ($[**]) dollars shall be discussed and approved with the Program Council prior to being incurred or paid by CTRC.


During the term of this Agreement and at SANOFI's request, CTRC agrees to the extent that it is authorized to do so, to review with SANOFI on a confidential basis New Research Projects (as defined below) in the Field of Use which are not encumbered by other Parties and which are not included in the Research Program. In the event SANOFI wishes to fund any of the New Research Projects or to license, or obtain an Option Right to license CTRC's proprietary rights to such projects, CTRC agrees to enter into good faith negotiations with SANOFI to effect such an agreement.


2.7 Current and proposed Research Projects submitted by CTRC to SANOFI for its review every year shall come with a brief research plan (5-6 pages) outlining the goals/objectives, costs, potential funding sources (both SANOFI requested and external grants), milestones, timelines, and status of intellectual property.


2.8 CTRC agrees to give SANOFI a first right of review of afl new research projects (New Research Project) in the Field of Use to which CTRC has the legal right to develop, make, have made, sell or have sold and which were not mentioned in the Research Program. The New Research Projects will be introduced at Program Council meetings. SANOFI has a maximum of ninety (90) days to review such research project and make the following decisions:


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a) SANOFI does not fund said New Research Project; in which event
this New Research Project is unencumbered and CTRC has right to find
additional source of funding; however it is understood that CTRC will
inform SANOFI of any firm offer from third parties and will provide
SANOFI with an additional thirty (30) days to reconsider its decision
to fund this New Research Project.


b) SANOFI agrees to fully fund this New Research Project; in which
event, SANOFI shall then have all rights in the New Research Project
according to the terms and obligations of this Agreement;


c) Parties agree to partial SANOFI funding and obtainment of a
mutually agreed third party co-funder. It is understood that SANOFI
shall be part of all negotiations between CTRC and additional
co-funder of such New Research Projects, and rights and royalties
assigned to SANOFI will be negotiated based on the percentage of
SANOFI's funding under said New Research Projects. Terms and
conditions of said SANOFI's participation to such negotiations shall
be mutually agreed upon between the Parties prior the entering into
discussions with such third party co-funder.


After January 1, 1997, if SANOFI decides to fiend a New Research Project, which is at the discovery level (the project has not reached the development stage and as such is not ready to go to the FDA for IND), then SANOFI shall pay to CTRC an exclusive entrance fee of [**] ($ [**] ) dollars according to the terms of payment as stated under Article HI. It is agreed between the Parties that said entrance fee shall be spent to support investment of said New Research Project.


2.9 With respect to projects which have previously been funded by SANOFI (i.e. pre-clinical development or discovery projects to which CTRC has or may acquire Commercial Rights), but which have ceased to be funded by SANOFI, then no later than ninety (90) days after being presented to the Program Council, the Commercial Rights for such projects, to the extent not otherwise subject to any rights of SANOFI which preexist this Agreement, shall be excluded from SANOFI's Option Right.


Ninety (90) days after the presentation of such project to the Program Council, CTRC shall be free, under suitable confidentiality restrictions, to commence negotiations with third party with respect to said Commercial Rights to such projects and SANOFI shall have no further rights in such projects.


2.10. The Program Council shall also be in charge of designating the Lead Compounds.


2.11. It is understood that CTRC will keep specific note books relating to the Research Program or any New Research Project proposed to SANOFI, which shall be received by SANOFI or authorized representatives from time to time upon two weeks advance written notice by SANOFI to CTRC.


ARTICLE III--CONSIDERATION - TERMS OF PAYMENT


3.1 In consideration of the carrying out of CTRC's general research responsibilities under the Research Program, and in consideration of the other duties and obligations of CTRC under this Agreement, and subject to the termination provisions of Article VII herein, SANOFI shall provide funding to CTRC with in the amount of three million ($3,000,000) dollars for basic research and preclinical discovery research in fields related to oncology for 1996, and SANOFI shall provide funding to CTRC in the amount of one million five hundred thousand ($1,500,000) dollars for basic research and preclinical discovery research in fields related to oncology for 1997.


3.1.1 Payments by SANOFI to CTRC over the term of the Agreement will be according to the following schedule:


January 1, 1996 $750,000
April 1, 1996 $750,000


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July 1, 1996 $750,000
October 1, 1996 $750,000
January 1, 1997 $375,000
April 1, 1997 $375,000
July 1, 1997 $375,000
October 1, 1997 $375,000


CTRC shall submit an invoice to SANOFI within 30 days prior to each payment due date.


3.1.2 a) During the Funding Period beginning January 1, 1996 and ending December 31, 1996:


i) SANOFI Projects-The Parties, through the Program
Council, will first allocate up to one million dollars
($1,000,000) for each Funding Period to SANOFI Projects.
SANOFI shall control, in its discretion, the planning and
expenditure of such funds.


ii) Other projects-The Parties, through the Program
Council, will allocate two million dollars ($2,000,000) plus
any of the one million ($1,000,000) dollars not dedicated to
SANOFI Projects for calendar year 1996 to fund other research
projects including New Research Projects selected by SANOFI to
be included in the Research Program.


During such a period of time, all payments due under this Agreement
i.e. Option Fee, Licensing Fee and Milestone Payment, as well as under
the MGBG License and Development Agreement, except bonus payments, if
any, shall be credited to SANOFI's funding commitment under this
Agreement for 1996, up to a maximum credit of seven hundred and fifty
thousand dollars ($750,000). In the event the amount due for such
fees and payments exceeds the maximum credit in said period of time,
CTRC, shall then issue a separate invoice for such excess to SANOFI,
which amount shall be payable by SANOFI within thirty (30) days.


b) During the Funding Period beginning January 1, 1997 and ending December 31, 1997:


i) SANOFI Projects SANOFI will have discretionary
control in planning and expenditure of up to five hundred
thousand dollars ($500,000) of the base funding support (one
million five hundred thousand dollars ($1,500,000)) for use
in support of pre-clinical research or other research and
development work on SANOFI owned or licensed Compounds and/or
Technology.


Subject to prior express and written consent of SANOFI on a
corresponding estimates provided by CTRC, SANOFI agrees to pay
on a fee-for-service, basis any work conducted by CTRC on
SANOFI owned Compounds/Technology that exceeds five hundred
thousand dollars ($500,000).


If the SANOFI budget is less than five hundred thousand
dollars ($500,000), the residual will be allocated to CTRC
research projects. If the amount spent during the fiscal year
is less than five hundred thousand dollars ($500,000), then:
a) a time credit will be issued to SANOFI if due to delays at
CTRC, or b) be allocated to CTRC New Research Project(s) if
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