Co-development Agreement

EXHIBIT 10.28


CO-DEVELOPMENT AGREEMENT


BETWEEN


BIOENVISION


AND


ILEX ONCOLOGY


TABLE OF CONTENTS


CO-DEVELOPMENT AGREEMENT ............................................... 1


WITNESSETH ............................................................. 1


1. DEFINITIONS ....................................................... 1


2. CO-DEVELOPMENT PROGRAM ............................................ 3


3. CO-DEVELOPMENT FUNDING ............................................ 6


4. INCOME AND ROYALTY PAYMENTS ....................................... 9


5. SRI MILESTONE PAYMENTS ............................................ 11


6. MARKETING ......................................................... 12


7. SUBLICENSING ...................................................... 13


8. PAYMENTS AND REPORTS .............................................. 14


9. RECORDS ........................................................... 15


10. MANUFACTURE ....................................................... 16


11. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL ............................ 16
INFORMATION AND IMPROVEMENTS


12. PATENT PROSECUTION ................................................ 17


13. INFRINGEMENT BY THIRD PARTY ....................................... 17


14. REVOCATION PROCEEDINGS ............................................ 18


15. INFRINGEMENT OF THIRD PARTY RIGHTS ................................ 19


16. REPRESENTATIONS ................................................... 19


17. DISCLAIMER ........................................................ 21


18. INDEMNIFICATION ................................................... 21


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19. INSURANCE ......................................................... 23


20. TERM AND TERMINATION .............................................. 23


21. CONFIDENTIALITY; PUBLICATION; PUBLICITY ........................... 26


22. DISPUTE RESOLUTION ................................................ 28


23. ASSIGNABILITY ..................................................... 30


24. REFORM ............................................................ 30


25. WAIVER AND ALTERATION ............................................. 30


26. MARKING ........................................................... 31


27. IMPLEMENTATION .................................................... 31


28. GOVERNING LAW ..................................................... 31


29. EXPORTATION OF TECHNICAL INFORMATION .............................. 31


30. HEADINGS .......................................................... 31


31. PARTIES INDEPENDENT ............................................... 32


32. COUNTERPARTS ...................................................... 32


33. FORCE MAJEURE ..................................................... 32


34. SURVIVAL OF OBLIGATIONS ........................................... 32


35. NOTICE ............................................................ 33


APPENDIX I - PATENTS AND PATENT APPLICATIONS ...................... 35


APPENDIX II- CO-DEVELOPMENT AGREEMENT ............................. 36
BETWEEN BIOENVISION AND SRI


APPENDIX III - SLOAN-KETTERING INSTITUTE FOR
CANCER RESEARCH AGREEMENT


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CO-DEVELOPMENT AGREEMENT


THIS AGREEMENT (the "Agreement") is entered into and effective this 12th day of March, 2001, by and between Bioenvision, Inc. having its principal place of business at One Rockefeller Plaza, New York, NY 10020, herein called "Bioenvision", and Ilex Oncology, Inc. having its principal place of business at 4545 Horizon Hill Blvd, San Antonio, Texas 78229-2263, herein called "Ilex".


WITNESSETH


WHEREAS, Bioenvision has commercial rights that were licensed from Southern research Institute ("SRI") relating to the development and uses of a 2'-fluoro-2-halo substituted purine nucleoside, herein referred to as "Clofarabine", which has been shown to be effective in vitro and in vivo against hematologic malignancies; and


WHEREAS, Bioenvision recognizes that Ilex has expertise in the development of new drugs for clinical use, and


WHEREAS, Bioenvision recognizes that the development program for Clofarabine will be expedited by the expertise of Ilex, and


WHEREAS, Bioenvision has expertise and strategic relationships which may facilitate the development and marketing of Clofarabine outside of the United States and Canada;


NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained and intending to be legally bound thereby, the parties agree as follows:


1. DEFINITIONS


As used herein the following terms shall have the meanings set forth below:


1.1 Affiliate means any corporation, firm, partnership or other entity that
controls, is controlled by, or is under common control with a party
hereto. For purposes of this Agreement, "control" means the ownership,
whether direct or indirect, of fifty (50%) percent or more of the
equity having the power to vote or otherwise direct the affairs of the
entity.


1.2 Bioenvision means Bioenvision, Inc. and joint ventures, subsidiaries,
or other business entities controlled directly or indirectly by
Bioenvision or in which Bioenvision owns at least a majority interest.


1.3 Clofarabine means 2-ch1oro-9-(2-deoxy-2-fluoro-[Beta]-D-
arabinofuranosyl)-9H-purin-6-amine.


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1.4 Co-Development Program means the joint clinical development of the
Technology by Bioenvision and Ilex.


