Collaborative Research, License Agreement

EXHIBIT 10.8


COLLABORATIVE RESEARCH, LICENSE AND CO-PROMOTION AGREEMENT


dated as of October 5, 1998


by and between


SCHERING AKTIENGESELLSCHAFT


And


MYRIAD GENETICS, INC


TABLE OF CONTENTS


Page
---- ARTICLE I DEFINITIONS.......................................................................... 1


SECTION 1.1 Definitions.......................................................................... 1
SECTION 1.2 Accounting........................................................................... 9


ARTICLE II RESEARCH PROGRAM..................................................................... 9


SECTION 2.1 Joint Research Steering Committee.................................................... 9
SECTION 2.2 Research Program..................................................................... 10
SECTION 2.3 Access to ProNet; Pathway Options.................................................... 11
SECTION 2.4 Research Term........................................................................ 11
SECTION 2.5 Quarterly Reports.................................................................... 12


ARTICLE III DRUG DISCOVERY AND EARLY DEVELOPMENT; DEVELOPMENT.................................... 12


SECTION 3.1 Drug Discovery and Management Committee.............................................. 12
SECTION 3.2 Drug Discovery and Early Development Program......................................... 12
SECTION 3.3 Development Program.................................................................. 13
SECTION 3.4 MYRIAD Participation................................................................. 13
SECTION 3.5 Reporting............................................................................ 13
SECTION 3.6 Right to Engage Third Parties in Drug Discovery and Early
Development and Development.......................................................... 13
SECTION 3.7 Drug Approval Applications........................................................... 13
SECTION 3.8 Manufacturing........................................................................ 13


ARTICLE IV LICENSES............................................................................. 14


SECTION 4.1 License to SCHERING to Conduct Research.............................................. 14
SECTION 4.2 License to MYRIAD to Conduct Research................................................ 14
SECTION 4.3 License to SCHERING to Conduct Development........................................... 14
SECTION 4.4 License to MYRIAD to Conduct Development............................................. 14
SECTION 4.5 License to SCHERING to Conduct Commercialization..................................... 14
SECTION 4.6 Rights and Licenses to MYRIAD to Conduct Commercialization........................... 14
SECTION 4.7 Sublicensing......................................................................... 15
SECTION 4.8 Third Party Technology............................................................... 15
SECTION 4.9 Abandonment.......................................................................... 15
SECTION 4.10 Diagnostic Product Rights............................................................ 15
SECTION 4.11 No Other Rights...................................................................... 16


ARTICLE V COMMERCIALIZATION.................................................................... 16


SECTION 5.1 Joint Marketing Committee............................................................ 16
SECTION 5.2 MYRIAD Option to Co-Promote.......................................................... 17
SECTION 5.3 SCHERING as Lead Marketing Party..................................................... 17
SECTION 5.4 Right to Engage Third Parties in Commercialization................................... 18
SECTION 5.5 Commercialization Efforts............................................................ 18
SECTION 5.6 Commercialization Plan and Budget.................................................... 18
SECTION 5.7 Commercialization of Royalty Bearing Product......................................... 19


i.


SECTION 5.8 Control Over Advertising and Detailing............................................... 19
SECTION 5.9 Sales Efforts in the Co-Promotion Territory.......................................... 19
SECTION 5.10 Training Program..................................................................... 19
SECTION 5.11 Trademarks........................................................................... 20
SECTION 5.12 Manufacturing and Supply in Commercialization........................................ 20
SECTION 5.13 Product Recalls...................................................................... 20
SECTION 5.14 Tax Considerations................................................................... 20
SECTION 5.15 Co-Promotion Mechanism............................................................... 20
SECTION 5.16 Termination of Co-Promotion.......................................................... 21
ARTICLE VI PROFIT SHARING AND ROYALTIES......................................................... 21

SECTION 6.1 Calculation of Co-Promotion Exercise Payment......................................... 21
SECTION 6.2 Share of Operating Profits or Losses................................................. 22
SECTION 6.3 Co-Promotion Reports and Payments.................................................... 23
SECTION 6.4 Term................................................................................. 23
SECTION 6.5 Royalties............................................................................ 24
SECTION 6.6 Sales by Sublicensees................................................................ 25
SECTION 6.7 Royalty Reports and Payments......................................................... 25
SECTION 6.8 Payments............................................................................. 25
SECTION 6.9 Taxes................................................................................ 25
SECTION 6.10 Form of Payment...................................................................... 25
SECTION 6.11 Payments to or Reports by Affiliates................................................. 26
SECTION 6.12 No Overlapping Royalties............................................................. 26
ARTICLE VII TREATMENT OF CONFIDENTIAL INFORMATION................................................ 26

