Collaborative Research, Development And License Agreement, Dated July 26, 1999

Exhibit 10.14

Certain confidential information contained in this document, marked by brackets and asterisks, has been omitted pursuant to a request for confidential treatment pursuant to 17 C.F.R a7a7 200.80(b)(4) and 200.83 and Rule 406 under the Securities Act of 1933, as amended, and has been filed separately with the Securities and Exchange Commission.


COLLABORATIVE RESEARCH, DEVELOPMENT


AND LICENSE AGREEMENT


Among

ACADIA PHARMACEUTICALS INC.,

and


ALLERGAN, INC.

and


ALLERGAN PHARMACEUTICALS (IRELAND) LIMITED, INC.


and


ALLERGAN SALES, INC.


TABLE OF CONTENTS

Page


1.

Definitions 1

2.

Scope of Collaboration; Development Responsibilities; Exclusivity and Governance 6

2.1

Scope of Collaboration 6

2.2

Development Responsibilities 6

2.3

Exclusivity of the Collaboration 6

2.4

Research Management Committee 7

2.5

Research Management Committee Functions And Powers 7

2.6

Information And Reports 8

2.7

RMC Dispute Resolution 8

3.

Technology Transfer and Identification of Active Compounds 8

3.1

Transfer of ACADIA Technology 8

3.2

Transfer of Allergan Technology 8

3.3

Identification of Active Compounds 9

4.

Compound Testing And Selection 9

4.1

Testing To Identify Active Compounds 9 4.2

Selection of Designated Compounds 9

4.3

Selection of Collaboration Lead Compounds 10

5.

Product Development Manufacturing and Supply 12

5.1

Development of Collaboration Lead Compounds 12

5.2

Disclosure of Study Data on Collaboration Lead Compounds 12

5.3

Manufacture and Supply 12

6.

License Grants; Failure to Pursue Development in Japan 12

6.1

License Grants for Collaborative Research 12

6.2

License Grant for Development and Commercial Purposes 13

6.3

Sublicensing Rights 13

6.4

Diligence Obligations 13

6.5

Failure to Pursue Development in Japan 13

7.

Fees and Payments 14

7.1

Up-front Fee 14

7.2

Research Funding 14

7.3

Milestone Payments 15

7.4

Royalties 16

8.

Payments; Records; Audits 18

8.1

Payment; Reports 18

8.2

Exchange Rate; Manner and Place of Payment 18

8.3

Late Payments 18

8.4

Records and Audits 18


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8.5

Withholding of Taxes 19

8.6

Exchange and Royalty Rate Controls 19

9.

Intellectual Property 19

9.1

Ownership of Technology 19

9.2

Patent Prosecution 19

9.3

Cooperation of the Parties 20

9.4

Infringement by Third Parties 20

9.5

Infringement of Third Party Rights 21

9.6

Trademarks 22

9.7

Patent Labeling 22

10.

Representations and Warranties 22

10.1

Representations and Warranties 22

10.2

ACADIA Representations and Warranties 22

10.3

Allergan Representations and Warranties 23

10.4

Disclaimer Concerning Technology 23

11.

Confidentiality; Publication 24

11.1

Confidentiality 24

11.2

Exceptions 24

11.3

Terms of Agreement 24

11.4

Authorized Disclosure 24

11.5

Publications 25

12.

Term and Termination 26

12.1

Term of the Agreement 26

12.2

Termination by Mutual Agreement 26

12.3

Termination by Allergan 26

12.4

Termination for Cause 26

12.5

Accrued Rights, Surviving Obligations 26

13.

Indemnity 28

13.1

Indemnification 28

13.2

Control of Defense 28

13.3

Insurance 28

14.

Governing Law; Dispute Resolution 29

14.1

Governing Law 29

14.2

Dispute Resolution 29

14.3

Jurisdiction and Venue 29

15.

