Collaborative Research And Development And License Agreement

COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT



THIS COLLABORATIVE RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENT (the " Agreement ") is entered into as of March 31, 2006 (the " Effective Date ") by and between OPTIMER PHARMACEUTICALS INC. , a Delaware corporation with its offices located at 10110 Sorrento Valley Road, Suite C, San Diego, California 92121 (" Optimer "), and CEMPRA PHARMACEUTICALS, INC. , a Delaware corporation with its offices located at 170 Southport Drive, Suite 500, Morrisville, NC 27560. Optimer and Cempra may be referred to herein individually as a " Party " or collectively, as the " Parties ."



RECITALS



WHEREAS, Optimer is a biopharmaceutical company engaged in the discovery and development of pharmaceutical products using its proprietary carbohydrate synthesis technology;



WHEREAS, Cempra is a biopharmaceutical company engaged in the discovery and development of novel pharmaceutical products;



WHEREAS, Cempra and Optimer desire to enter into a relationship to identify, develop and commercialize pharmaceutical products comprising novel Macrolide Antibiotics to treat infectious diseases.



WHEREAS, Cempra and Optimer entered into a letter agreement dated November 10, 2005 wherein Optimer and Cempra agreed to execute a detailed agreement regarding the synthesis by Optimer of Macrolide Antibiotics for Cempra; and



WHEREAS, Optimer is willing to synthesize Macrolide Antibiotics using its proprietary carbohydrate synthesis technology, assist Cempra in the development thereof, and is prepared to grant Cempra a license under such technology to allow Cempra to develop and commercialize pharmaceutical products arising from this relationship;



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





1. DEFINITIONS



1.1 "Affiliate" means a person, corporation, partnership, or other entity that controls, is controlled by or is under common control with a Party. For the purposes of this Section 1.1, the word "control" (including, with correlative meaning, the terms "controlled by" or "under the common control with") means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such entity, whether by the ownership of at least fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.



1.2 "ASEAN Countries" means all member nations of the Association of Southeast Asian Nations as of the Effective Date.



1.3 "Cempra Know-How" means any Know-How which is developed or acquired and Controlled by Cempra or its Affiliates during the term of this Agreement that is necessary and useful for the research, development, manufacture, importation, use, or sale of Cempra Products.



1.4 "Cempra Patents" means any Patents, other than Optimer Patents, which are Controlled by Cempra or its Affiliates during the term of this Agreement and that claim the manufacture, importation, use or sale of Macrolide Antibiotics or Cempra Products.



1.5 "Cempra Product" means a pharmaceutical product (including but not limited to Combination Products or those comprised of one or more Test Products, Macrolide Antibiotics, or any analogs or derivatives of either of the foregoing) for which the use, sale, or manufacture thereof would, but for the licenses granted Cempra hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing.








1.6 "Collaboration" means all activities performed by or on behalf of Optimer or Cempra in the course of the Research Program with respect to the Development and Commercialization of Test Products and Cempra Products.



1.7 "Combination Product" means a pharmaceutical product (i) containing (x) in the case of Cempra, an active pharmaceutical ingredient for which, if included in a pharmaceutical product as the sole active pharmaceutical ingredient the use, sale, or manufacture thereof would, but for the licenses granted Cempra hereunder, infringe the Optimer Patents in the country in which such product is sold by Cempra, an Affiliate thereof, or a Third Party sublicensee of either of the foregoing, or (y) in the case of Optimer, an active pharmaceutical ingredient which (I) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (II) is a Cempra Product, or (III) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent; and (ii) one or more other pharmaceutically active ingredients for which rights are not included in the license granted to (x) Cempra under this Agreement, with respect to Cempra Products, or (y) Optimer, with respect to Optimer Products.



1.8 "Commence" or "Commencement", when used to describe a Phase 1 Trial, Phase 2 Trial, Phase 3 Trial, or Phase 4 Trial, means the first dosing of the first patient for such trial.



