Research & License Agmnt Btw Company & Hoechst

EXHIBIT 10.18


COLLABORATIVE RESEARCH AND LICENSE AGREEMENT


This Collaborative Research and License Agreement is made and effective as of October 18, 1999 (the "Effective Date"), by and between 3-Dimensional Pharmaceuticals, Inc., a corporation having its principal place of business at Eagleview Corporate Center, 665 Stockton Drive, Suite 104, Exton, PA 19341, U.S.A. ("3DP"), and Hoechst Schering AgrEvo GmbH, a corporation having its principal place of business at Miraustr. 54, D-13509 Berlin, Germany ("AgrEvo"). 3DP and AgrEvo may be referred to herein as a "Party" or, collectively as Parties


WHEREAS, 3DP is engaged in discovery research for a variety of biologically active compounds and the development of technologies to facilitate such research, and 3DP has developed patented and other proprietary systems for generating chemical compounds having desired biological and other properties;


WHEREAS, AgrEvo is engaged in research and development of biologically active compounds and the development of technology for various agrochemical and related purposes;


WHEREAS, 3DP and AgrEvo desire to enter into a collaborative research and development agreement to discover, identify, and evaluate compounds that have certain biological and other properties, and AgrEvo may develop, own, patent, manufacture, distribute, market and sell worldwide products containing one or more of such compounds;


NOW, THEREFORE in consideration of the various promises and understandings set forth herein, the Parties agree as follows:


1. DEFINITIONS Unless otherwise specifically provided herein, the following terms shall have the following meanings and may be used in the singular or plural, as indicated by their context:


1.1 "Accessible Compound Library" means a computer database that is proprietary to 3DP which describes small organic compounds that are generated using the DirectedDiversity Software Tools and are not obtained from any public source.


1.2 "Active Compound" means a 3DP Screening Compound that has been synthesized by 3DP and that has been selected by AgrEvo for development or optimization according to Section 2.3.


1.3 "Affiliate" of a Party means: (i) any corporation or other business entity owning or directly or indirectly controlling at least fifty percent (50%) of the stock or other ownership interest normally entitled to vote for election of directors of a Party, and (ii) any corporation or other business entity owned or directly or indirectly controlled by a Party, or by a corporation defined by subparagraph (i) above, through ownership of at least fifty percent (50%) of stock or other ownership interest normally entitled to vote for election of directors.


1.4 "Agreement" shall mean the present agreement including its appendices.


1.5 "Compound Patents" means any Patents that claim: (i) an Active Compound and/or a Research Program Compound; and/or any precursor, intermediate or starting material used to make the Active Compound and/or the Research Program Compound and/or any related compounds of any of the foregoing that are claimed in the Compound Patents; or (ii) methods of making or using any compositions containing any of the compounds specified in subparagraph i) above.


1.6 "Confidential Information" means any and all knowledge, information, data material, experience or reports by one Party to the other under this Agreement including inventions, compounds, know-how, data and materials relating to the Research Program or to the licensed Products, and shall include without limitation research, technical, manufacturing, marketing, financial, personnel and other business information and plans, whether in oral, written, graphic or electronic form.


1.7 "Directed Diversity Software Tools" or "Software" means certain software tools proprietary to 3DP and used to generate combinatorial libraries, calculate compound property descriptors, compare mapping and visualize compound libraries, and support multi-objective selection strategies for compound optimization.


1.8 "Effective Date" means the effective date of this Agreement as set forth in its first paragraph.


1.9 "Field" means plant management, pest management (including fungi) and animal health, including but not limited to the use of herbicides, plant trait modifiers, plant growth regulators, pesticides, fungicides, animal health care, home and garden products, and environmental health products. The term "Field" expressly excludes human diagnostic and human therapeutic products.


1.10 "Licensed Product" means any commercial product comprising: (1) an Active Compound or a Research Program Compound; or (2) a compound synthesized by AgrEvo and covered by a Compound Patent, provided that the compound synthesized by AgrEvo results from Optimization Synthesis performed at 3DP on an Active Compound selected for optimization by 3DP pursuant to Sections 2.5 and 5.


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1.11 "Net Sales" means the gross invoiced sales price charged to third parties in an arms length transaction for all Licensed Products sold by AgrEvo, its Affiliates and sublicensees in the Field in the Territory after deduction of the following items: (i) customary trade, quantity and case discounts, wholesaler- charge backs, or rebates (including rebates to governmental agencies); provided that such discounts, charge backs and rebates are not applied disproportionately with respect to particular products sold; (ii) customary credits or allowances for rejection or return of previously sold Licensed Products; (iii) any direct tax or government charge (other than an income tax) levied on the sale, use, transportation or delivery of a Licensed Product and borne by the seller thereof; and (iv) any charge for freight or insurance if separately stated.