General Provisions 29

15.1

Notices 29

15.2

Force Majeure 30

15.3

Entirety of Agreement 30

15.4

Non-Waiver 30


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15.5

Disclaimer of Agency 30

15.6

Severability 30

15.7

Affiliates; Assignment 30

15.8

Headings 31

15.9

Limitation of Liability 31

15.10

Counterparts 31

15.11

Bankruptcy 31

15.12

Public Disclosure 32


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COLLABORATIVE RESEARCH, DEVELOPMENT


AND LICENSE AGREEMENT

THIS COLLABORATIVE RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement"), entered into as of July 26, 1999 (the "Effective Date") by and among ACADIA PHARMACEUTICALS INC. , a Delaware corporation ("ACADIA"), with offices at 3911 Sorrento Valley Blvd., San Diego, California 92121 and ALLERGAN PHARMACEUTICALS (IRELAND) LIMITED, INC. a Panamanian corporation with offices at Castlebar road Westport, County Mayo, Ireland, ALLERGAN SALES, INC. a California corporation with offices at 2525 Dupont Drive, Irvine, California 92612 and ALLERGAN, INC. , a Delaware corporation, with offices at 2525 Dupont Drive, Irvine, California 92612 (hereinafter collectively "Allergan"),


W I T N E S S E T H:


WHEREAS, ACADIA has discovered compounds that are potent agonists selective for the m1 muscarinic receptor which agonists may be useful in the treatment of ocular disease such as glaucoma; and

WHEREAS Allergan is engaged in the research, development, marketing, manufacture and sale of therapeutic products for the treatment of ocular disease; and


WHEREAS, ACADIA and Allergan desire to enter into a collaborative relationship to conduct research with the goal of designating two [b7b7b7***b7b7b7] specific muscarinic receptor ligands as lead drug development compounds for development and commercialization by Allergan for the treatment of ocular disease:

NOW, THEREFORE, in consideration of the foregoing and the covenants and premises contained in this Agreement, the parties agree as follows:

1. Definitions . As used herein, the following terms shall have the following meanings:


1.1 " ACADIA Designated Compound" shall mean any one (1) of up to [b7b7b7***b7b7b7] Active Compounds and their respective [b7b7b7***b7b7b7] (to the extent such [b7b7b7***b7b7b7] are included in the mixture tested) and salts thereof, at any one time selected as a drug candidate by ACADIA pursuant to Section 4.3(b).

1.2 " ACADIA Know-How" shall mean all tangible or intangible know-how, trade secrets, inventions (whether or not patentable), data, preclinical results, physical, chemical or biological material, and other information and data on or relating to all [b7b7b7***b7b7b7] Muscarinics that (a) ACADIA owns, controls or to which it has a license with the right to sublicense on the Effective Date or (b) are independently developed by ACADIA or its Affiliates during the Research Term and, in each case, any replication or any part of such information or material.


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1.3 " ACADIA Patents" shall mean, to the extent useful for the purposes of the Collaboration and any subsequent commercialization of Allergan Products, all foreign and domestic: (a) patents existing as of the Effective Date or issued during the Research Term; and (b) patents issuing from patent applications that are pending as of the Effective Date or during the Research Term (including provisionals, divisionals, continuations and continuations-in-part of such applications); and (c) substitutions, extensions, reissues, renewals and inventors certificates relating to the foregoing patents, which ACADIA owns or controls or to which ACADIA has a license (with the right to sublicense). ACADIA Patents shall also mean any patents solely owned by ACADIA pursuant to Section 9.1 hereof. ACADIA Patents existing as of the Effective Date are the patents and applications listed in Exhibit C attached hereto.


1.4 " ACADIA Pool Compounds" shall have the meaning set forth in Section 4.2.

1.5 " ACADIA Product" shall mean any product containing a Collaboration Lead Compound which receives Regulatory Approval for commercial marketing and sale for use in the Field and is commercialized in the Field by ACADIA, its Affiliates or its sublicensees; including all formulations, line extensions and modes of administration thereof.

1.6 " ACADIA Technology" shall mean the ACADIA Patents and the ACADIA Know-How.


1.7 " Active Compounds" shall mean any M1 Muscarinic that demonstrates the requisite activity levels in the Assays pursuant to the Research Plan, as such activity levels may be amended from time to time by the RMC.

1.8 " Affiliate" shall mean any company or entity controlled by, controlling, or under common control with a party hereto and shall include any company of which greater than fifty percent (50%) of whose voting stock or participating profit interest is owned or controlled, directly or indirectly, by a party, and any company which owns or controls, directly or indirectly, greater than fifty percent (50%) of the voting stock of a party.

1.9 " Allergan Designated Compound" shall mean any one (1) of up to [b7b7b7***b7b7b7] Active Compounds, [b7b7b7***b7b7b7] , at any one time selected as a drug candidate by Allergan pursuant to Section 4.3(a) hereof for research and development in the Field.

