Development And License Agreement

EXHIBIT 10.5





CONFIDENTIAL TREATMENT REQUESTED



CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT HAS BEEN DELETED AS MARKED BY BRACKETS, AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.



DEVELOPMENT AND LICENSE AGREEMENT





THIS DEVELOPMENT AND LICENSE AGREEMENT (the "AGREEMENT") is made as of the 3rd day of May, 1995 by and between AVIRON, a California corporation with its principal place of business at 1450 Rollins Road, Burlingame, California, 94010, U.S.A. ("AVIRON"), and SANG-A PHARM. Co., LTD., a Korean corporation with its principal place of business at 640-9 Dueng Chon Dong, Kangseo-Ku, Seoul, South Korea ("SANG-A").







WHEREAS, Aviron is a biopharmaceutical company engaged in the business of developing vaccines for the prevention of various diseases in humans; and



WHEREAS, Sang-A is a Korean company interested in establishing vaccine development and manufacturing capabilities; and



WHEREAS, the parties desire to collaborate in the clinical development, manufacture, distribution, marketing and sale of certain vaccine and other human therapeutic products, on a product-by-product basis;



NOW, THEREFORE, in consideration of the promises and covenants set forth below, the parties hereby agree as follows:







ARTICLE I





The capitalized terms used herein but not separately defined shall have the meanings set forth in Exhibit A hereto.





ARTICLE 2

DEVELOPMENT PROGRAM





2.1 COMMENCEMENT OF DEVELOPMENT PROGRAM. Following [

] for a particular Partner Product, such Product will be deemed available for development in South and North Korea by Sang-A and Sang-A shall commence a program of clinical development for such Partner Product, as further set forth herein (the "DEVELOPMENT PROGRAM").









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2.2 DEVELOPMENT OBLIGATIONS OF SANG-A.



2.2.1 SANG-A COMMITMENT. Sang-A hereby agrees to conduct at its own expense all clinical development work necessary to obtain all Government Approvals for the commercialization of each Partner Product in South and North Korea.



2.2.2 DEVELOPMENT EFFORT. [



] Sang-A shall work diligently, consistent with accepted business practices and legal requirements, to develop each Partner Product, devoting the same degree of attention and diligence to such development efforts as similar companies devote to development activities for products of comparable market potential. Sang-A agrees to provide scientific, technical, clinical and regulatory personnel, equipment, time and resources to the development of each Partner Product sufficient to meet its obligations hereunder.



2.2.3 DEVELOPMENT REPORTS; NOTICES. Sang-A will deliver to Aviron, in English, a summary of any annual development plan prepared by or on behalf of Sang-A for any Partner Product in a Development Program, and any other reports or information reasonably requested by Aviron to enable it to comply with any obligations to its licensors, as described in Section 3.3. Aviron will provide Sang-A with an annual development plan and quarterly progress reports, in English, upon the request of Sang-A.



2.2.4 VISIT OF FACILITIES. Representatives of either party may, upon reasonable request and prior notice and at mutually agreed upon times and intervals, (i) visit such party's facilities where the development of Partner Products is being conducted, and (ii) consult informally with personnel of such party conducting the Development Program during such visits, by telephone, facsimile transmission or other manner as the parties shall agree. Aviron may also visit any of Sang-A's sublicensees' facilities in which such development activities are being conducted.



2.3 DEVELOPMENT OBLIGATIONS OF AVIRON.



2.3.1 ACCESS TO AVIRON DATA. Subject to the terms of this Agreement, Sang-A shall be entitled access to Aviron Data for each Partner Product, as such Data become available, for use in the Development Program. Sang-A shall be permitted to use and reference all Aviron Data in any regulatory filings necessary for Government Approval in South and North Korea. Notwithstanding the foregoing, Sang-A agrees that it shall treat all Aviron Data as Confidential Information, subject to the terms of Article 10 hereof.



2.3.2 ACCESS COSTS; POTENTIAL CORPORATE PARTNERS. Provided Aviron and/or its Affiliates [

] Sang-A's access to the Aviron Data shall be [



] Sang-A expressly acknowledges and agrees, however, that Aviron may enter into an arrangement with one or more corporate partners for the development









CONFIDENTIAL TREATMENT REQUESTED



of certain or all Partner Products in countries outside South and North Korea, [

] In the event Aviron enters into such an agreement, and Aviron is unable, [

]Aviron will pay an amount not to exceed [ ] for such right on behalf of Sang-A, and Sang-A shall be responsible for the balance of any amount required from such partner for access to Aviron Data.