SECTION 7.1 Confidentiality...................................................................... 26
SECTION 7.2 Publication.......................................................................... 26
SECTION 7.3 Publicity Review..................................................................... 27
SECTION 7.4 Disclosure of Inventions............................................................. 27
SECTION 7.5 Termination of Prior Agreement....................................................... 27
SECTION 7.6 Use of Names......................................................................... 27
ARTICLE VIII OWNERSHIP OF PATENT RIGHTS........................................................... 27

SECTION 8.1 Ownership............................................................................ 28
SECTION 8.2 Patent Prosecution................................................................... 28
SECTION 8.3 Third Party Patent Rights............................................................ 28
SECTION 8.4 Enforcement Rights................................................................... 28
SECTION 8.5 Defense and Settlement of Third Party Claims......................................... 29
ARTICLE IX INFORMATION AND REPORTS.............................................................. 29

SECTION 9.1 Information and Reports During Development and Commercialization..................... 29
SECTION 9.2 Complaints........................................................................... 29
SECTION 9.3 Adverse Drug Experiences............................................................. 30
SECTION 9.4 Records of Revenues and Expenses; Resolution of Audit Disputes....................... 30
ARTICLE X TERM AND TERMINATION................................................................. 31

SECTION 10.1 Term................................................................................. 31
SECTION 10.2 Reasons for Termination.............................................................. 31


ii.
SECTION 10.3 Effect of Termination by MYRIAD...................................................... 32
SECTION 10.4 Remedies............................................................................. 32
SECTION 10.5 Survival............................................................................. 32
ARTICLE XI REPRESENTATIONS AND WARRANTIES....................................................... 32

SECTION 11.1 Representations and Warranties....................................................... 32
ARTICLE XII INDEMNIFICATION...................................................................... 33

SECTION 12.1 Indemnification of MYRIAD by SCHERING................................................ 33
SECTION 12.2 Indemnification of SCHERING by MYRIAD................................................ 33
SECTION 12.3 Notice, Etc.......................................................................... 34
ARTICLE XIII DISPUTE RESOLUTION................................................................... 34

SECTION 13.1 Senior Officials..................................................................... 34
SECTION 13.2 Arbitration.......................................................................... 34
ARTICLE XIV MISCELLANEOUS........................................................................ 35

SECTION 14.1 No Agency............................................................................ 35
SECTION 14.2 Expenses............................................................................. 35
SECTION 14.3 Binding Effect....................................................................... 35
SECTION 14.4 Notices.............................................................................. 35
SECTION 14.5 Severability......................................................................... 36
SECTION 14.6 Cooperation.......................................................................... 36
SECTION 14.7 Amendments and Waivers............................................................... 36
SECTION 14.8 Counterparts......................................................................... 36
SECTION 14.9 Entire Agreement..................................................................... 37
SECTION 14.10 Headings............................................................................. 37
SECTION 14.11 Assignment and Successors............................................................ 37
SECTION 14.12 Force Majeure........................................................................ 37
SECTION 14.13 Parties in Interest.................................................................. 37
SECTION 14.14 Governing Law........................................................................ 37
SECTION 14.15 Further Assurances................................................................... 37
SECTION 14.16 Bankruptcy........................................................................... 37
SECTION 14.17 Ambiguities.......................................................................... 37


Exhibit A-1 Schering Credits
Exhibit A-2 Myriad Credits


iii.


COLLABORATIVE RESEARCH, LICENSE


AND CO-PROMOTION AGREEMENT


This COLLABORATIVE RESEARCH, LICENSE AND CO-PROMOTION AGREEMENT (this "Agreement"), made as of the 5th day of October, 1998 (the "Effective Date"), by and between SCHERING AKTIENGESELLSCHAFT, a German corporation (hereinafter "SCHERING"), and MYRIAD GENETICS, INC., a Delaware corporation (hereinafter "MYRIAD"). SCHERING and MYRIAD are sometimes referred to herein individually as a "Party" and collectively as the "Parties."