1.10 " Allergan Know-How" shall mean all tangible or intangible know-how, trade secrets, inventions (whether or not patentable), data, preclinical and clinical results, physical, chemical or biological material, and other information and data on or relating to all [b7b7b7***b7b7b7] Muscarinics that are independently developed by Allergan or its Affiliates during the Research Term and, in each case, any replication or any part of such information or material.


1.11 " Allergan Patents" shall mean any patents solely owned by Allergan pursuant to Section 9.1 hereof.


1.12 " Allergan Pool Compounds" shall have the meaning set forth in Section 4.2.


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1.13 " Allergan Product" shall mean any product containing a Collaboration Lead Compound which receives Regulatory Approval for commercial marketing and sale for use in the Field and is commercialized in the Field by Allergan, its Affiliates or its sublicensees; including all formulations, line extensions and modes of administration thereof.


1.14 " Allergan Technology" shall mean the Allergan Patents and Allergan Know-How.


1.15 " Assays" shall mean R-SAT ? assays used to measure activity at all muscarinic receptors and other in vitro molecular assays as determined by the RMC.

1.16 " Collaboration" shall mean the programs of collaborative research and development under this Agreement for the discovery, selection, synthesis, investigation, and preclinical and clinical development of [b7b7b7***b7b7b7] Muscarinics for use in the Field.


1.17 " Collaboration Know-How" shall mean any and all tangible or intangible know-how, trade secrets, inventions (whether or not patentable), data, preclinical results, physical, chemical or biological material, and other information and data that is (a) useful for purposes of the Collaboration and/or that relates to [b7b7b7***b7b7b7] Muscarinics, Allergan Designated Compounds, Allergan Pool Compounds or Collaboration Lead Compounds, but excluding ACADIA Designated Compounds and ACADIA Pool Compounds and (b) that is derived from or developed pursuant to activities undertaken by either party, including their consultants or collaborators in the conduct of the Collaboration, and, in each case, any replication or any part of such information or material.


1.18 " Collaboration Lead Compound" shall mean an Allergan Designated Compound selected by Allergan pursuant to Section 4.5 hereof as lead drug development compounds for further pre-clinical and clinical development and commercialization for use in the Field.

1.19 " Collaboration Patents" shall mean all foreign and domestic patents (including substitutions, extensions, reissues, renewals and inventors certificates relating thereto) that issue from patent applications including provisionals, divisionals, continuations and continuations-in-part of such applications that claim inventions in the Collaboration Know-How and that are filed by one or both of the parties on behalf of one or both of the parties hereto.


1.20 " Collaboration Technology" shall mean the Collaboration Patents and the Collaboration Know-How.


1.21 " Confidential Information" shall mean all information, inventions, know-how or data disclosed by a party to the other pursuant to this Agreement including, without limitation, manufacturing, marketing, financial, personnel, scientific and other business information and plans, and the material terms of this Agreement, whether in oral, written, graphic or electronic form.


1.22 " Field" shall mean the prevention or treatment of ocular disease.

1.23 " First Commercial Sale" of an Allergan Product or an ACADIA Product shall mean the first sale for use or consumption of such Allergan Product or such ACADIA Product in a country after Regulatory Approval has been granted by the governing health regulatory


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authority of such country. Sale to an Affiliate or sublicensee shall not constitute a First Commercial Sale unless the Affiliate or sublicensee is the end user of the Allergan Product or ACADIA Product.


1.24 " FTE" shall mean full-time equivalent scientific personnel.


1.25 " IND" shall mean an Investigational New Drug Application filed with the United States Food and Drug Administration, or the equivalent application or filing necessary to commence human clinical trials in another country, as applicable.


1.26 " [b7b7b7***b7b7b7] Muscarinics" shall mean all [b7b7b7***b7b7b7] muscarinic receptor ligands (i) in ACADIA's possession as of the Effective Date, (ii) synthesized during the Research Term pursuant to the Research Plan or in any other ACADIA program which selectively targets activation of the [b7b7b7***b7b7b7] muscarinic receptor, or (iii) acquired from Third Parties during the Research Term pursuant to the Research Plan or in conjunction with any other ACADIA program which selectively targets activation of the [b7b7b7***b7b7b7] muscarinic receptor.


1.27 " Major Market" shall mean the United States of America, France, Germany, Italy, Spain or the United Kingdom.


1.28 " NDA" shall mean a New Drug Application, Product License Application or equivalent application filed with the United States Food and Drug Administration, or the equivalent community application filed in the European Union, or the equivalent application filed as a national application in [b7b7b7***b7b7b7] .

