License And Research Collaboration Agreement

LICENSE AND RESEARCH


COLLABORATION AGREEMENT


THIS LICENSE AND RESEARCH COLLABORATION AGREEMENT has a signature date as of the 23rd day of March 1997 (the "Signature Date"), but will be effective only as provided in Section 19.14 below, by and between Geron Corporation, a Delaware corporation having its principal place of business at 230 Constitution Drive, Menlo Park, California, U.S.A. 94025 ("Geron") and Pharmacia & Upjohn S.p.A., a corporation of Italy having its principal place of business at Via Robert Koch, 1.2, 20152 Milano, Italy ("P&U").


RECITALS


A. Geron possesses certain rights pertaining to the inhibition of the enzyme telomerase as it relates to the treatment of cancer in humans.


B. In April 1995, Geron entered into the KH Collaboration (as defined below) with Kyowa Hakko Kogyo Co., Ltd., a corporation of Japan, for the research and development of compounds that inhibit telomerase for the treatment of cancer in humans and for sale in certain countries of Asia.


C. In December 1996, Geron and P&U entered into: (i) a Heads of Agreement that describes a collaboration with the objective to discover and develop pharmaceutical products containing compounds that inhibit telomerase for the treatment of cancer in humans and for sale on a worldwide basis, subject to Kyowa Hakko entering into an appropriate amendment to the 2 KH Collaboration with Geron, and (ii) a Common Stock Purchase Agreement under which P&U purchased U.S. 2,000,000 of Geron Common Stock.


D. Geron and P&U desire to enter into this Agreement to achieve the objective set forth in the Heads of Agreement, and Geron is contemporaneously entering into (i) an amendment of the KH Collaboration to conform to the terms and provisions of this Agreement and (ii) the Three-Way Agreement (as defined below).


E. Geron and P&U are also contemporaneously entering into a second Common Stock Purchase Agreement pursuant to which Geron will sell and P&U will purchase an additional U.S. 8,000,000 of Geron Common Stock in two installments.


ARTICLE 1


DEFINITIONS


The following terms shall be defined as follows for the purposes of this Agreement:


1.1 "Affiliate" means an entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another entity. For purposes of this definition, "control" means the direct or indirect ownership of (a) at least [*] or, if less than [*], the maximum percentage as allowed by applicable law, of the outstanding voting securities of such entity or (b) at least [*] of the decision making authority of such entity.


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 3


1.2 "Asian Territory" means China, Hong Kong, India, Indonesia, Kampuchea, South and North Korea, Laos, Malaysia, Myanmar (formerly Burma), the Philippines, Singapore, Taiwan, Thailand, and Vietnam. The Asian Territory does not include Japan.


1.3 "Candidate Drug" means a compound suitable for commercial development for use in the Field that has been selected by P&U in accordance with Section 2.6 for further pre-clinical and clinical development by P&U in accordance with P&U CD Selection Procedures and this Agreement.


1.4 "Clinical Expense Credit" means a credit against future royalties payable to Geron pursuant to Article 7 equal to [*] percent ([*]%) of the costs and expenses incurred [*].


1.5 "COGS" shall mean the sum of the following costs to the extent allocable to a Product sold by P&U in the Territory for the particular period during which any royalty is calculated (net of any intercompany transfer pricing): [*]. COGS shall exclude the following: [*]. COGS shall be calculated in a manner consistent with generally accepted accounting principles used in the place


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.


4


of manufacture, consistently applied. The methodology to be used in making the allocations referred to above shall be consistent with P&U's methodology for similar products and shall be consistent from year to year.


1.6 "Control" means, for purposes of this Agreement (other than the definition of Affiliate), possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party. Rights which may be acquired by the exercise of an option that would increase the royalty or other payment obligation of the party exercising such option shall not be Controlled by such party. Examples of the meaning of Control are set forth on EXHIBIT 1.6.


1.7 "Development Plan" means the written plan for clinical development of a Product prepared by P&U in accordance with Section 3.1.


1.8 "Effective Date" shall have the meaning set forth in Section 19.14.


1.9 "Field" means the inhibition of the enzyme telomerase for the treatment of cancer in humans, excluding treatments based on antisense, ribozyme, or gene therapy-based telomerase inhibitors.