Combination Products: Where Licensed Product is sold in the form of a Combination Product containing one or more active ingredients in addition to an Active Compound, Research Program Compound or a compound synthesized by AgrEvo and covered by a Compound Patent, provided that the compound synthesized by AgrEvo results from Organization Synthesis performed at 3DP on an Active Compound selected for optimization by 3DP pursuant to Sections 2.6 and 5.3 (hereinafter, "Licensed Compounds"), Net Sales for such Combination Product will be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/(A+B) where A is the net invoice price to third parties of product containing such Licensed Compound, if sold separately. If, on a country-by- country basis, the other active component or components in the combination are not sold separately and where B is the net invoice price to third parties of product containing the additional ingredients, if sold separately in said country, Net Sales for the purpose of determining royalties on the Combination Product shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/C where A is the invoice price of Product containing the Licensed Compound, if sold separately, and C is the invoice price of the Combination Product. If, on a country-by-country basis, neither the Product nor the other active component or components of the Combination Product is sold separately in said country, Net Sales for the purposes of determining royalties of the combination Product shall be reasonably allocated between the Product and the other active components based upon their relative value as determined by the Parties hereto in good faith.


1.12 "Optimization Synthesis" means at least [**] interactive rounds of SAR generation, selection synthesis and testing.


1.13 "Patents" means all patent applications or issued patents, including provisionals, divisionals, continuations, continuations-in-part, reissues and extensions derived therefrom in any country.


1.14 "Probe library" means the collection of discrete, structurally diverse small organic molecules synthesized at the Effective Date from the Accessible Compound Libraries, including additional compounds synthesized subsequently.


1.15 "Research Program" means the collaborative research activities conducted by 3DP and AgrEvo, as described in Article 2 of this Agreement.


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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1.16 "Research Program Compound" means a compound that has been synthesized by 3DP in the course of the Research Program, e.g., in the course of optimizing an Active Compound.


1.17 "Research Program Patents" means any Patents, other than Compound Patents and 3DP Technology Patents, that claim inventions made by either Party in the course of the Research Program.


1.18 "Research Program Term" means an initial period of two (2) years from the Effective Date in which the Parties have agreed to conduct collaborative research pursuant to the Research Program. This Research Program Term may be extended pursuant to Sections 2.8 and 6.2 or may be shortened pursuant to Section 12.4 of this Agreement.


1.19 "Research Steering Committee"or"Committee"means the committee to be formed pursuant to Article 3 of this Agreement.


1.20 "ThermoFluor Protein Characterization and Screening Technology" or "ThermoFluor Technology" means a parallel, microscale [**] that provides a fluorescent signal readout useful for target characterization, assay development, and compound library screening.


1.21 "Territory" means the entire world.


1.22 "3DP Screening Library" means a collection of [**] compounds, selected from the Probe Library and from the Accessible Compound Library, provided by 3DP to AgrEvo for screening pursuant to Section 2.2 of this Agreement "3DP Screening Compound" means a compound present in the 3DP Screening Library.


1.23 "3DP Technology" means U.S. Patents No. 5,463,564; 5,574,656; 5,684,711 and 5,901,069, associated know-how and other intellectual property rights of 3DP that cover the use of DirectedDiversity Accessible Compound Libraries, DirectedDiversity Software Tools and ThermoFluor Protein Characterization and Screening Technology, and other related technology developed by 3DP during the course of this Agreement.


1.24 "3DP Technology Patents" mean Patents covering 3DP Technology.


1.25 "Valid Claim" means a claim of a Patent that has not lapsed or become abandoned or been declared invalid or unenforceable by a court or agency of competent jurisdiction from which no appeal can be or has been taken.


2. COLLABORATIVE RESEARCH PROGRAM


2.1 Research Program. The goal of the Research Program is to identify and optimize compounds of commercialization in the Field. The Parties agree to collaborate in drafting a specific research plan, to be approved by the Research Steering Committee pursuant to Section 3.1 of this Agreement, and agree to use their reasonable efforts to achieve the goal of the Research Program.


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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2.2 3DP Screening Compounds. 3DP will supply 3DP Screening Compounds to AgrEvo to be screened at AgrEvoin in [**] according to section 2.4 with the aim to identify Active Compounds for potential use in the Field under the following terms or other terms agreed to by the Research Steering Committee on behalf of the Parties:


(a) 3DP will supply the 3DP Screening Library to AgrEvo through approximately monthly deliveries that cumulatively contains [**] compounds that are jointly selected by the Research Steering Committee from the Probe Library and Accessible Compound Libraries designated by 3DP.


