Drug Discovery And Development Agreement

EXHIBIT 10.1



[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



EXECUTION COPY





DRUG DISCOVERY AND DEVELOPMENT AGREEMENT

THIS DRUG DISCOVERY AND DEVELOPMENT AGREEMENT (the " Agreement ") is made effective as of September 21, 2007 (" Effective Date ") by and between Array BioPharma Inc., a Delaware corporation, having its principal offices located at 3200 Walnut, Boulder, CO 80301 (" Array "), and Celgene Corporation, a Delaware corporation, having its principal offices located at 86 Morris Avenue, Summit, NJ 07901 (" Celgene ").

BACKGROUND

A. Array has skills, expertise and technology relating to the discovery and development of therapeutics that modulate molecular targets involved in oncology and other disease areas.

B. Celgene is engaged in the discovery, development and commercialization of therapeutics in the fields of oncology and immunological diseases.

C. Celgene and Array desire to establish a collaboration to apply Array92s expertise and technology to the discovery, optimization and development of small molecule compounds that directly bind and modulate certain molecular targets, and to provide for the development and commercialization of certain products based on such compounds, all on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I
DEFINITIONS

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



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.1 "[ * ]" shall mean those [ * ] previously agreed by the Parties.

1.2 "Affiliate" of a Party shall mean any person, corporation or other entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party, as the case may be, for so long as such control exists. As used in this Section 1.1, " control " shall mean: (a) to possess, directly or indirectly, the power to direct the management and policies of such person, corporation or other entity, whether through ownership of voting securities or by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of at least fifty percent (50%) (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting share capital in such person, corporation or other entity.

1.3 "Analog" shall mean, with respect to a specific Development Compound, Development Back-Up Compound, Collaboration Compound, Collaboration Back-Up Compound or Abandoned Compound, molecules (a) that have the same core structure (meaning exact atom arrangement that makes up the original core structure present in the structure of such specific chemical compound, minus any substituent R groups) as such specific Development Compound, Development Back-Up Compound, Collaboration Compound, Collaboration Back-Up Compound or Abandoned Compound; (b) that modulates the Target to which such Development Compound, Development Back-Up Compound, Collaboration Compound, Collaboration Back-Up Compound or Abandoned Compound is directed, the mechanism of action of which is a specific interaction with such Target; and (c) that has a [ * ].

1.4 "Annual Net Sales" shall mean total Net Sales of Licensed Products in a particular calendar year, as derived from audited financial statements of Celgene (or the applicable Affiliate or Sublicensee), provided, however, that Celgene shall use U.S. generally accepted accounting principles to calculate in good faith the Net Sales from any entities that are not audited or have not completed their audit within seventy-five (75) days of the end of the preceding calendar year.

1.5 "Array Technology" shall mean the Array Patents and Array Know-How.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.5.1 "Array Know-How" shall mean any and all Information Controlled by Array and created prior to the Effective Date that: (a) covers a Collaboration Compound or a Collaboration Back-Up Compound (including the composition of matter, or manufacture or any use thereof); and (b) is necessary for Celgene to exercise the rights licensed to it under the Agreement or perform its obligations with respect to Collaboration Compounds, Collaboration Back-Up Compounds and Licensed Products under the Agreement. For the purposes of the license granted in Section 5.1.2, Array Know-How shall also include any and all Information Controlled by Array and created prior to the Effective Date that is necessary for, or specifically pertains to, the discovery, development or use of Compounds, Development Compounds and Development Back-Up Compounds.

1.5.2 "Array Patents" shall mean all Patents owned or Controlled by Array (a) as of the Effective Date, or (b) during the Term of this Agreement to the extent that such Patents claim Array Know-How, in each case that: (i) claim a Collaboration Compound or a Collaboration Back-Up Compound (including the composition of matter, or manufacture or any use thereof); and (ii) are necessary for Celgene to exercise the rights licensed to it under the Agreement or perform its obligations with respect to Collaboration Compounds, Collaboration Back-Up Compounds and Licensed Products under the Agreement. For the purposes of the license granted in Section 5.1.2, Array Patents shall also include all Patents owned or Controlled by Array as of the Effective Date covering inventions that are necessary for the discovery, development, or use of Compounds, Development Compounds and Development Back-Up Compounds.

Notwithstanding Sections 1.5.1 and 1.5.2 above, the Array Technology shall not include Collaboration Patents or Collaboration Know-How.

1.6 "Celgene Compound" shall mean a chemical entity provided to Array by Celgene, in Celgene92s sole discretion, and agreed on by the JRC as evidenced by written notice that such chemical entity is provided for research and development purposes under this Agreement.