1.9 "Commercialization" means all activities that are undertaken after Regulatory Approval of an NDA for a particular Product and that relate to the commercial marketing and sale of such Product including advertising, marketing, promotion, distribution, and Phase 4 Trials.



1.10 "Confidential Information" means all Information, and other information and materials, received by either Party from the other Party pursuant to this Agreement that: (i) is designated as confidential at the time of disclosure or promptly thereafter; (ii) under the circumstances surrounding disclosure should be treated as confidential by the receiving Party, or (iii) by reason of its nature would be treated as confidential by a reasonable receiving party, which would include, without limitation, trade secrets..



1.11 "Control " means, with respect to any intellectual property right, that a Party owns or has a license to such item or right, and has the ability to grant a license or sublicense in or to such right as set forth herein without violating the terms of any agreement or other arrangement with any Third Party.



1.12 "Develop" or "Development" means, with respect to a Test Product or Product, engaging in preclinical and clinical drug development activities, which may include but is not limited to research, pre-clinical, clinical and regulatory activities directed towards obtaining Regulatory Approval of a Product, including but not limited to the performance by Optimer of its obligations and Cempra of its responsibilities under the Research Program.



1.13 "Development Plan" has the meaning set forth in Section 4.1.



1.14 "Diligent Efforts " means the carrying out of obligations or tasks in a manner consistent with the efforts a Party devotes to research, development or marketing of a pharmaceutical product or products of similar market potential, profit potential or strategic value resulting from its own research efforts, taking into account technical and regulatory factors, target product profiles, product labeling, past performance, costs, economic return, the regulatory environment and competitive market conditions in the therapeutic area, all based on conditions then prevailing, and subject to and in consideration of, in each case, the resources available to such Party and within such Party92s organization for such efforts. Diligent Efforts requires that a Party, at a minimum, assign responsibility for such obligations to specific employees, sets and seeks to achieve specific and meaningful objectives for carrying out such obligations, and consistently makes and implements decisions designed and allocates resources reasonably sufficient to advance progress with respect to such objectives.



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1.15 "Fair Market Value" means the fair market value of Cempra capital stock on the date the relevant milestone is achieved under Section 6.2(a) or (b), as applicable, which shall be determined as follows:



(a) if the Cempra capital stock to be issued under Section 6.2(a) or (b) is traded on a public securities exchange or through the Nasdaq National Market, the fair market value thereof shall be deemed to be the average of the closing prices of such security on such exchange over the 30-day period ending three (3) business days prior to the date such security was received;



(b) if the Cempra capital stock to be issued under Section 6.2(a) or (b) is actively traded over-the-counter, the fair market value thereof shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period ending three (3) business days prior to the date such security was received; or



(c) If there is no active public market for any Cempra capital stock issued under Section 6.2(a) or (b), the fair market value thereof shall be as determined in good faith by Cempra92s Board of Directors based on a reasonable consideration of all relevant factors.



1.16 "FDA " means the United States Food and Drug Administration, or any successor federal agency thereto.



1.17 "Field " means all human and animal diagnostic and therapeutic uses.



1.18 "First Commercial Sale" means the first sale of commercial quantities of any Product sold to a Third Party by a Party, its Affiliate, or a sublicensee of either of the foregoing in any country after, if and as reasonably necessary or applicable, receipt of Regulatory Approval for such Product in such country. Sales for test marketing, sampling and promotional uses or clinical trial or research purposes or compassionate uses will not be considered to constitute a First Commercial Sale



1.19 "FTE" means the equivalent of one person working full time for one 12-month period in a research, development, commercialization, regulatory or other relevant capacity, approximating 1800 hours per year. In the interests of clarity, though, a single individual who works more than 1800 hours in a single year shall be treated as one FTE regardless of the number of hours worked.



1.20 "Good Clinical Practices" or "GCP" means current Good Clinical Practices as specified in the United States Code of Federal Regulations, at the time of testing, and all FDA and ICH guidelines, including the ICH Consolidated Guidelines on Good Clinical Practices.