1.29 " Net Sales" shall mean, with respect to any Allergan Product or ACADIA Product, the amount invoiced by Allergan or ACADIA, their Affiliates or sublicensees to Third Parties which are not Affiliates or sublicensees of the selling party, unless such Affiliates or sublicensees are the end users of such Allergan Product or ACADIA Product in which case the amount billed therefor shall be deemed to be the amount that would be invoiced to a Third Party in an arm's length transaction, for the sale of such products less (i) cash discounts and/or quantity discounts allowed; (ii) credits and allowances of returns, rejections and recalls; (iii) charges for freight, insurance and transportation specifically included in the amount invoiced; (iv) sales and use taxes, duties or other governmental tariffs and other similar taxes incurred and government mandated rebates, (v) accruals for estimated wholesaler chargebacks, contract rebates and bid rebates and Medicaid and other similar government mandated rebates as Allergan or ACADIA may be required to pay from time to time, all of which shall be determined in accordance with such party's standard accounting methods. In the event an Allergan Product or an ACADIA Product is sold in a combination product with other biologically active components, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination by the fraction A/B, where A is the gross selling price of the Allergan Product or ACADIA Product sold separately and B is the gross selling price of the combination product. In the event that no such separate sales are made, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination by the fraction C/(C+D), where C is the fully allocated cost of the active ingredient (Collaboration Lead Compound) in the Allergan Product or ACADIA Product and D is the fully allocated cost of such other biologically active components. In no event shall Net Sales of any


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Allergan Product or ACADIA Product calculated under this provision with respect to any combination product be less than [b7b7b7***b7b7b7] of the Net Sales of such combination product. In the event an Allergan Product or an ACADIA product is sold in a capitated arrangement or with other products (a "Combination") then Net Sales shall be calculated by multiplying the Net Sales of that Combination by the fraction A/B, where A is the gross selling price of the Allergan Product or ACADIA Product sold separately and B is the gross selling price of the Combination. In the event that no such separate sales are made, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the Combination by the fraction C/(C+D), where C is the fully allocated cost of the Allergan Product or ACADIA Product and D is the fully allocated cost of the other products in the Combination. From time to time, but not less often than annually, the party owing any royalty with respect to Net Sales will determine the actual amount of rebates paid under clauses (iv) and (v) above and any differences between the estimates accrued under (v) above and the actual amounts paid will be treated as adjustments to Net Sales subject to royalty in the period in which such differences are so determined.


1.30 " Proof of Concept in Glaucoma Patients" shall have the meaning stated in Exhibit A hereto.


1.31 " Regulatory Approval" shall mean any and all approvals (including price and reimbursement approvals), licenses, registrations, or authorizations of the United States or European Union or any country, federal, state or local regulatory agency, department, bureau or other government entity that is necessary for the manufacture, use, storage, import, transport and/or sale of an Allergan Product or an ACADIA Product in such jurisdiction.

1.32 " Research Management Committee" or " RMC" shall mean the committee formed pursuant to Section 2.4.


1.33 " Research Plan" shall mean the plan for conducting the research under the Collaboration, as amended from time to time by the RMC. The initial Research Plan agreed upon by the parties hereto is attached to this Agreement as Exhibit B. Any amendments or revisions to the Research Plan shall be in writing and shall require unanimous approval of the RMC.


1.34 " Research Program" shall mean a collaborative research program in the Field under this Agreement with the goal of designating two Collaboration Lead Compounds for development and commercialization in the Field.


1.35 " Research Term" shall mean [b7b7b7***b7b7b7] following the Effective Date and one additional [b7b7b7***b7b7b7] renewal period upon written notice from Allergan no less than one (1) month prior to the anniversary of the Effective Date, if Allergan has not selected two Collaboration Lead Compounds during the [b7b7b7***b7b7b7] period following the Effective Date. The Research Term may be further extended upon terms to be agreed upon by the parties in good faith negotiations.

1.36 " Royalty Term" shall mean, in the case of each Allergan Product or ACADIA Product, in any country, the period of time commencing on the First Commercial Sale and ending upon the later of (a) ten (10) years from the date of First Commercial Sale in such


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country, or (b) the expiration of the last to expire Valid Claim covering such Allergan Product or ACADIA Product in such country.

1.37 " Term of the Agreement" shall have the meaning ascribed in Section 12.1.


1.38 " Territory" shall mean all countries of the world.


1.39 " Third Party" shall mean any entity other than Allergan or ACADIA or an Affiliate of Allergan or ACADIA.