1.7 "Celgene Technology" shall mean the Celgene Patents and Celgene Know-How.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.7.1 "Celgene Know-How" shall mean any and all Information Controlled by Celgene and (a) created prior to the Effective Date or during the Option Term that is necessary for the discovery, development, manufacture, use or sale of Compounds, Development Compounds and Back-Up Compounds directed to each Target for which Celgene does not exercise the Celgene Product Option, and (b) which is contributed by Celgene during the Option Term, in Celgene92s sole discretion, to the collaboration hereunder, as evidenced by written notice from Celgene to Array and agreed on by the JRC or JDC.

1.7.2 "Celgene Patents" shall mean all Patents owned or Controlled by Celgene (a) prior to the Effective Date or during the Option Term covering inventions that are necessary for the discovery, development, manufacture, use or sale of Compounds, Development Compounds and Back-Up Compounds directed to each Target for which Celgene does not exercise the Celgene Product Option, and (b) which are contributed by Celgene during the Option Term, in Celgene92s sole discretion, the collaboration hereunder, as evidenced by written notice from Celgene to Array and agreed on by the JRC or JDC.

Notwithstanding Sections 1.7.1 and 1.7.2 above, the Celgene Technology shall not include Collaboration Patents or Collaboration Know-How.

1.8 "Collaboration Compound" means each Development Compound for which Celgene has exercised its Celgene Product Option under Section 3.5 of this Agreement and which is identified in the written notice given by Celgene to effect such exercise.

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

1.9.1 "Collaboration Know-How" shall mean any Information generated, solely or jointly, by employees, consultants or agents of Array and/or Celgene in the course of performing activities under the Discovery Program or in accordance with the applicable Development Plan, or, solely with respect to Array, activities directed to the development, manufacture and/or use of Compounds, Development Compounds, Collaboration Compounds, Back-Up Compounds,



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



Development Back-Up Compounds, Collaboration Back-Up Compounds, Licensed Products, in each case during the Option Term.

1.9.2 "Collaboration Patents" shall mean all Patents covering inventions conceived or created, solely or jointly, by employees, consultants or agents of Array and/or Celgene in the course of performing activities under the Discovery Program or in accordance with the applicable Development Plan, or, solely with respect to Array, activities directed to the development, manufacture and/or use of Compounds, Development Compounds, Collaboration Compounds, Back-Up Compounds, Development Back-Up Compounds, Collaboration Back-Up Compounds or Licensed Products, in each case during the Option Term.

1.10 "Combination Product" shall mean a Licensed Product that is a pharmaceutical preparation for human use incorporating two or more therapeutically active ingredients and including a Collaboration Compound as one of its active ingredients. Notwithstanding the foregoing, drug delivery vehicles, adjuvants, and excipients shall not be deemed to be "therapeutically active ingredients," and their presence shall not be deemed to create a Combination Product under this Section 1.10.

1.11 "Compound" shall mean a small molecule chemical entity (a) that is (i) synthesized and/or assayed against a Target by Array prior to the Effective Date, (ii) first synthesized and/or assayed by or on behalf of a Party in the course of performing activities under the Discovery Program, or (iii) a Celgene Compound; (b) that modulates one or more Target(s), the mechanism of action of which is a specific interaction with such Target; and (c) that has [ * ].

1.12 "Control" (including any variations, such as " Controlled " or " Controlling "), with respect to any Compound or intellectual property rights, shall mean rights to a Compound or intellectual property sufficient to grant the applicable license under this Agreement, without violating the terms of any agreement or other arrangement with any Third Party or, without the other Party92s written consent, requiring any payment to a Third Party.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.13 "Derivative" shall mean a molecule (a) that is synthesized using the same synthetic route such that such molecule is derived from the Development Compound by one synthetic step and such that any compound modifications (i.e., differences between such molecule and the corresponding Development Compound) are readily determined to be related to or derived from the Development Compound, and (b) that has [ * ].

1.14 "Development Back-Up Compound" shall mean, with respect to each Compound designated as a Development Compound, additional Lead Compounds suitable for clinical development designated in accordance with Section 3.5.3 below.

1.15 "Development Compound" shall mean a Compound that is designated for further development in clinical trials, in accordance with Section 3.5.2 below.

1.16 "Diligent Efforts" shall mean the carrying out of obligations or tasks in a manner consistent with the efforts a Party devotes to a product or a research, development or marketing project at a similar stage of research or development that is of similar market potential, profit potential or strategic value resulting from its own research efforts, but in no event using less than the commercially reasonable standards applied by other public biotechnology companies to their pharmaceutical products at a similar stage of research or development that is of similar market potential, profit potential or strategic value.

1.17 "FDA" shall mean the United States Food and Drug Administration, or any successor entity thereto performing similar functions.

1.18 "FD&C Act" shall mean the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time, and the regulations promulgated thereunder, as amended from time to time.

