Collaborative Research And Development Agreement

EXHIBIT 10.46


CONFIDENTIAL


COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT


between


3-DIMENSIONAL PHARMACEUTICALS, INC.


and


ATHERSYS, INC.


NOTE: Certain portions of this Collaborative Research and Development ---- 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.


ARTICLE 1 DEFINITIONS.....................................................1


ARTICLE 2 JOINT COMMITTEES...............................................10


2.1 Joint Steering Committee..........................................10


2.2 Chairperson.......................................................10


2.3 Joint Development Committee.......................................11


2.4 Responsibilities of the Joint Committees..........................11


2.5 Voting............................................................12


2.6 Opinion of Patent Counsel.........................................12


ARTICLE 3 RESEARCH PROGRAM...............................................12


3.1 Goal of Research Program..........................................12


3.2 Selection of Athersys Target and 3DP Target.......................12


3.3 Rejection.........................................................13


3.4 Selection/Rejection of Joint Targets..............................13


3.5 Athersys Responsibilities.........................................13


3.6 3DP Responsibilities..............................................14


3.7 Completion of Lead Generation.....................................14


3.8 Additional Efforts................................................14


3.9 Termination of Research Program For a Joint Target................15


3.10 Optional 3DP Continued Research...................................15


3.11 Re-instatement of Terminated Joint Target.........................15


3.12 [* *]......................................16


3.13 Expansion of Research Program.....................................16


ARTICLE 4 DEVELOPMENT PROGRAM............................................17


4.1 Goal of Development Program; Development Plans....................17


4.2 Responsibilities During the Development Program...................17


4.3 Determination to Move from Lead Generation to Lead Optimization...17


4.4 Progression into Lead Optimization................................18


4.5 Athersys Responsibilities.........................................18


4.6 3DP Responsibilities..............................................18


4.7 Progression into Pre-Clinical Development and Clinical
Development.......................................................18


4.8 Development Efforts...............................................18


4.9 Opting Out........................................................18


i


4.10 Termination of Development Program for a Joint Compound...........19


ARTICLE 5 COMMERCIALIZATION..............................................20


5.1 Commercialization of Joint Products...............................20


5.2 Division of Revenues for Joint Products...........................20


5.3 Athersys Product Commercialization................................21


5.4 3DP Product Commercialization.....................................22


ARTICLE 6 EXCLUSIVITY....................................................23


6.1 Athersys Restriction..............................................23


6.2 3DP Restriction...................................................23


ARTICLE 7 COSTS AND FINANCIAL RECORD KEEPING.............................23


7.1 Research Program Costs............................................23


7.2 Development Program Costs.........................................23


7.3 Record Keeping....................................................24


7.4 Quarterly Reconciliation..........................................24


7.5 Audits............................................................25


ARTICLE 8 CROSS-LICENSES.................................................25


8.1 License Grant by 3DP..............................................25


8.2 License Grant by Athersys.........................................26


8.3 3DP's Libraries...................................................26


ARTICLE 9 RESEARCH PROGRAM AND DEVELOPMENT PROGRAM RECORD KEEPING........26


9.1 Laboratory Notebooks..............................................27


9.2 Audit.............................................................27


9.3 Policies for Maintaining Records; Assignments of Inventions.......27


ARTICLE 10 CONFIDENTIAL INFORMATION.......................................27


10.1 Confidentiality Obligations.......................................27


10.2 Written Assurances and Permitted Uses of Confidential
Information.......................................................28


ii


10.3 Publication.......................................................28


10.4 Permitted Disclosures.............................................29


ARTICLE 11 PATENTS AND INTELLECTUAL PROPERTY..............................30


11.1 Ownership; Inventions.............................................30


11.2 Prosecution and Maintenance of Patent Rights......................32


11.3 Prosecution and Maintenance of Joint Targets, Joint Lead
Compounds, Joint Safety Assessment Compounds and Joint
Development Compounds.............................................32