1.10 "Geron Compound" means a compound that [*]


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.


5


[*]. In the event a Geron Compound is identical to a P&U Compound or a KH Compound, then that compound shall be deemed, for purposes of this Agreement, to be a Compound of the party that identified or caused to be identified (i.e., by submitting for screening) that compound as a telomerase inhibitor. For the purpose of this Section 1.10 and Sections 1.19, 1.30, and 1.40, (i) a compound is not a telomerase inhibitor unless it has a [*] as tested in the primary and primary and secondary assays referred to in the Research Plan) of less than [*] and [*] of at least [*] when tested in the secondary biochemical assays referred to in the Research Plan, and (ii) two compounds are "Chemically Equivalent" if (a) the second compound is an isomer, salt, or ester of the first compound or (b) the second compound results from a chemical synthesis or compound acquisition program based on the first compound or on SAR data relating to the first compound, and the second compound does not have a [*] [*] as tested in the primary and primary and secondary assays referred to in the Research Plan) of at least [*] higher than the first compound.


1.11 "Geron Knowhow" means Information that (i) Geron discloses to P&U under this Agreement, or (ii) is Controlled by Geron or its Affiliates during the term of this Agreement, including Information resulting from the Research. Geron Knowhow excludes Geron Patents.


1.12 "Geron Patent" means a Patent which claims a process, method, apparatus, composition of matter, compound, chemical, material, or article of manufacture useful in the Field (or the discovery, development, manufacture and clinical use of compounds having


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 6


potential activity in the Field), which Patent is Controlled by Geron or its Affiliates during the term of this Agreement, including Geron's undivided interest in any Joint Patent. Set forth in EXHIBIT 1.12 is a list of all current Geron Patents.


1.13 "Geron Technology" means the Geron Knowhow and Geron Patents, collectively.


1.14 "IND" means an Investigational New Drug application filed with the U.S. Food and Drug Administration or the comparable application in a Major Country.


1.15 "Information" means techniques; inventions; practices; methods; knowledge; knowhow; skill; experience; test data, including, without limitation, pharmacological, toxicological, and clinical test data, analytical and quality control data, having application in the Field.


1.16 "Joint Patent" means a Patent that claims a process, method, apparatus, composition of matter, compound, chemical, material, or article of manufacture useful in the Field (or the discovery, development, manufacture and clinical use of compounds having potential activity in the Field) and the subject of which is an invention jointly invented, as determined under the laws of the jurisdiction in which a patent application for such invention is filed, by Geron and P&U in the course of performing the Research.


1.17 "Joint Research Committee" or "JRC" means the committee established pursuant to this Agreement with responsibility for directing the Research.


7


1.18 "KH Collaboration" means the License and Research Collaboration Agreement between Geron and Kyowa Hakko, dated April 24, 1995, as amended.


1.19 "KH Compound" means a compound useful in the Field that [*] In the event a KH Compound is identical to a P&U Compound or a Geron Compound, then that compound shall be deemed, for purposes of this Agreement, to be a Compound of the party that first identified or caused to be identified (i.e., by submitting for screening) that compound as a telomerase inhibitor.


1.20 "KH Knowhow" means Information which (i) Kyowa Hakko discloses to Geron under the KH Collaboration or (ii) is Controlled (as defined in the KH Collaboration) by Kyowa Hakko or its Affiliates during the term of this Agreement. KH Knowhow excludes KH Patents.


1.21 "KH Patent" means a Patent which claims a process, method, apparatus, composition of matter, compound, chemical, material, or article of manufacture useful in the Field (or the discovery, development, manufacture and clinical use of compounds having potential activity in the Field), which Patent is Controlled (as defined in the KH Collaboration) by KH or its Affiliates during the term of this Agreement, including KH's undivided interest in any Patent jointly owned with Geron.


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 8


1.22 "KH Technology" means the KH Knowhow and KH Patents, collectively.


1.23 "Kyowa Hakko" or "KH" means Kyowa Hakko Kogyo Co., Ltd., a corporation of Japan having its principal place of business at 1-6-1 Ohtemachi, Chiyoda-Ku, Tokyo, Japan.