1.5 Confidential Information has the meaning set forth in Article 21.1.


1.6 Damages has the meaning set forth in Article 18.1.


1.7 Field means, and is limited to, the practice of the Patent, Invention
and Technical Information for use in the treatment of human cancer. For
purposes of this Agreement, "cancer" shall mean any malignant tumor
arising from or situated in either the hematological cell lines or
solid organs or tissues within the human body. The cancer may be
primary or secondary in origin."


1.8 Ilex means Ilex Oncology, Inc. and joint ventures, subsidiaries, or
other business entities controlled directly or indirectly by Ilex or in
which Ilex owns at least a majority interest.


1.9 Improvement or Improvements means those unencumbered technology
advances in the formulation, manufacture or structure of Clofarabine or
any Product made by or on behalf of Management during the term of this
Agreement that are either within the scope of and would constitute an
infringement of the Patent claims or use Technical Information and are
within the Field.


1.10 Indemnified Party has the meaning set forth in Article 18.3.


1.11 Indemnifying Party has the meaning set forth in Article 18.3.


1.12 Invention or Inventions means (i) applications of the Technology or
(ii) applications necessary for use of the Technology and claimed in
any Patent, solely in the Field.


1.13 Management means the team established pursuant to Section 2.2, which
shall be responsible for co-ordination and supervision of the
Co-Development Program.


1.14 Net Sales Revenue means the gross amount recognized by a party or its
Affiliates or sublicensees for the sale of Clofarabine or other
Product(s) through normal distribution channels (as determined by
generally accepted accounting principles and industry practices), less
any deductions for value added taxes incurred, and not recovered by
such party or the equivalent, or trade discounts, or returns, or such
deductions that may be made from the sale price in the Territory.


1.15 Patent or Patents means the patents and/or patent applications, set
forth in Appendix I, covering the Invention or Improvement as defined
above, patents to be issued pursuant thereto, and all divisionals,
continuations, continuations-in-part, reissues, substitutions, and
extensions thereof, and any patent issuing on a patent application
filed after the Effective Date of this Agreement which is included in
the grant of license hereunder and any foreign counterparts of the
foregoing. Appendix I lists the owner of each such Patent.


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1.16 Product(s) means Clofarabine . which was licensed by Bioenvision from
SRI and as set out in the SRI Agreement (as hereinafter defined), and
includes other related purine nucleosides within the scope of the
patent rights licensed in the aforementioned license.


1.17 Providing Party has the meaning set forth in Article 21.1.


1.18 Representatives has the meaning set forth in Article 21.1.


1.19 Technical Information means unencumbered published or unpublished
confidential and proprietary information in the nature of research and
development information, knowledge and technical data, together with
trade secrets relating to the Products, including any inventions in the
possession of and belonging solely to Ilex or Bioenvision on or prior
to the Effective Date of this Agreement and which Ilex or Bioenvision,
acting in good faith, believe to be useful in carrying out the
co-development program, including that which comes into the possession
of Ilex or Bioenvision during the term of this Agreement as a result of
activities carried out under this Agreement.


1.20 Technology means the patented and unpatented, patentable and
unpatentable proprietary Technical Information related to the Products
for use in the Field which is owned or possessed by Bioenvision with
rights to sublicense and is made available to Ilex pursuant to this
Agreement.


1.21 Territory means worldwide, with the exception of Japan and Southeast
Asia (as defined in the Agreement between SRI and Bioenvision -
Appendix II).


1.22 SRI Agreement means, collectively, the Co-Development Agreement between
Bioenvision and SRI dated August 31, 1998 (Appendix II to this
Agreement) and the accompanying inter-institutional agreement between
SRI and Sloan-Kettering Institute for Cancer Research ("MSK") (Appendix
III to this Agreement), in each case, as amended (if amended).


2. CO-DEVELOPMENT PROGRAM


2.1 The parties to this Agreement hereby agree to jointly co-develop
Clofarabine for commercialization according to the terms of this
Agreement. This Agreement supersedes all other written or verbal
agreements, express or implied, between Ilex and Bioenvision relating
to the subject matter hereof. Ilex shall be responsible for conducting
all clinical trials and the filing and prosecution of all applications
with applicable USA and Canadian regulatory authorities and all
regulatory filings in the USA and Canada shall be in the name of Ilex.
Ilex shall use all reasonable efforts to complete such actions and to
obtain applicable regulatory approvals as promptly as practicable. In
this regard, the parties contemplate attempting to obtain "orphan drug"
status for Clofarabine but acknowledge that it may be necessary to seek
regulatory approval on a different basis, Bioenvision shall be
responsible for conducting all clinical trials and the filing and
prosecution of all applications with applicable regulatory authorities
other than in the USA and Canada and all such filings shall be in the
name of Bioenvision.