11.4 Cooperation.......................................................33


11.5 Third Party Infringement..........................................33


11.6 Other Intellectual Property Infringement..........................34


11.7 Patent Term Extensions............................................35


ARTICLE 12 REPRESENTATIONS AND WARRANTIES.................................35


12.1 Authority.........................................................35


12.2 Commercially Reasonable Efforts...................................35


12.3 No Conflicts......................................................35


12.4 No Existing Third Party Rights....................................35


12.5 Intellectual Property.............................................35


12.6 Access to Athersys Cell Lines.....................................36


12.7 Access to 3DP Compounds...........................................36


12.8 Disclaimer of Warranties..........................................37


ARTICLE 13 INDEMNIFICATION................................................37


13.1 Indemnification by Athersys.......................................37


13.2 Indemnification By 3DP............................................38


13.3 Insurance Proceeds................................................38


13.4 Insurance.........................................................38


ARTICLE 14 TERM AND TERMINATION...........................................38


14.1 Term..............................................................38


14.2 Extension of Research Program.....................................39


14.3 Partial Termination...............................................39


14.4 Breach............................................................39


14.5 Insolvency or Bankruptcy..........................................39


14.6 Survival of Obligations...........................................40


14.7 Effects of Termination............................................40


iii


ARTICLE 15 DISPUTE RESOLUTION.............................................41


15.1 Dispute Resolution Process........................................41


15.2 Dispute Resolution Panel..........................................41


15.3 Arbitration.......................................................41


ARTICLE 16 MISCELLANEOUS PROVISIONS.......................................42


16.1 Entire Agreement..................................................42


16.2 Further Actions...................................................42


16.3 Binding Effect....................................................42


16.4 Assignment........................................................42


16.5 No Implied Licenses...............................................42


16.6 No Waiver.........................................................42


16.7 Force Majeure.....................................................42


16.8 Independent Contractors...........................................42


16.9 Notices and Deliveries............................................43


16.10 Public Announcements..............................................43


16.11 Headings..........................................................44


16.12 Severability......................................................44


16.13 No Consequential Damages..........................................44


16.14 Applicable Law....................................................44


16.15 Counterparts......................................................44


iv


COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT
------------------------------------------------


This Agreement, made as of the 25th day of October, 2001 (the "Effective Date"), between 3-Dimensional Pharmaceuticals, Inc., a corporation -------------- organized under the laws of Delaware and having a place of business at 1020 Stony Hill Road, Suite 300, Yardley, Pennsylvania 19067 (herein referred to as "3DP") and Athersys, Inc., a corporation organized under the laws of Delaware --- and having a place of business at 3201 Carnegie Avenue, Cleveland, Ohio 44115 (herein referred to as "Athersys") (3DP and Athersys are each referred to as a
-------- "Party" and collectively, the "Parties").
-------


WITNESSETH THAT:


WHEREAS, 3DP is engaged in drug discovery research for a variety of pharmacologically active compounds and the development of technologies to facilitate such research and 3DP has patented and other proprietary systems for generating chemical compounds having desired pharmaceutical properties including DiscoverWorks(TM) Technology;


WHEREAS, Athersys is engaged in discovery and production of drug discovery targets and drug discovery screens and has proprietary technologies therefor, including RAGE-VT Technology and RAGE-PE Technology; and


WHEREAS, the Parties wish to enter into a strategic alliance in which they will collaborate on the selection of drug discovery targets to be produced and developed into screens by Athersys, on the screening by Athersys of compounds to be selected or synthesized and provided by 3DP, and on the further research and development and commercialization of compounds that are shown to be active in such screens.


NOW, THEREFORE, in consideration of the covenants and obligations expressed herein, and intending to be legally bound, and otherwise to be bound by proper and reasonable conduct, the Parties agree as follows:


ARTICLE 1
DEFINITIONS


1.1 "Affiliate" means, with respect to any Party, any corporation or
--------- other business entity, which controls, is controlled by, or is under common control with such Party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls at least fifty (50%) of the voting stock or other ownership interest of the other corporation or entity (or alternatively with respect to foreign entities, if it owns the maximum such ownership interest permitted by law), or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint at least fifty (50%) of the members of the governing body of the corporation or other entity.


1.2 "Athersys" means Athersys and its Affiliates.
--------


1.3 "Athersys Compound" means a Compound that is selected or
----------------- otherwise results from screening against the Athersys Target during Lead Generation.


1.4 "Athersys Development Compound" means a Development Compound
----------------------------- directed against an Athersys Target that results from Pre-Clinical Development undertaken by Athersys and has been selected for Clinical Development.


1.5 "Athersys Indemnitees" shall have the meaning set forth in
-------------------- Section 13.2.


1.6 "Athersys Lead Compound" means a Lead Compound directed against
---------------------- an Athersys Target that results from Lead Generation and has been selected for Lead Optimization or is identified during Lead Optimization.


1.7 "Athersys Product" means a Product that comprises an Athersys
---------------- Development Compound.


1.8 "Athersys Safety Assessment Compound" means a Safety Assessment
----------------------------------- Compound directed against an Athersys Target that results from Lead Optimization undertaken by Athersys and has been selected for Pre-Clinical Development.