1.24 "Major Country" means [*]


1.25 "Major Sublicensee" means a Third Party to which P&U has granted the right to manufacture, in whole or in part, and sell Products.


1.26 "NDA" means a New Drug Application filed with the U.S. Food and Drug Administration or the comparable application in a Major Country.


1.27 "Patent" means any patent application or issued patent, including any extension, registration, confirmation, continuation, continuation-in-part, reissue, re-examination, renewal, supplementary protection certificate or the like thereof in any country. A patent application which is still pending more than [*] after its filing date shall not be taken into account for the purpose of Article 7 after such time, until a patent issues from such application; provided however, that in the event the patent application is licensed from a Third Party and the license with such Third Party provides for a longer pendency period, such longer pendency period shall apply for purposes of this Agreement.


1.28 "Patent Costs" means the fees and expenses paid to legal counsel and other third parties, and filing and maintenance expenses, incurred in connection with the prosecution,


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 9


establishment and maintenance of rights under Patents applicable to Products, including costs of patent interference and opposition proceedings, but specifically excluding expenses related to litigation and any expenses related to the enforcement of any Patent or the defense of any claim of patent infringement.


1.29 "Product" means any pharmaceutical product or preparation that comprises a Compound selected by P&U for development in accordance with Section 2.6 herein having activity in the Field, and that utilizes or was made as a result of utilizing Geron Technology, KH Technology or P&U Technology.


1.30 "P&U Compound" means a compound useful in the Field that [*] In the event a P&U Compound is identical to a Geron Compound or a KH Compound, then that compound shall be deemed, for purposes of this Agreement, to be a Compound of the party that first identified or caused to be identified (i.e., by submitting for screening) that compound as a telomerase inhibitor.


1.31 "P&U Knowhow" means Information that (i) P&U discloses to Geron under this Agreement, or (ii) is Controlled by P&U or its Affiliates during the term of this Agreement, including Information resulting from the Research. P&U Knowhow excludes P&U Patents.


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 10


1.32 "P&U Patent" means a Patent which covers a method, apparatus, compound, chemical, material, or article of manufacture useful in the Field (or the discovery, development, manufacture and clinical use of compounds having potential activity in the Field), which Patent is Controlled by P&U or its Affiliates during the term of this Agreement, including P&U's undivided interest in any Joint Patent.


1.33 "P&U CD Selection Procedures" means the written guidelines adopted by P&U from time to time with respect to the general criteria, procedures, and review process for selecting pharmaceutical compounds for commercial development and, to the extent the same exist, the specific guidelines applicable to oncology pharmaceuticals shall be considered P&U CD Selection Procedures for purposes of this definition. P&U shall keep Geron informed of such procedures, including any changes in such procedures. The current P&U CD Selection Procedures are set forth in the Research Plan, which shall be updated to reflect any change in such Procedures.


1.34 "P&U Technology" means the P&U Knowhow and P&U Patents, collectively.


1.35 "P&U Sales" means the gross amount invoiced by P&U, its Affiliates and Major Sublicensees for sales of Products, less: (i) rebates, retroactive price reductions, and discounts, including cash discounts, (ii) credits or allowances actually granted upon claims, rejections or returns of Products, including recalls, regardless of the party requesting such, (iii) freight, postage, shipping, and insurance charges paid for delivery of Product, to the extent billed and


11


paid by P&U, and (iv) taxes (other than income taxes), duties and other governmental charges incurred in connection with the sale of Products.


1.36 "Research" means all work performed by or for Geron and P&U in the Field during the Research Term according to the Research Plan.


1.37 "Research Plan" means the written plan for the Research to be conducted during the Research Term attached hereto as EXHIBIT 1.37 .


1.38 "Research Term" means the period commencing on the Effective Date and ending on the first to occur of (i) termination of this Agreement by either party under Article 17, or (ii) the third anniversary of the Effective Date (unless otherwise extended in accordance with this Agreement).


1.39 "Sales Plan" means the written plan prepared by P&U for the commercialization of each Product in the Territory.