W I T N E S S E T H:


WHEREAS, MYRIAD has expertise in the discovery and characterization of genes related to major common diseases and in the development and marketing of human diagnostic products and services derived from disease genes, and has developed a proprietary ProNet Technology to identify and compile protein- protein Interactions with potential application in the development of human diagnostic and therapeutic products;


WHEREAS, SCHERING has expertise in discovering, developing, manufacturing, distributing and marketing human therapeutic products;


WHEREAS, MYRIAD and SCHERING are interested in entering into an agreement whereby MYRIAD and SCHERING will jointly perform research using MYRIAD's proprietary ProNet Technology to identify Genes and Interactive Proteins and whereby SCHERING shall have the option to obtain from MYRIAD a license to the results of such research for the discovery, development, manufacture and marketing of Human Therapeutic Products derived from such Genes and Interactive Proteins; and


WHEREAS, SCHERING desires to grant to MYRIAD, and MYRIAD desires to obtain, rights to Co-Promote Human Therapeutic Products derived from such Genes and Interactive Proteins in the Co-Promotion Territory.


NOW THEREFORE, in consideration of the premises, and the representations, covenants and agreements hereinafter set forth, and for other good and valuable consideration, the adequacy and sufficiency of which is hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:


ARTICLE I


DEFINITIONS
-----------


SECTION 1.1 Definitions. As used in this Agreement, the following
----------- terms, when capitalized, shall have the meanings ascribed to them below.


"Abandoned Product" has the meaning set forth in Section 4.9.
-----------------


"Acquiring Party" means any Third Party (including a "group" within
--------------- the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) that, together with its affiliates, has annual worldwide pharmaceutical revenues of $500 million or greater, or that is then adverse to SCHERING or MYRIAD, as the case may be, in material litigation matters or has been at any time in the three (3) years prior to the time in question.


"Advertising" means the promotion of the Co-Promotion Products in the
----------- Co-Promotion Territory incurred by a Party through any means, including, without limitation, (i) television and radio advertisements; (ii) advertisements appearing in journals, newspapers, magazines or other media; (iii) seminars and conventions; (iv) packaging design; (v) professional education programs; (vi) samples (including related costs for manufacturing, shipping, and use taxes), visual aids and other selling materials; (vii) hospital formulary committee presentations; and (viii) presentations to state and other governmental formulary committees; provided, however, that Advertising shall exclude Detailing and General Public Relations.


1.


"Affiliate" means any person, corporation, partnership, firm, joint
--------- venture or other entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, SCHERING or MYRIAD, as the case may be. As used in this definition, "control" means the possession of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of the outstanding voting securities or by contract or otherwise.


"Allocated Administration Expenses" means the administration expenses
--------------------------------- incurred by any Operating Unit that is actually directly engaged in the Drug Discovery and Early Development, Development or Commercialization of Co- Promotion Products in the Co-Promotion Territory. Administrative expenses of a Party or Operating Units not engaged in the Development or Commercialization of Co-Promotion Products in the Co-Promotion Territory shall not be recoverable as an Allocated Administrative Expense or otherwise.


"Annual Research Plan" means the written plan describing the research
-------------------- in the Field to be carried out during each year of the Research Program by MYRIAD and SCHERING pursuant to this Agreement. Each Annual Research Plan will be set forth in a written document adopted by the JRSC.


"Bait" means initial DNA, RNA, expressed sequence tags and proteins
---- that are used in the ProNet Technology pursuant to the Research Program to identify and select the Interactive Proteins that bind to or interact with any Bait.


"Business Day" means a day other than a Saturday, Sunday or other day
------------ on which banking institutions in the State of New Jersey are authorized or required by law to close.


"Change of Control" means the occurrence of any of the following with
----------------- respect to MYRIAD or SCHERING, as the case may be, at any time after the date hereof:


(a) any Acquiring Party shall have acquired or become the beneficial owner of securities representing forty percent (40%) or more of the aggregate voting power of the then outstanding voting securities of MYRIAD or SCHERING, as the case may be, or the surviving entity of any merger transaction, whether by merger, consolidation, tender offer, reorganization or similar means; or


(b) any sale by MYRIAD of all or substantially all of MYRIAD's pharmaceutical and/or ProNet Technology-related assets, or any sale by SCHERING of all or substantially of all SCHERING's pharmaceutical assets, in each case to any Acquiring Party.