1.9 "Athersys Target" means the Target that is selected by Athersys
--------------- for screening of Compounds provided by 3DP during Lead Generation under this Agreement to develop a Product that will be owned exclusively by Athersys.


1.10 "Candidate Target" means a Target listed in Schedule 1.10,
---------------- ------------- Targets that are relevant to the disease areas listed in Schedule 1.10,
------------- and Targets that are within the families of Targets listed in Schedule 1.10,
------------- as may be amended by the JSC from time to time.


1.11 "Clinical Development" means the full range of Phase I, Phase II
-------------------- and Phase III clinical development that are required to obtain a Regulatory Approval to market a Product.


1.12 "Clinical Development Plan" means the detailed program of
------------------------- Clinical Development activities documented by the JDC for each Joint Target and its respective Joint Development Compound and including those elements described in Section 4.1.


1.13 "Combination Product" means a Product that includes one or more
------------------- active ingredients in addition to a Development Compound developed under this Agreement.


1.14 "Compound" means an organic chemical compound that is selected or
-------- synthesized by 3DP from the 3DP Probe Library or associated 3DP Synthetically Accessible Libraries or from other sources owned or controlled by 3DP for use in the Research Program. A flowchart of the potential progression of a Compound through Pre-Clinical Development and Clinical Development and into a Product is attached hereto as Schedule 1.14.
-------------


1.15 "Confidential Information" means all proprietary, non-public
------------------------ information that has or could have commercial value or other utility in a Party's business, or the unauthorized disclosure of which could be detrimental to the Party's interests, including confidential information, inventions, know-how, data and materials relating to chemical structures, Targets,


2


screens, assays, utility against Targets, Compounds, Lead Compounds, Safety Assessment Compounds, Development Compounds or Products provided by the Parties or otherwise developed under this Agreement, and shall include, without limitation, research, technical, development, manufacturing, commercialization, financial, personnel and other business information and plans, whether in oral, written, graphic or electronic form.


1.16 "Development Compound" means a Safety Assessment Compound that
-------------------- results from Pre-Clinical Development and has characteristics considered required for a successful IND submission and, therefore, suitable for and has been selected for Clinical Development.


1.17 "Development Plan" means a Lead Optimization Plan, Pre-Clinical
---------------- Development Plan or Clinical Development Plan.


1.18 "Development Program" means the activities and tasks that
------------------- comprise Lead Optimization, Pre-Clinical Development, Clinical Development, manufacture and registration of a Product as applied to Joint Lead Compounds, Joint Safety Assessment Compounds, Joint Development Compounds and Joint Products as outlined in ARTICLE 4. Schedule 1.14 graphically depicts the
------------- elements of the Development Program and its relationship to the Research Program.


1.19 "Development Term" means with respect to each Lead Compound, the
---------------- period of time beginning with selection of such Lead Compound for Lead Optimization and ending with the earlier of (i) termination by the JSC or the JDC, as applicable, of the Development Program for such Lead Compound or Safety Assessment Compounds or Development Compounds derived therefrom, and (ii) the first commercial sale of a Product that results from such Lead Compound or Safety Assessment Compound or Development Compound derived therefrom.


1.20 "Disclosing Party" shall have the meaning set forth in Section
---------------- 10.1.


1.21 "Discontinuing Party" means a Party that elects to opt out of
------------------- further development and funding of a Joint Lead Compound, Joint Safety Assessment Compound or Joint Development Compound, as further provided in Section 4.9.


1.22 "DiscoverWorks(TM) Technology" means 3DP's full panoply of drug
---------------------------- discovery and compound and library synthesis technologies including but not limited to DirectedDiversity(R) technology, ThermoFluor(R) Technology, 3DP Probe Libraries, 3DP Synthetically Accessible Libraries and Proteomica(TM) technology, notwithstanding that not all such technologies and resources will be utilized under this Agreement.


1.23 "Effective Date" shall have the meaning set forth in the
-------------- preamble.


1.24 "FTE" means a full time equivalent scientific employee (i.e., one
--- full-time or multiple part-time employees aggregating to one full-time employee) employed by a Party and assigned to work on the Research Program or Development Program with such time and effort to constitute one employee working on the Research Program or Development Program on a full-time basis consistent with normal business and scientific practice (i.e., on an annual basis, at


3


least forty (40) hours per week of dedicated effort for at least forty-eight (48) weeks per year). In no event does an FTE include a subcontractor.


1.25 "FTE Rate" means [* *] per year per FTE for the first contract
-------- year subject to an annual increase of [* *] compounded annually thereafter to reflect inflation.