1.21 "Good Laboratory Practices" or "GLP" means current Good Laboratory Practices as specified in the United States Code of Federal Regulations at 21 CFR a7 58 at the time of testing and all applicable ICH guidelines.



1.22 "Good Manufacturing Practices" or "GMP" means current Good Manufacturing Practices and standards as provided for (and as amended from time to time) in European Community Directive 91/356/EEC (Principles and Guidelines of Good Manufacturing Practice for Medicinal Products) and in the Current Good Manufacturing Practice Regulations of the United States Code of Federal Regulations Title 21 (21 CFR a7a7 210-211) in relation to the production of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients, and subject to any arrangements, additions or clarifications agreed from time to time between the Parties.



1.23 "Governmental Authority" means any court, agency, department or other instrumentality of any foreign, federal, state, county, city or other political subdivision.



1.24 "Human Clinical Trial" means any Phase 1 Trial, Phase 2 Trial, Phase 3 Trial or Phase 4 Trial the subject of which includes a Test Product or Product.



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1.25 "IND" means an Investigational New Drug Application filed with the FDA or the equivalent application or filing filed with any equivalent agency or government authority outside of the United States (including any supra-national agency such as in the European Union) necessary to Commence human clinical trials in such jurisdiction, and including all regulations at 21 CFR a7 312 et. esq., and equivalent foreign regulations.



1.26 "Information " means information, results and data of any type whatsoever, including without limitation, databases, inventions, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and patent and other legal information or descriptions.



1.27 "Invention" means any discovery, invention, improvement, concept or idea, whether or not patentable, conceived or reduced to in the course of the activities conducted pursuant to this Agreement, together with all intellectual property rights relating thereto. Inventions may include, but not be limited to, processes, compounds, compositions, or methods.



1.28 "Know-How" means any non-public, proprietary Information and other data, instructions, processes, methods, formulae, techniques, compositions, materials, expert opinions and information, including without limitation, biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information. Know-How does not include any rights under Patents.



1.29 "Letter Agreement" means the letter agreement between Optimer and Cempra dated November 11, 2005.



1.30 "Macrolide Antibiotics" means any macrolide or ketolide, including but not limited to any (i) [***] compound that incorporates, is based on, or is described in, or the synthesis of which is in whole or part based on or described in, the Optimer Technology, including but not limited to those synthesized by Optimer under this Agreement or the Letter Agreement, (ii) [***] (including but not limited to [***]), and (iii) any derivatives or analogs of any of the foregoing. For avoidance of doubt, the parties expressly agree that Macrolide Antibiotics shall not mean any 18-membered- lactone-ring-based compound (e.g., Optimer92s OPT-80).



1.31 "NDA" means a New Drug Application filed with the FDA or the equivalent application or filing filed with any equivalent Governmental Authority outside of the United States necessary for approval of a drug in such jurisdiction.



1.32 "Net Sales" means



(a) with respect to a Product (subject to subsections (b) and (c) below), the amount received by a Party or its Affiliate or a Third Party sublicensee for sales of such Product to Third Parties, excluding reasonable sales returns, allowances and rebates actually paid, granted or accrued, including, without limitation, trade, quantity and cash discounts and any other reasonable adjustments actually allowed, including, but not limited to, those granted on account of price adjustments (including retroactive price adjustments), billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, pharmacy benefit management companies, health maintenance organizations or other health care organizations, or any governmental or regulatory authority or agency (including their purchasers and/or reimbursers), adjustments arising from consumer discount programs, customs or excise duties, tariffs, sales tax, consumption tax, value added tax, and other taxes (except income taxes) or duties relating to sales, and similar payments respect to the United States government, any state government, any local government, or any foreign government, or to any governmental or regulatory authority in respect of sales, and freight, handling, and insurance; and



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(b) in the case of Combination Products,



[***]



1.33 "Optimer Improvements" means any Other Sole Inventions of Optimer and, to the extent owned by Optimer, Other Joint Inventions that, in either case, constitute improvements, enhancements, or modifications of any Macrolide Antibiotics, Cempra Products, or other technology claimed in the Optimer Patents listed on Schedule 1.30 , or which would be useful or necessary in the manufacture, use, or sale of Cempra Products.