(b) 3DP will deliver samples of 3DP Screening Compounds to AgrEvo at a rate of approximately [**] compounds per month until the entire 3DP Screening Library has been delivered to AgrEvo. Each 3DP Screening Compound sample will contain approximately [**] mg of compound as a [**] solution in 96 deep well plates in DMSO, each deep well plate containing 88 compounds. 3DP agrees to use commercially reasonable efforts to deliver the initial [**] 3DP Screening Compounds within four (4) weeks from the Effective Date. If requested by the Research Steering Committee, reasonable additional amounts of the Screening Library Compounds will be provided by 3DP to AgrEvo for screening purposes. 3DP shall be reimbursed by AgrEvo at 3DP's costs for providing such additional amounts of the Screening Library Compounds, if providing such additional amounts of compounds requires the services of FTEs outside of the Research Program.


(c) 3DP will supply an electronic record of structures of 3DP Screening Compounds as delivered. AgrEvo agrees to restrict access to inspection of these structures to its employees on a need to know basis for AgrEvo's research activities, unless and until otherwise agreed to in writing by 3DP.


2.3 Screening at AgrEvo. AgrEvo will conduct screening tests on the 3DP Screening Compounds and Research Program Compounds. Within [**] months of receipt of a given 3DP Screening Compound, AgrEvo will declare if it is interested in further research on such a compound. In case of interest, such a compound shall be designated as an Active Compound by AgrEvo. AgrEvo's general criteria for the designation of an Active Compound shall be discussed at the Research Steering Committee.


2.4 Screening at 3DP. Upon request of AgrEvo, 3DP shall perform enzymology or ThermoFluor Protein Characterization assays on molecular targets supplied by AgrEvo as required for screening of 3DP Screening Compounds and/or Research Program Compounds. As approximate performance objectives, it is estimated that [**] will be required to set up a new enzymologicolassay; [**] will be required to perform an enzymologicalassay on up to [**] compounds; and [**] will be required and run a ThermoFluor(R) Protein Characterization assay on up to [**] compounds. 3DP shall promptly report the results of such screening to AgrEvo. In the event that AgrEvo requests 3DP to conduct assays on a larger number of molecular targets than can be conducted by the FTE commitment hereunder, AgrEvo shall negotiate in good faith to increase FTE support.


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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2.5 Research on Active Compounds. AgrEvo may conduct further research pursuant to this Agreement on Active Compounds. If AgrEvo decides that the activity of an Active Compound is not sufficient to direct further development, it may select, at its sole discretion, such a compound for optimization. Optimization may be carried out either by 3DP or AgrEvo. Notwithstanding the foregoing, in deciding which Party carries out the optimization of a given Active Compound the members of 3DP in the Research Steering Committee shall have a first right of refusal to perform such optimization at 3DP. For purposes of clarification, once 3DP exercises its right to optimize an Active Compound, 3DP shall have the obligation to perform such optimization, and 3DP shall have the right to continue optimizing compounds that result from previous rounds of optimization performed at 3DP. It is understood, however, that 3DP shall not be obligated to perform optimization work that either exceeds the capacity of the FTE's allocated to the Research Program, or the term of the Research Program.


2.6 Synthesis at 3DP. 3DP will provide chemical and biochemical support services for the optimization of Active Compounds as stipulated in Section 2.5 and/or prepare new libraries of Research Program Compounds for screening according to Sections 2.3 and 2.4. The optimization services to be provided by 3DP shall include the following, with specific FTE allocations to be determined by the Research Steering Committee.


(a) Optimization of Active Compounds obtained from screens performed at AgrEvo through iterative rounds of SAR generation, selection, synthesis and testing (at AgrEvo or 3DP) of compounds selected from 3DP Accessible Compound Libraries. The Research Program compounds derived from the optimization of Active Compounds under this subparagraph shall not be considered as part of the 3DP Screening Library to be provided to AgrEvo under Paragraph 2.2(a). [As an approximate performance objective, it is estimated that [**] will be required to select, synthesize, and perform quality control tests on [**] new compounds derived from established Accessible Compound Libraries (depending on synthesis routes).]


(b) Design and production chemistry development for new libraries for screening purposes according to Section 2.3 and 2.4 and/or new libraries based on Active Compounds obtained from screens performed at AgrEvo or 3DP. Such new libraries and the Research Program Compounds contained therein shall not be considered as part of the 3DP Screening Library to be provided to AgrEvo under Paragraph 2.2(a) [As an approximate performance objective, it is estimated that [**] will be required to develop, scope and verify a new combinational synthesis for such a library.]