1.19" FTE" shall mean a full-time person employed by Array, dedicated full-time to the Discovery Program, or in the case of less than a full-time dedicated person, a full-time, equivalent



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



person year, based upon a total of one thousand eight hundred eighty (1,880) hours per year of work on the Discovery Program.

1.20 "GAAP" shall mean generally accepted accounting principles as applicable in the United States of America.

1.21 "IND" shall mean any Investigational New Drug Application filed with the FDA pursuant to 21 C.F.R. a7 312 before the commencement of clinical trials involving a Development Compound, a Development Back-Up Compound, a Collaboration Compound or a Collaboration Back-Up Compound (or any Licensed Product incorporating a Collaboration Compound or Collaboration Back-Up Compound), or any comparable filings with any Regulatory Authority in any other jurisdiction.

1.22 "Information" shall mean materials, data and other information relating to the subject matter of this Agreement and including: (a) techniques and data, including screens, models, inventions, methods, test data (including, pharmacological, toxicological and clinical test data), analytical and quality control data, marketing, pricing, distribution, costs, and sales data, manufacturing information, and patent and legal data or descriptions (to the extent that disclosure thereof would not result in loss or waiver of privilege or similar protection); (b) compositions of matter, including compounds, biological materials and assays; and (c) the subject matter and content of all JRC, JDC, JMC and JCC discussions and meetings. As used herein, " clinical test data " shall be deemed to include all information related to the clinical or preclinical testing of a Compound or Licensed Product, including patient report forms, investigators92 reports, biostatistical, pharmaco-economic and other related analyses, regulatory filings and communications, and the like.

1.23 "Initiation" of a particular clinical trial shall be deemed to occur upon the date of first dosing of the first subject in such trial.

1.24 "Licensed Product" shall mean a product that incorporates a Collaboration Compound or a Collaboration Back-Up Compound as an active ingredient.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.25 "Marketing Approval" shall mean all approvals, licenses, registrations or authorizations of a Regulatory Authority in a country necessary for the manufacture, use, storage, import, marketing and sale of a Licensed Product in such country.

1.26 "Marketing Approval Application" or "MAA" shall mean a New Drug Application (as defined in 21 C.F.R. a7 314.50 et. seq .) or a comparable application for Marketing Approval (not including pricing or reimbursement approval) in another jurisdiction, in each case with respect to a Licensed Product.

1.27 "Marketing Exclusivity" shall mean, with respect to a Licensed Product that the Licensed Product has been granted marketing exclusivity afforded approved drug products pursuant to (a) Sections 505(c), 505(j), and 505A of the FD&C Act or its equivalent in a country other than the United States, or (b) the orphan drug exclusivity afforded approved drugs designated for rare diseases or conditions under Sections 526 and 527 of the FD&C Act or its equivalent in a country other than the United States, or (c) applicable law covering the Licensed Product which precludes the Regulatory Authority in a country from granting Marketing Approval for another product that contains the same active ingredient as that which is contained in the applicable Licensed Product.

1.28 "Net Sales" shall mean the gross amounts billed or invoiced by Celgene, its Affiliates or Sublicensees to non-Sublicensee Third Parties for the sale or other commercial disposition of Licensed Products less deductions from such amounts calculated in accordance with GAAP, so as to arrive at reported Net Product Sales under GAAP, and further reduced by write offs of accounts receivable or increased for collection of accounts that were previously written off.

Sales between Celgene and its Affiliates or Sublicensees and Licensed Products provided to Third Parties at no cost, or below direct manufacturing cost, in connection with research and development, clinical trials, compassionate sales or indigent programs or for use as samples shall be excluded from the computation of Net Sales, and no payments will be payable on such sales or no-cost transfers except where such Affiliates or Sublicensees are end users. If a Licensed Product is sold or transferred for consideration other than cash, or in a transaction not at arm92s length, the Net



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



Sales from such sale or transfer shall be deemed the then-fair market value of such Licensed Product.

In the event a Licensed Product is sold which is a Combination Product, for purposes of determining royalty payments due Array under Section 6.5, Net Sales of Combination Products shall be calculated by multiplying the Net Sales of the Combination Product during the applicable reporting period by the fraction A/(A+B), in which " A " is the average sales price of the Licensed Product when such Licensed Product comprising a single Collaboration Compound or Collaboration Back-Up Compound as the sole therapeutically active ingredient is sold separately in substantial quantities, and " B " is the average sales price of the other therapeutically active ingredients contained in the Combination Product sold separately in substantial quantities; in each case during the applicable reporting period. In the event that no separate sales of either the Licensed Product comprising a single Collaboration Compound or Collaboration Back-Up Compound, as the case may be, as the sole therapeutically active ingredient or the other therapeutically active ingredients of the Combination Product are made during the applicable reporting period, or if the average sales price for a particular therapeutically active ingredient cannot be determined for the applicable reporting period, the respective average sales prices during the most recent reporting period in which sales of both occurred shall be used. In the event that either or both of A or (and) B is (are) not available, then Net Sales of Combination Products for the purposes of determining royalty payments hereunder shall be reasonably allocated based on the relative values contributed by each component, and agreement by the Parties to such allocation shall not be unreasonably withheld or delayed.