1.26 "Funding Party" means a Party that elects to continue development
------------- of a Joint Lead Compound, Joint Safety Assessment Compound or Joint Development Compound as further provided in Section 4.9 after the other Party opts out of further development, i.e., becomes a Discontinuing Party.
----


1.27 "IND" means (a) (i) an Investigational New Drug Application, as
--- defined in the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder, that is required to be filed with the FDA before beginning clinical testing of a Development Compound in human subjects, or any successor application or procedure and (ii) any foreign counterpart of a U.S. Investigational New Drug Application, and (b) all supplements and amendments that may be filed with respect to the foregoing.


1.28 "Intellectual Property" means all of the following or their
--------------------- substantial equivalent or counterpart in any jurisdiction throughout the world: (i) patents, patent applications and patent disclosures, (ii) trademarks, service marks, trade dress, trade names, corporate names, logos and Internet domain names, (iii) copyrights and copyrightable works, (iv) registrations and applications for any registration for any of the foregoing and (v) trade secrets, confidential information and inventions.


1.29 "Iterative Chemistry Limitations" means limitations inherent in
------------------------------- synthesizing compounds through iterative rounds of chemistry using combinatorial chemistry reaction schemes as developed for the 3DP Synthetically Accessible Library. A further explanation and examples of such iterative chemistry limitations are provided in Schedule 1.29.
-------------


1.30 "Joint Compound" means a Compound that is selected or otherwise
-------------- results from screening against a Joint Target during Lead Generation.


1.31 "Joint Development Compound" means a Development Compound
-------------------------- directed against a Joint Target that results from Pre-Clinical Development undertaken by the Parties and has been selected by the JDC for Clinical Development.


1.32 "Joint Lead Compound" means a Lead Compound directed against a
------------------- Joint Target that results from Lead Generation and has been selected by the JSC for Lead Optimization.


1.33 "Joint Product" means a Product that comprises a Joint
------------- Development Compound.


1.34 "Joint Safety Assessment Compound" means a Safety Assessment
-------------------------------- Compound directed against a Joint Target that results from Lead Optimization undertaken by the Parties and has been selected by the JSC for Pre-Clinical Development.


4


1.35 "Joint Target" means one of the [* *] Targets that are selected
------------ by the JSC in accordance with Section 3.4 for screening by Athersys of Compounds provided by 3DP under this Agreement to develop a Product that will be owned jointly by Athersys and 3DP.


1.36 "JDC" means the Joint Development Committee established as
--- provided in Section 2.3. Schedule 1.14 graphically depicts the relation of the
------------- JDC and the JSC to the Research and Development Program activities.


1.37 "JSC" means the Joint Steering Committee established as provided
--- in Section 2.1.


1.38 "Lead Compound" means a Compound that has a well-understood
------------- structure-activity relationship with respect to a Target and is suitable for Lead Optimization, such that derivatives of the Compound, e.g., homologs,
---- analogs, polymorphs and isomers, can be designed which would reasonably be expected to have greater Potency, selectivity, pharmacokinetics, pharmacodynamics and acute safety. "Lead Compound" also includes such derivatives, e.g., homologs, analogs, polymorphs, and isomers up to the point of
---- selection as a Safety Assessment Compound.


1.39 "Lead Generation" means a program of identifying Lead Compounds
--------------- by using Primary Screens and Secondary Screens to screen Compounds from the 3DP Probe Library and using up to three rounds of 3DP's proprietary iterative combinatorial chemical synthesis developed from the 3DP Synthetically Accessible Library, and DirectedDiversity(R) Technology to identify Compounds or classes of Compounds having superior activity and by using Secondary Screens to assist 3DP in determining the structure-activity relationships of Compounds being screened and confirm cell-based functional activity of the Compounds.


1.40 "Lead Generation Plan" means the detailed program of Lead
-------------------- Generation activities as documented by the JSC for each Joint Target and including those elements described in Section 2.4.1.


1.41 "Lead Optimization" means a program of activities to progress
----------------- Lead Compounds into Safety Assessment Compounds by using customized or novel medicinal chemistry technologies to make specific derivatives, e.g., homologs,
---- analogs, polymorphs and isomers, of Lead Compounds and testing such derivatives in in vitro, ex vivo assays and/or in vivo animal models and using the data therefrom to improve Lead Compounds' structure-activity relationships, Potency, selectivity, pharmacokinetics, pharmacodynamics and acute safety. It is understood that Lead Optimization and Pre-Clinical Development overlap in the sense that certain data developed during Lead Optimization are useful in Pre-Clinical Development.


1.42 "Lead Optimization Plan" means the detailed progr ...