1.34 "Optimer Know-How" means all Know-How Controlled by Optimer or its Affiliates as of the Effective Date, or which is developed or acquired by and Controlled by Optimer or its Affiliates during the term of this Agreement, including but not limited to any Know-How related to Optimer Improvements, that is necessary or useful for the research, development, manufacture, importation, use or sale of the Macrolide Antibiotics, Test Products or Cempra Products.



1.35 "Optimer Patents" means any Patents Controlled by Optimer or its Affiliates as of the Effective Date or which are developed and Controlled, or licensed to and Controlled, by Optimer or its Affiliates during the term of this Agreement, that are necessary or useful for the research, development, manufacture, importation, use or sale of Macrolide Antibiotics, Test Products, or Cempra Products, including without limitation, the Patents listed on Schedule 1.35 and any Patents (or, with respect to Patents jointly owned by the Parties, Optimer92s rights to any such Patents) claiming any Optimer Improvements.



1.36 "Optimer Product" means any product (including but not limited to Combination Products) developed and/or commercialized by Optimer in any ASEAN Country that (i) contains a Macrolide Antibiotic, Test Product, or derivative or analog of either of the foregoing, (ii) is a Cempra Product, or (iii) whose manufacture, sale, or use is covered in any ASEAN Country by a Valid Claim of any Cempra Patent, Joint Invention Patent, or foreign counterpart of any Optimer Patent. For avoidance of doubt, the parties expressly agree that, for purposes of this Agreement (including, but not limited to, Optimer92s royalty payment obligation set forth in Article 6), Optimer Products shall not include any product which incorporates an 18-membered-lactone-ring-based compound as an active pharmaceutical ingredient (e.g., Optimer92s OPT-80) unless such product incorporates an additional active pharmaceutical ingredient which itself (or the mechanism of action of which) independently renders such product an Optimer Product pursuant to the foregoing definition.



1.37 "Optimer Technology" means Optimer Patents and Optimer Know-How.



1.38 "Patent" means: (a) an issued unexpired United States or foreign patent (including inventor92s certificate) that has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof; or (b) any pending United States or foreign patent application, including without limitation any continuation, division or continuation-in-part thereof and any provisional application.



1.39 "Phase 1 Trial" means a clinical trial that generally provides for the first introduction into humans of a Product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of the Product, and generally consistent with 21 CFR a7 312.21(a).



1.40 "Phase 2 Trial" means a clinical trial of a Product on patients, including possibly pharmacokinetic studies, the principal purpose of which is to make a preliminary determination that such Product is safe for its intended use and to obtain sufficient information about such Product92s efficacy to permit the design of further clinical trials, and generally consistent with 21 CFR a7 312.21(b).



1.41 "Phase 3 Trial" means a clinical trial that provides for a pivotal human clinical trial of a Product, which trial is designed to: (a) establish that a Product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the Product in the



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dosage range to be prescribed; (c) support Regulatory Approval of such Product; and (d) generally consistent with 21 CFR a7 312.21(c).



1.42 "Phase 4 Trial" means clinical trial of a Product Commenced in a particular country after Regulatory Approval for such Product in such country in order to support commercialization of the Product.



1.43 "Product" means an Optimer Product or Cempra Product, as appropriate.



1.44 "Regulatory Approval" means any and all approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, that are necessary for the manufacture, distribution, use or, in the Commercializing Party92s reasonable judgment, sale of a Product in a regulatory jurisdiction.



1.45 "Regulatory Authority" means any Governmental Authority with responsibility for granting any licenses or approvals necessary for the marketing and sale of pharmaceutical products including, without limitation, the FDA and any drug regulatory authority of countries of the European Union, and Japan, and where applicable any ethics committee or any equivalent review board.