1.40 "Selectable Compounds" means all compounds identified as telomerase inhibitors by Geron or P&U prior to the Effective Date or by either party or KH during the Research Term; provided, however, [*]


1.41 "Selection Period" means the period commencing on the Effective Date and ending [*] months after the end of the Research Term.


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 12


1.42 "Territory" means the entire world.


1.43 "Third Party" means any person or entity other than Geron, P&U, Kyowa Hakko, or an Affiliate of Geron, P&U, or Kyowa Hakko.


1.44 "Third Party License" means a license between a party to this Agreement and any Third Party.


1.45 "Three-Way Agreement" means the Three Party Agreement dated as of the Signature Date of this Agreement by and among Geron, P&U and Kyowa Hakko.


13


ARTICLE 2


RESEARCH


2.1 Collaborative Research. Geron and P&U will conduct the Research on a collaborative basis with the goal of identifying compounds useful in the Field and suitable for clinical development into commercially successful Products in the Territory. As part of such collaboration, Geron and P&U shall each use reasonable diligent efforts to engage in and conduct the Research and shall commit the resources required for the Research, all as more particularly set forth in the Research Plan. The Research Plan describes the activities and resource commitments of Geron and P&U, including, without limitation, for scientific research, drug discovery, screening and testing of compounds, synthesizing compounds, and determining structure/activity relationships, to be undertaken by each party in the Research. As further described in the Research Plan, Geron shall disclose such Geron Knowhow and provide such technical assistance and materials as may be reasonably required to establish its in vitro telomerase inhibitor screening assays at P&U's (or its Affiliate's) facilities. Subject to any rights of Third Parties, appropriately selected compounds contained in libraries Controlled by P&U and its Affiliates shall be screened by P&U or Geron to identify telomerase inhibitors as described in the Research Plan. Subject to the approval of the JRC, Geron may contract with and make payments to Third Parties for Research to be conducted in collaboration with Geron consistent with the Research Plan. Any modifications of the Research Plan shall be made by the JRC.


14


2.2 Research Efforts.


(a) To further the purposes of the Research, each party may provide certain of its employees to work at the other party's facilities, subject to approval by the JRC. Each party shall record scientific data in laboratory notebooks in a manner that protects the confidentiality of information relating to the structure of telomerase inhibitor compounds of the other party. On reasonable notice, and at reasonable intervals, each party shall have the right to inspect and copy such notebooks and other relevant records to the extent reasonably required to carry out its respective obligations and to exercise its respective rights hereunder.


(b) Each party shall inform the other party and the JRC in writing promptly upon the party's synthesis or identification of compounds or compositions of matter that are Selectable Compounds. The party shall include in such notices to the other party the [*] and any other information relevant to the synthesizing or using of such Compounds in the Field. Upon request, each party also shall supply to the other a reasonable quantity (sufficient for analytical and biochemical characterization as determined by the JRC) of any Compound synthesized by such party during the Selection Period.


2.3 Records of Research Expenditures. Geron will maintain complete and accurate records of its expenditures for its Research, and provide quarterly reports of such expenditures. Such records shall be open during reasonable business hours for a period of [*] years from their creation for examination at P&U's expense, such examination to take place on [*]


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission. 15


[*] notice and not more often than [*] by a certified public accountant selected by P&U and reasonably acceptable to Geron. Such accountant shall review the records for the sole purpose of verifying the accuracy of expenditures reported by Geron under this Agreement and to assure that such funds were expended for the Research, and such information shall be considered confidential under the terms of this Agreement. Such expenditures shall be accounted for in accordance with generally acceptable accounting principles, consistently applied. Qualifying expenditures shall be only an amount equal to [*] (adjusted annually by the JRC), and [*] of sponsored research payments for work done by Third Parties which is made available to the Research and performed in accordance with the Research Plan. An "FTE" shall mean a full-time equivalent (as determined by the employment policies of the party) scientist performing scientific work on or directly related to the Research, and such amount shall include all direct salaries, benefits and related taxes and other labor costs, all direct costs for materials, supplies, travel, and subcontracted services, and all occupancy and other indirect costs allocable to the Research.