"Commercialization" and "Commercialize" refers to all activities
----------------- ------------- undertaken pursuant to an approved Commercialization Plan relating to the manufacture, marketing and sale of a Co-Promotion Product.


"Commercialization Budget" has the meaning set forth in Section 5.6.
------------------------


"Commercialization Costs" means those expenses incurred by a Party for
----------------------- a Co-Promotion Product which are generally consistent with a Commercialization Plan and Commercialization Budget and are specifically attributable to such Co- Promotion Product in the Co-Promotion Territory, and shall consist of (i) Cost of Goods Sold, (ii) Marketing expenses, (iii) Distribution expenses, (iv) Post- Launch Product R&D expenses, (v) Allocated Administration Expenses, and (vi) a Cost of Capital Allowance.


"Commercialization Plan" has the meaning set forth in Section 5.6.
----------------------


"Completion of Pivotal Clinical Trials" means the end of the first
------------------------------------- clinical trial which, when completed, will have demonstrated to the DDMC's reasonable satisfaction that a Human Therapeutic Product (i) is


2.


safe and efficacious, (ii) has an established dose, (iii) has an established route of administration and (iv) has a treatment schedule in the target population, all sufficient for the purpose of supporting a Drug Approval Application.


"Confidential Information" means all confidential information
------------------------ (including but not limited to confidential information about any element of Technology) which is disclosed by one Party to the other hereunder or under the Confidentiality Agreement referred to in Section 7.5 to the extent that such information (i) as of the date of disclosure is not demonstrably known to the Party receiving such disclosure or its Affiliates as shown by written documentation other than by virtue of a prior confidential disclosure to such Party or its Affiliates; or (ii) as of the date of disclosure or thereafter is not disclosed in published literature or not otherwise generally known to the public through no fault or omission of the Party receiving such disclosure; or (iii) as of the date of disclosure or thereafter is not obtained from a Third Party free from any obligation of confidentiality to the disclosing Party and having the lawful right to disclose it.


"Control" or "Controlled" refers to possession of the ability to grant
------- ---------- a license or sublicense of patent rights, know-how or other intangible rights as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.


"Co-Promotion," "Co-Promote" or "Co-Promoting" means the Detailing by
------------ ---------- ------------ different entities, using their own separate sales forces, of a Co-Promotion Product with the same trade dress, under the same trademark, using the same Advertising, and with SCHERING designated to handle distribution and to record sales.


"Co-Promotion Exercise Notice" has the meaning set forth in Section
---------------------------- 5.2(a).


"Co-Promotion Exercise Payment" has the meaning set forth in Section
----------------------------- 6.1.


"Co-Promotion Option" means MYRIAD's option pursuant to Section 5.2
------------------- hereof to designate a Potential Co-Promotion Product as a Co-Promotion Product.


"Co-Promotion Product" means a Human Therapeutic Product with respect
-------------------- to which MYRIAD shall have exercised its option to Co-Promote pursuant to Section 5.2 and marketed by the Parties in the Co-Promotion Territory.


"Co-Promotion Territory" means the United States and Canada.
----------------------


"Cost of Capital Allowance" means the amount recoverable by either
------------------------- Party under this Agreement for the use of its Utilized Capital allocated to the business of this collaboration related to Co-Promotion Products in the Co- Promotion Territory after SCHERING's receipt of MYRIAD's Co-Promotion Exercise Notice for such Co-Promotion Product in the Co-Promotion Territory. Each Party's cost of capital shall be determined by reference to its weighted average cost of capital for the relevant period determined in accordance with objective and customary financial formulas. There shall be no Cost of Capital Allowance for time periods prior to the first commercial sale of a Co-Promotion Product in the Co-Promotion Territory.


"Cost of Goods Sold" means the cost of producing a Co-Promotion
------------------ Product sold as computed by SCHERING in accordance with International Accounting Standards applied on a consistent basis. Such costs shall include, but not be limited to, the fully-burdened cost of all raw materials, labor and overhead for formulation, filling, finishing, labeling, packaging and quality assurance, and shall also include any value added taxes or ...