1.46 "Regulatory Filing" means the NDA, biologic license application ("BLA"), IND, or any foreign counterparts thereof and any other filings required by regulatory authorities relating to the study, manufacture or commercialization of any Product.



1.47 "Research Program" means the activities conducted by Optimer and Cempra pursuant to the obligations and responsibilities set forth in a Work Plan and Budget established by the Parties pursuant to this Agreement.



1.48 "Research Term" means the period commencing on the Effective Date and continuing until the earlier of (i) completion by Optimer of the tasks assigned to Optimer in the Work Plan and Budget or (ii) the second anniversary of the Effective Date, subject to any extensions thereof agreed to by the Parties in writing.



1.49 "Royalty Term" means, on a country-by-country and Product-by-Product basis:



(a) For Cempra Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing until the later of (a) the last to expire Valid Claim of an Optimer Patent covering the manufacture, use or sale of such Cempra Product in such country or (b) ten (10) years following the First Commercial Sale of such Cempra Product in such country; and



(b) For Optimer Products, the period commencing on the First Commercial Sale thereof in a particular country and continuing until the later of (a) the last to expire Valid Claim of a Cempra Patent covering the manufacture, use or sale of such Optimer Product in such country or (b) ten (10) years following the First Commercial Sale of such Optimer Product in such country.



1.50 "Sublicensing Revenue" means net revenue received from Third Party sublicensees, other than royalties or other payments calculated on the basis of sales of Cempra Products, directly and solely as consideration for Cempra92s or its Affiliates92 sublicensing to Third Parties (other than Cempra Affiliates) of the rights to Optimer Patents licensed to Cempra and its Affiliates under this Agreement, including but not limited to upfront and milestone payments, but excluding (i) [***]



1.51 "Term" has the meaning assigned to it in Section 9.1.



1.52 "Territory" means worldwide, excluding ASEAN Countries.



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1.53 "Test Product" means a Macrolide Antibiotic or derivative or analog thereof that has been designated by Cempra to be the subject of Development pursuant to Section 3.4.



1.54 "Third Party" means any entity other than (a) Optimer, (b) Cempra or (c) an Affiliate of either of them.



1.55 "Valid Claim" means a claim of any pending patent application or any issued, unexpired United States or granted foreign patent within any Patent that has not been dedicated to the public, disclaimed, abandoned or held invalid or unenforceable by a court or other body of competent jurisdiction from which no further appeal can be taken, and that has not been explicitly disclaimed, or admitted by the Party Controlling such Patent in writing to be invalid or unenforceable or of a scope not covering Products through reissue, disclaimer or otherwise.



1.56 "Work Plan and Budget" has the meaning set forth in Section 3.1.





1A. JOINT STEERING COMMITTEE



1A.1 Joint Steering Committee. Promptly after the Effective Date, the Parties shall establish a "Joint Steering Committee" as described in this Section 1A. The Joint Steering Committee shall exist during the Research Term. The Joint Steering Committee shall, subject to applicable provisions of this Agreement concerning the Research Program, Work Plan, and Budget, (i) develop, review, approve, and establish all aspects of the Work Plan and Budget and, once the initial Work Plan and Budget have been established, (ii) monitor and oversee the Parties92 progress thereunder, advise the Parties with respect thereto, and develop, review, and approve any changes or amendments to the Work Plan and Budget, such changes and amendments to be effective upon approval thereof by the Joint Steering Committee and agreement by (i) Optimer with respect to obligations of Optimer (such agreement not to be unreasonably withheld) or (ii) Cempra with respect to responsibilities of Cempra, provided that, notwithstanding the foregoing, the Joint Steering Committee shall have no authority to amend the body of this Agreement. Each party shall indicate in writing within five (5) business days of approval by the Joint Steering Committee whether or not it agrees to its proposed obligations or responsibilities, and, if not agreeing to its proposed obligations or responsibilities, provide its reasonable objections thereto. I ...