(c) ThermoFluor Protein Characterization assays performed to support optimization programs on molecular targets supplied by AgrEvo as required for the progress of the Research Program. [As an approximate performance objective, it is estimated that [**] will be required to set up and run a ThermoFluor(R) assay on up to [**] compounds.]


2.7 Notwithstanding the Confidentiality Obligations of Article 8, and except for the use of DirectedDiversity Software Tools by AgrEvo as described in Article 4 and the use of the ThermoFluor Workstation as described in Section 5.8, 3DP hereby agrees that research, optimization and development undertaken by AgrEvo pursuant to the terms of this Agreement may be undertaken for AgrEvo by any Affiliate or Affiliates of AgrEvo, provided that such Affiliate or Affiliates agree(s) to be bound by the obligations accepted by AgrEvo under this Agreement.


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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2.8 AgrEvo shall have the option to extend the Research Program for additional one-year terms, on ninety (90) days written notice prior to the end of the initial or extended term, with a minimum support obligation of [**]. For any ongoing project that is started but not completed before the expiration of a term, the parties shall negotiate in good faith an appropriate extension of the existing term which is less than one year in order to complete such project.


3. RESEARCH STEERING COMMITTEE


3.1 Research Steering Committee. The Research Program will be managed by a Research Steering Committee ("Committee"). AgrEvo and 3DP shall each designate three (3) employees, to be selected by their respective R&D management, to form this Committee. One of the AgrEvo members shall be designated as the chairperson. In the event of a tie vote, the chairperson shall cast the deciding vote, except with respect to the first right of refusal of 3DP to perform such optimization at 3DP as stipulated in Section 2.5. From time-to- time, the Research Steering Committee may designate additional qualified representatives of AgrEvo and 3DP to perform specific Committee-related tasks. The Research Steering Committee shall be responsible for:


(a) Reviewing and approving a research plan, and monitoring the progress of research; and


(b) Reviewing the research plan on a quarterly basis, and amending the research plan from time to time;


(c) Discussing general criteria for designating Active Compounds.


(d) Tracking the development and status of Active Compounds and Research Program Compounds.


(e) Adjusting the objectives and program priorities of the FTEs allocated to the Research Program on a quarterly and a project-by-project-basis; and


(f) Reviewing and approving publications and other like disclosures related to the subject matter of the Research Program.


3.2 Meetings of the Research Steering Committee. The Research Steering Committee shall meet quarterly, alternating at the facilities of AgrEvo and 3DP, unless meeting locations are otherwise agreed to by the Committee.


4. DIRECTEDDIVERSITY SOFTWARE TOOLS


The use of DirectedDiversity Software Tools by AgrEvo, as covered by this Article 4, and support obligations of 3DP, may be extended by AgrEvo to its Affiliate, AgrEvo UK Limited (Chesterford Park), if AgrEvo UK Limited agrees in writing to be bound by the provisions of this Agreement. In the event of the proposed merger of the life science activities of Hoechst Aktiengesellschaft and Rhone Poulenc SA, the merged entity will be entitled to [**]


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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[**] if such research sites agree in writing to be bound by the provisions of this Agreement.


4.1 Use of DirectedDiversity Software Tools. 3DP will provide DirectedDiversity Software Tools and support to AgrEvo for in-house use by AgrEvo only in the Field according to Section 4.3.


4.2 DirectedDiversity Software Tools and Support. 3DP will supply the following Software modules and technical support to AgrEvo:


[**]


4.3 Workstation for DirectedDiversity Software Tools. DirectedDiversity Software Tools will be implemented on a Windows NT Workstation. 3DP agrees to furnish up to [**] singleseat Windows NT DirectedDiversity code installations at sites to be defined by AgrEvo. 3DP shall provide up to [**] days of on-site consultation at 3DP to one to three (1-3) AgrEvo scientists per year. Licenses to DirectedDiversity Software Tools shall be renewable on a yearly basis provided that the Research Program is in effect. After the expiration or termination of the Research Program, 3DP agrees to negotiate in good faith with AgrEvo for AgrEvo's continued use of the Directed Diversity Software Tools. In the absence of such a further agreement, and upon 3DP's written request, AgrEvo agrees to return the DirectedDiversity Software Tools promptly to 3DP. 3DP agrees to use commercially reasonable efforts to install the DirectedDiversity Software Tools within eight (8) weeks from the Effective Date.