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2.2 Ilex shall be responsible for meeting the milestones and timetable set
forth below:


Milestone Completion Date
--------- ---------------


Completion of Pivotal Phase II Trials Ilex to use all reasonable efforts to
cause such trials, as designed by
Management, to be completed not later
than 31 December 2002, but the parties
acknowledge and agree that such trials
may not be completed by such date
notwithstanding Ilex's best efforts. The
parties agree that if the trials are not
completed by 31 December 2002, but are
still ongoing and progressing to
completion within a reasonable timeframe
thereafter, the Milestone date shall be
adjusted, accordingly.


Filing of New Drug Application with US Not later than August 31, 2003; provided Food and Drug Administration that such date is consistent with the
agreed upon regulatory strategy with the
FDA and that the deadline shall be
continued through the period ending on
January 1, 2004 so long as Ilex
continues to use all reasonable efforts
to complete the filing in due form as
promptly as reasonably practicable
during such extended period. The parties
acknowledge and agree that Bioenvision
may agree to extend the deadline beyond
January 1, 2004 upon request by Ilex,
which agreement shall not be
unreasonably withheld.


2.3 Management team ("Management") shall be established which will direct
and supervise the Co-Development Program of Clofarabine or any Product
and which will co-ordinate the marketing strategy for Clofarabine or
any Product. The Management shall consist of four people, with two
representatives appointed by each of Bioenvision and Ilex. Bioenvision
and Ilex may change their respective representatives at any time.
Additional members of Management may be added but at all times the
equal balance of representatives from each party shall be maintained.
The Management shall be responsible for approving the annual
development plans for the Co-Development Program, as well as, the
annual budget proposals and manufacturing, pre-marketing and marketing
strategies for Clofarabine or any other Product. The Management will
promptly share with SRI all information generated under the
Co-Development Program pursuant to the confidentiality provisions of
Article 21 and with particular respect to the preclinical studies and
clinical trials. Upon commercialization of the Product(s), the
Management will provide SRI with quarterly updates (which may be oral
unless otherwise requested by SRI) in reasonable detail, describing the
Management's plans, activities and accomplishments. The Management
shall be established within thirty (30) days of signing of this
Agreement.


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2.4 Notwithstanding Article 2.2 above, Ilex shall have the lead (and
controlling vote for the Management) role in designing and executing
the Co-Development Program, including, without limitation, any
development issue and any strategic marketing issues as described in
Article 6, in the USA and Canada. In establishing the development
program and marketing strategy for the USA and Canada, ILEX will give
due regard to the effects, both positively and negatively, on
Bioenvision' s development and/or marketing strategy for Europe.


2.5 Notwithstanding Article 2.2 above, Bioenvision shall have the lead role
and controlling vote in designing and executing the Co-Development
Program, including, without limitation, any development issue and any
strategic marketing issues as described in Article 6, in all other
territories outside the USA and Canada.


2.6 Both parties to this Agreement acknowledge the SRI Agreement. Except as
set forth herein, the rights of either party to this Agreement are
subject to and limited by the terms and conditions of the SRI
Agreement.


2.7 The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of
Article 21 and including, without limitation, all information with
respect to market analysis, competitor position, pre-clinical studies
and clinical trials, the filing of any applications with the US Food
and Drug Administration or similar Canadian authority and the
manufacture and testing of different formulations and preparations of
Clofarabine or any related Product which is the subject of this
Co-Development Agreement.


2.8 Within ninety (90) days of the effective date of this Agreement, the
Management shall prepare a Development Plan for Clofarabine. This plan
shall describe the commercial strategy, clinical trial proposals and
assessment of the market potential for Clofarabine.


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3. CO-DEVELOPMENT FUNDING


3.1 Ilex shall pay all costs and expenses of any work deemed necessary for
the development of Clofarabine or any Product in the USA and Canada,
and this shall include, but shall not be limited to, clinical trials,
the manufacture of bulk drug substance and finished Product, the filing
of any applications with the US Food and Drug Administration or similar
Canadian authority and the manufacture and testing of different
formulations and preparations of Clofarabine or any related product
which is the subject of this Co-Development Agreement.


3.2 Bioenvision and Ilex shall share equally in the costs and expenses of
the development of Clofarabine or any Product in any other countries
within the Territory other than the USA and Canada, pursuant to a
development plan and budget which is approved by Management on an
annual basis. Ilex's consent, via the Management, shall be required for
any budgetary matter which is to be cofunded by Ilex, such consent not
to be unreasonably withheld. Notwithstanding, Ilex agree to provide a
minimum of $1 million in the first two years from the Effective Date
for the clinical development of Clofarabine or any Product outside the
USA and Canada. If additional money, over and above that agreed to by
Ilex via the Management, shall be required, for whatever reason, for
the proper development of Clofarabine or any Product outside the USA
and Canada Bioenvision may elect to spend the additional money for such
development and such additional money shall be credited to Bioenvision
against future royalty payments to Ilex and at the rate of $1.5 for
every $1 of additional expenditure.