1.29 "Option Term" shall have the meaning set forth in Section 4.1.1(a).

1.30 "Party" or "Parties" shall mean Array and/or Celgene.

1.31 "Patent" shall mean any patents and patent applications, together with all additions, divisions, continuations, continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent term extensions, supplemental protection certificates and renewals of any of the foregoing.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.32 "Phase I" shall mean a human clinical trial conducted on a limited number of study subjects for the purpose of gaining evidence of the safety and tolerability of, and information regarding pharmacokinetics and, with respect to applicable oncology trials, potential pharmacological activity for, a product or compound, as described in 21 C.F.R.a7 312.21(a) (including any such clinical study in any country other than the United States).

1.33 "Phase II" shall mean a human clinical trial conducted on study subjects with the disease or condition being studied for the principal purpose of achieving a preliminary determination of efficacy and/or appropriate dosage ranges, as further described in 21 C.F.R. a7312.21(b) (including any such clinical study in any country other than the United States).

1.34 "Phase III" shall mean a human clinical trial, the principal purpose of which is to establish safety and efficacy in study subjects with the disease or condition being studied, as further described in 21 C.F.R. a7312.21(c) (including any such clinical study in a country other than the United States), which is designed and intended to be of a size and statistical power sufficient to serve as a pivotal study to support the filing of a MAA for the indication being studied.

1.35 "Regulatory Authority" shall mean the FDA, or a regulatory body with similar regulatory authority in any jurisdiction outside the United States.

1.36 "Sales Representative" shall mean a professional pharmaceutical sales representative engaged or employed by either Party to conduct sales activities and other promotional efforts with respect to a Co-Promoted Product.

1.37 "Sublicensee" shall mean, with respect to a particular Collaboration Compound, a Collaboration Back-Up Compound or Licensed Product, a Third Party to whom Celgene has granted a license or sublicense to make and sell such Collaboration Compound, Collaboration Back-Up Compound or Licensed Product; and a "sublicense" shall mean any agreement or arrangement between Celgene and a Sublicensee granting such rights.



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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



1.38 "Target" shall mean those targets listed on Schedule 1.38 attached hereto, or any substitute for such a target mutually agreed by the Parties in accordance with Section 3.2 below or selected by Array from two (2) proposed substitute targets in accordance with Section 3.5.1 below.

1.39 "Third Party" shall mean any entity other than Array, Celgene and their respective Affiliates.

1.40 "Valid Claim" shall mean (a) a claim of an issued and unexpired Patent (including the term of any patent term extension, supplemental protection certificate, renewal or other extension) which has not been held unpatentable, invalid or unenforceable in a final decision of a court or other government agency of competent jurisdiction from which no appeal may be or has been taken, and which has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise; or (b) a claim of a patent application, which claim has been pending less than five (5) years from the original filing date of such claim in a given country, unless or until such claim thereafter issues as a claim of an issued Patent (from and after which time the same shall be deemed a Valid Claim subject to paragraph (a) above).

1.41 Additional Definitions . Each of the following terms shall have the meaning described in the corresponding section of this Agreement below.



Term Section Defined
Abandoned Product 12.3.2
Array Indemnitees 11.4.2
[ * ] [ * ]
[ * ] [ * ]
Celgene Indemnitees 11.4.1
Celgene Product Option 4.1
Clinical Candidate Guidelines 3.5.1
Collaboration Back-Up Compound 4.1.1(b)




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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



Commercialization Plan 8.1.2
Compound Improvement 9.2.2
Confidential Information 10.1
Cooperating Party 10.4.2
Co-Promoted Product 8.2.1
Co-Promotion Option 8.2.1
Co-Promotion Plan 8.2.2
Development Back-Up Compound 3.5.2
Development Milestone 6.3.1
Development Plan 3.6.1
Discovery Milestone 6.2
Discovery Program 3.1
Dispute 13.1
Escalation Notice 2.2.3
Exclusivity Period 5.6.2
force majeure event 13.4
Indemnify 11.4
JCC 2.1
JDC 2.1
JMC 2.1
JRC 2.1
[ * ] [ * ]
Losses 11.4.1
Prosecution and Maintenance 9.5.1(a)
Prosecuting Party 9.5.1(b)
Requesting Party 10.4.2
Subject Transaction 13.3.2




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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.



Third-Party Claim 11.4.1
Trial De ...