4.4 Limitations on Use of Software. The DirectedDiversity Software Tools are provided to AgrEvo pursuant to this Agreement and, notwithstanding anything else in this Agreement to the contrary, they may not be transferred or assigned to, or used by or on behalf of any third parties. AgrEvo may make no more than one (1) copy of the Software, which may be used for backup purposes only. AgrEvo may not, directly or indirectly, decompile, disassemble, reverse engineer or otherwise attempt to derive source code for the Software, and may not modify, enhance, create derivative works based on, or otherwise change the Software, AgrEvo may not sell, assign, lease, sublicense, or otherwise transfer, disclose, or grant access to the Software or any copy thereof to any third party, without the written consent of 3DP, which may be withheld in 3DP's sole discretion. Except as expressly permitted by this Agreement, AgrEvo may not place or install any portion of the Software on any electronic media, including but not limited to, local or wide area networks, multiple processing units, multiple site arrangements, service or software rental bureaus, list servers, electronic bulletin boards, World Wide Web sites or any other server that is Internet- enabled.


4.5 Proprietary Rights, Protection of Confidentiality. AgrEvo acknowledges that 3DP owns all right, title and interest in and to the Software or any portion thereof. AgrEvo acknowledges that the Software contains confidential and proprietary information and trade secrets of 3DP whether or not the Software, or any portion thereof, is or may be copyright or copyrightable and/or patented or patentable, and that the Software is disclosed to AgrEvo in the strictest confidence. AgrEvo hereby agrees to maintain the Software in confidence using the same degree of care as


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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AgrEvo takes to safeguard its own proprietary information and trade secrets, but in no event shall AgrEvo use less than a reasonable degree of care, and to refrain from disclosing the Software to third parties.


4.6 Warranties as to the Software. 3DP warrants that, to 3DP's knowledge, based upon its review of the results of a reasonable search of relevant issued U.S. patents, as of the Effective Date, the use of the 3DP DirectDiversity Technology as permitted by this Agreement, will not violate the rights of third parties in the U.S. In the event that 3DP has reason to change this view after the Effective Date and during the term of the Research Program, 3DP shall promptly inform AgrEvo and provide full justification therefor. 3DP guarantees the operability of the software at the AgrEvo Workstation and that the Software has been written following the accepted rules of programming.


4.7 Limitation of Warranties and liabilities as to the Software. 3DP SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE LICENSE GRANTED HEREIN OR USE OF THE SOFTWARE; INCLUDING WITHOUT LIMITATION, LOSS OF DATA, LOSS OF INCOME OR PROFIT, OR OTHER LOSSES SUSTAINED AS A RESULT OF INJURY TO ANY PERSON OR LOSS OR DAMAGE TO PROPERTY; OR CLAIMS OF THIRD PARTIES.


5. LICENSE AND ALLOCATION OF RIGHTS


5.1 Research Program License for 3DP Technology. 3DP hereby grants to AgrEvo a worldwide, non-exclusive, irrevocable license under the 3DP Technology during the term of the Research Program to conduct the Research Program. Notwithstanding anything in this Agreement to the contrary, AgrEvo may not use 3DP Technology outside the Field. This license is provided to AgrEvo and those of its Affiliates who agree to be bound by the provisions of this Agreement and may not be assigned, sublicensed or used on behalf of any third parties without written permission from 3DP. Notwithstanding the foregoing, the use of the DirectedDiversity Software Tools by AgrEvo is limited by the provisions of Article 4 and Section 5.7, and the use of the ThermoFluor Workstation is limited by the provisions of Section 5.8.


5.2 Rights to Exclusive Screening. AgrEvo shall have the exclusive right to screen each 3DP Screening Compound for use in the Field pursuant to Section 2.3 for one [**] from its date of receipt by AgrEvo. Subject to Section 5.3, after the [**] exclusivity period, 3DP shall regain all rights to a minimum of [**] of the total compounds supplied to AgrEvo in the 3DP Screening Library. With regard to 3DP Screening Compounds for which 3DP regains rights pursuant to this Section 5.2, AgrEvo also hereby grants to 3DP a fully paid-up, royalty free worldwide license in the Field, with the right to sublicense under any Compound Patents and under Research Program Patents to make, have made, use, sell, have sold, import and have imported patented products.


**Certain portions of this Exhibit have been omitted upon a request of confidential treatment that has been filed with the Commission. The omitted portions have been filed seperately with the Commission.


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5.3 Rights to Nonexclusive Screening. Notwithstanding the provisions of Section 5.2, after the period outlined in Section 5.2, AgrEvo shall have the nonexclusive right to screen any remaining amount of all 3DP Screening Compounds for use in the Field. If, as a result of such nonexclusive screening, AgrEvo is interested in the optimization f ...