1.40 " Valid Claim" shall mean a claim of an unexpired patent included within the patent rights licensed hereunder, 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 reexamination, reissue or disclaimer.


2. Scope of Collaboration; Development Responsibilities; Exclusivity and Governance .


2.1 Scope of Collaboration . The parties hereby agree to establish and conduct, during the Research Term, a collaborative research program in accordance with the Research Plan and the terms of this Agreement. The initial Research Plan for conducting such research program is attached to this Agreement as Exhibit B. Pursuant to the Collaboration, the parties will collaborate in identifying Active Compounds with the goal of designating two Collaboration Lead Compounds for development and commercialization.


2.2 Development Responsibilities . ACADIA will be primarily responsible for providing all medicinal, computational and synthetic chemistry and m1 muscarinic R-SAT ? analysis and other in vitro molecular assays selected by the RMC. ACADIA will also be primarily responsible for providing sufficient quantities [b7b7b7***b7b7b7] of non-GMP Allergan Designated Compounds to Allergan for pre-IND animal proof of concept testing. Allergan will be primarily responsible for the in vivo testing in relevant disease models, the preclinical development of Allergan Designated Compounds in the Field including, but not limited to; pharmaceutics, ADME, toxicology, process chemistry and manufacturing scale up, and the further preclinical and clinical development of Collaboration Lead Compounds.


2.3 Exclusivity of the Collaboration . During the Research Term, the Research Program shall be the parties' exclusive means of collaborating and/or conducting research and development on [b7b7b7***b7b7b7] muscarinics in the Field. Other than pursuant to the terms of this Agreement, at the end of the Research Term for as long as Allergan is developing, and until Allergan has commercialized a Collaboration Lead Compound, Allergan shall not: a) collaborate with any Third Party for the purpose of discovering, developing and/or commercializing any compounds for use in the Field that produce the intended therapeutic effects principally by selective activation of the [b7b7b7***b7b7b7] muscarinic receptor (b) license in or acquire from any Third Party any compound and/or product for use in the Field that produces the intended therapeutic effects principally by selective activation of the [b7b7b7***b7b7b7] muscarinic receptor or (c) conduct any research and/or development for the purpose of identifying compounds for use in the Field that produce the intended therapeutic effects principally by selective activation of the [b7b7b7***b7b7b7] muscarinic receptor.


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For the purposes of the forgoing, ("selective") shall mean as set forth in the initial Research Plan attached as Exhibit B activity at the [b7b7b7***b7b7b7] muscarinic receptor at least [b7b7b7***b7b7b7] the activity at the [b7b7b7***b7b7b7] muscarinic receptor. At the end of the Research Term: if Allergan is developing a Collaboration Lead Compound in the Field, then (x) so long as Allergan is actively developing a Collaboration Lead Compound or commercializing an Allergan Product as permitted under this Agreement ACADIA shall not develop, itself, or with a Third Party any Allergan Designated Compound or ACADIA Designated Compound in the Field or any Collaboration Lead Compound in any field, and (y) for [b7b7b7***b7b7b7] after the end of the Research Term, only if Allergan continues to develop a Collaboration Lead Compound during such [b7b7b7***b7b7b7] period, ACADIA shall not develop any Allergan Designated Compound, itself, or with a Third Party, in any field, and (z) for [b7b7b7***b7b7b7] after the end of the Research Term, only if Allergan continues to develop a Collaboration Lead Compound during such [b7b7b7***b7b7b7] period, ACADIA shall not develop any [b7b7b7***b7b7b7] muscarinic, itself, or with a Third Party, in the Field.

2.4 Research Management Committee . Promptly after the Effective Date, the parties will form a Research Management Committee ("RMC") comprised of three (3) representatives of each of ACADIA and Allergan. One member of the RMC shall be selected to act as the chairperson of the RMC, with each chairperson acting for a term of [b7b7b7***b7b7b7] . The chairperson shall be selected alternately by Allergan and ACADIA, and ACADIA shall designate the first chairperson. The RMC shall determine the specific goals for the Collaboration, shall manage the ongoing research conducted under the Collaboration, and shall monitor the progress and results of such work. All decisions of the RMC shall be unanimous. The RMC shall meet on a quarterly basis or at such other frequency as the RMC agrees. The parties shall agree upon the time and place of meetings. Within [b7b7b7***b7b7b7] after each meeting, the RMC chairperson will provide the parties with a written report describing, in reasonable detail, the status of the Collaboration, ...