2.4 Formation of Joint Research Committee. The Research will be directed by a Joint Research Committee ("JRC") comprised of six (6) individuals with half being appointed and replaced by Geron and the other half being appointed and replaced by P&U. The initial appointees to the JRC are listed in EXHIBIT 2.4; each party shall promptly notify the other party in writing of replacements or appointments to the JRC. All decisions of the JRC shall require a majority vote of all the members of the JRC. Matters resulting in tie-votes shall be referred to the Chief Executive Officer of Geron and the Managing Director of P&U for resolution;


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.


16


provided however, that in no event shall any failure to resolve any tie-vote cause termination of this Agreement or termination of P&U's obligation to make any of the research payments in accordance with Article 8 hereof. The JRC will meet in person at least twice a year to discuss the progress of the Research. The chairperson of the JRC shall be selected from among the members of the JRC alternatively by Geron and P&U to one year terms, commencing on the Effective Date, with Geron selecting first. The JRC shall terminate and cease to exist upon the first anniversary of the expiration of the Research Term.


2.5 Responsibilities of JRC. The purpose of the JRC is to oversee and direct the Research. In addition to the JRC, each party shall appoint employees to a project team to carry out the day-to-day activities involved in identifying compounds active as telomerase inhibitors and suitable for clinical development and to expedite the progress of compounds through the completion of preclinical activities, all as described in the Research Plan. The JRC shall further have the responsibility for modifying the Research Plan as necessary over time to ensure the greatest likelihood of success in achieving the objective of the Research Plan. Any modifications of the Research Plan shall be memorialized in writing, formally reviewed by the JRC, and if approved by a majority vote of the JRC, then incorporated herein by reference. The JRC shall evaluate and discuss the results of and information related to the Research to ensure that the Research Plan specifies appropriate scientific direction and research goals, allocates research responsibilities correctly, and establishes relevant time lines, and that there is appropriate scientific management of the collaboration. The JRC shall summarize the progress of the


17


Research in a written report distributed to each party at least once each calendar year. The JRC shall establish procedures and guidelines to govern the operation of the project team.


18


2.6 Selection of Candidate Drugs for Development.


(a) During the Selection Period. [*]


(b) After the Selection Period. [*]


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.


19


[*]


2.7 Extension of Research Term and Selection Period. P&U shall have, in its sole discretion, the right to extend the Research Term and Selection Period for an additional [*] period upon providing written notice to Geron of such election at least one hundred eighty (180) days prior to the expiration of the Research Term. In the event P&U makes such election, P&U shall pay Geron an additional [*] divided into [*] equal quarterly installments beginning on the third anniversary of the original Research Term as a non-refundable payment for research to be conducted by Geron during the [*] extension period. Any such extension of the Research Term (and the activities to be conducted during such extended period) shall be governed by the terms and conditions of this Agreement.


2.8 Extension by Mutual Consent. Although the parties contemplate that the objective of the Research, if achievable, is likely to be achieved within three (3) years (or [*] if P&U elects to extend the Research Term in accordance with Section 2.7 above) after the Effective Date, they recognize that it may be desirable to extend the Research to complete work described in the Research Plan that was near completion at the end of the Research Term or to


* Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.


20


commence a new Research Plan. The parties agree to discuss and negotiate in good faith any request by either party to extend the Research Term and the terms and conditions under which such extension could occur.


2.9 Sharing of Information. Geron and P&U will exchange verbal or written reports presenting a meaningful summary of their activities, including research and development activities under this Agreement, on a monthly basis so as to keep the other party reasonably informed in a timely manner of its activities in the Field. Each party will make regular presentations to the other of its activities under this Agreement, and additionally on an informal basis, inform the other party of the work done under this Agreement. Each party will provide the other with data or other information regarding any and all work carried out in the course of the Research as reasonably requested by the other party. This Section 2.9 applies to (i) Information generated by the Research during the Research Term, (ii) Information relative to Candidate Drugs under development as provided herein, and (iii) Information relative to Products for which a royalty is due to Geron hereunder. Each party will make available and disclose to the other party promptly after the Effective Date all Knowhow of such party as of the Effective Date, to the extent necessary or useful for the other party's conduct of the Research hereunder. Each party will also disclose any additional Knowhow learned, acquired or disco ...