3.3 This Agreement shall become immediately effective upon closing as
hereinafter described. Prior to closing, Ilex and Bioenvision shall
each deliver three originals of this Agreement, fully executed, to
Bioenvision's counsel, Piper, Marbury, Rudnick & Wolfe LLP, at 1251
Avenue of the Americas, 29th Floor, New York, New York 10020-1104. At
closing, Ilex shall pay to Bioenvision the sum of US$1.35 million,
minus US $250,000 which was previously paid by Ilex to Bioenvision upon
signature of the Terms for a Co-Development Agreement, for a total of
US$1.1 million to be paid by Ilex by irrevocable wire transfer of
immediately available federal funds to an account for the benefit of
Bioenvision, which shall be notified in writing to Ilex, where such
funds shall be held in escrow pending completion of the closing. The
closing shall be completed promptly upon confirmation by Bioenvision's
counsel of receipt of such funds and delivery by such counsel of an
original Agreement executed by each party to the other party.
Notwithstanding anything to the contrary contained herein, this
Agreement shall not be deemed effective until confirmation of receipt
of such US$1.1 million in immediately available federal funds in the
account for the benefit of Bioenvision.


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In addition, if the FDA agrees that the existing Clofarabine Toxicology
package contained in the Investigators IND, filed by the University of
Texas MD Anderson Cancer Center, is sufficient for Ilex's NDA, and Ilex
will not be required to do additional cGMP animal toxicity studies to
continue or complete the clinical trials, then Ilex shall promptly pay
via wire transfer to Bioenvision an additional $150,000. Otherwise,
Ilex shall use the $150,000 to defer its costs for the required
additional toxicology studies on an as-costs-are-incurred basis, and
refund to Bioenvision any remainder of the $150,000 once all toxicology
studies are fully paid for.


3.4 Ilex agrees to pay Bioenvision an additional sum of US$2.5 million by
irrevocable wire transfer of immediately available federal funds
immediately after completion of the Management designed pivotal Phase
II clinical trial of Clofarabine. Completion, for this purpose, shall
mean the date on which all patients will have finished treatment as
defined in the protocol for the Phase II clinical trial.


3.5 Ilex is hereby granted an option to purchase US$1 million of
Bioenvision common stock at the Market Value per each such share. Such
option shall become exercisable upon completion of the Phase II
clinical trial referred to in Article 3.4 and shall also expire 30 days
after completion of the Phase II trial referred to in Article 3.4. The
Market Value per each share of Bioenvision common stock shall equal the
average of the Market Price per each such share for on each of the 10
Trading Days immediately prior to the date of exercise of the option.
"Market Price" means, with respect to the shares of common stock of
Bioenvision on any applicable Trading Day, (a) if the shares are listed
or admitted for trading on any national securities exchange or included
in the NASDAQ National Market or NASDAQ SmallCap Market, the last
reported sales price as reported on such exchange or market; (b) if the
shares are not listed or admitted for trading on any national
securities exchange or included in the NASDAQ National Market or NASDAQ
SmallCap Market, the average of the last reported closing bid and asked
quotation for the shares as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or a similar
service if NASDAQ is not reporting such information; (c) if the shares
are not listed or admitted for trading on any national securities
exchange or included in the NASDAQ National Market or NASDAQ SmallCap
Market or quoted by NASDAQ or a similar service, the average of the
last reported bid and asked quotation for the shares as quoted by a
market maker in the shares (or if there is more than one market maker,
the bid and asked quotation shall be obtained from two market makers
and the average of the lowest bid and highest asked quotation). In the
absence of any available public quotations for the Common Stock, the
Board of Directors of Bioenvision shall determine in good faith the
Market Price of the common stock, which determination shall be set
forth in a certificate by the Secretary of the Company. "Trading Day"
means any day on which the common stock of Bioenvision is quoted for
trading on any national securities exchange, The NASDAQ National
Market, the NASDAQ SmallCap Market, the NASDAQ or a similar service, or
by a market maker in the "pink sheets" or a similar service or, if the
common stock is not customarily quoted for trading in any of those
venues (excluding weekends and holidays and similar customary days on
which such trading does not occur), then any day other than a Saturday,
Sunday, or other day on which commercial banks in the State of New York
are authorized or required by law to close. In exercising the option
Ilex shall not make use of material non-public information and shall
comply with applicable law. This option shall be non-transferable.


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3.6 Ilex agrees to pay to Bioenvision the sum of US$5,000,000by irrevocable
wire transfer of immediately available federal funds within five (5)
days after submission by Ilex of a new drug application ("NDA") with
the United States Food and Drug Administration ("FDA") for the use of
Clofarabine or other Product in the treatment of chronic lymphocytic
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