2.3.3 SUPPLY OF CLINICAL MATERIALS. Aviron shall use [ ]

to supply, or cause to be supplied, such amounts of Clinical Materials

necessary to obtain Government Approval for Partner Products and necessary

for Sang-A's activities pursuant to the Development Program. Sang-A agrees

that it shall use such Clinical Materials only for purposes of pursuing IND

allowance of the relevant Partner Product and conducting the Development

Program, and that it shall not transfer any Clinical Materials to a third

party without the prior written approval of Aviron. As the need for a

continuous supply of Clinical Materials arises the parties shall negotiate

agreements, on a Product-by-Product basis, containing the terms upon which

such Clinical Materials will be supplied (the "Clinical Supply

Agreements"). With respect to the Cold Adapted Influenza Product, [











]



2.3.4 TECHNICAL ASSISTANCE. Aviron shall provide technical assistance to Sang-A, as provided in Article 6 hereof.



2.3.5 AVIRON CLINICAL DEVELOPMENT. Notwithstanding the above, nothing in this Agreement shall be construed to impose an obligation on Aviron to conduct clinical or pre-clinical development for any given Partner Product.



2.4 COORDINATION OF THE DEVELOPMENT PROGRAM, To facilitate and coordinate the relationship of Aviron and Sang-A with regard to the Development Program for each Partner Product, Sang-A and Aviron shall establish a plan covering the mechanisms for the exchange of technical, business and regulatory information under this Agreement, including the appointment by each party of a "Project Coordinator." [



]









2.5 REGULATORY MATTERS.



2.5.1 COMPLIANCE WITH REGULATIONS. Sang-A shall conduct its efforts hereunder in compliance with all applicable regulatory requirements, including without limitation, any equivalents in South and North Korea to the U.S. FDA Good Clinical Practice, Good Laboratory Practice and Good Manufacturing Practice regulations.



2.5.2 REGULATORY FILINGS. Sang-A shall, at its own expense, prepare, file and shall be the owner and party of record sponsoring all filings with the regulatory authorities with respect to the Partner Products in South and North Korea (the "REGULATORY FILINGS"), and Sang-A shall be responsible for causing such applications to progress through the approval process. Aviron shall have rights of consultation with Sang-A personnel responsible for Regulatory Filings with respect to the preparation and submission of such Regulatory Filings, and Aviron shall cooperate with Sang-A in such manner as Sang-A may reasonably request to assist in obtaining regulatory approval for such Partner Products or Improvements. Sang-A shall promptly deliver to Aviron summaries, in English, of all such Regulatory Filings and correspondence, at Sang-A's expense. Sang-A shall deliver English language translations of all Regulatory Filings and correspondence at Aviron's request.



2.5.3 MAINTENANCE OF RECORDS. Sang-A shall maintain records with respect to activities conducted under the Development Program in sufficient detail and in good scientific manner appropriate for Government Approval purposes in South and North Korea and as will reflect all studies conducted, results achieved and data obtained by Sang-A in the course of the Development Program.



2.5.4 ADVERSE EVENT REPORTING. Each party agrees to report to the other, immediately upon receipt of the information, any serious adverse event which is reported to occur as a result of use of a Partner Product. Such events must be reported in as much detail as possible, whether or not there is proof of a causal connection between the events and use of a Partner Product. A serious adverse event includes any experience relating to a Partner Product which is reasonably regarded to be medically significant. Each party also agrees to provide to the other copies of all reports that are made to governmental health authorities concerning material safety, efficacy or quality matters with respect to any Partner Product.





ARTICLE 3

GRANT OF RIGHTS



3.1 LICENSE. Subject to the terms of this Agreement, Aviron hereby grants to Sang-A, and Sang-A hereby accepts, an exclusive (even as to Aviron) right and license and/or sublicense, as the case may be (i) to practice and use the Aviron Technology in South and North Korea for the purpose of conducting clinical development of, manufacturing and marketing Partner Products for use in the Licensed Field, and (ii) to make, use, sell, offer for sale and distribute such Partner Products in South and North Korea.









CONFIDENTIAL TREATMENT REQUESTED



3.2 SANG-A RIGHT TO SUBLICENSE. Except for the right to manufacture Partner Products, Sang-A shall have the right, in South and North Korea, to sublicense the rights granted pursuant to Section 3.1 (but with no further right to sublicense) to one or more third parties: PROVIDED, HOWEVER, [





]



3.3 LICENSE GRANT LIMITATIONS. Sang-A acknowledges and understands that certain aspects of the Aviron Technology as well as certain of the Clinical Materials related to one or more of the Partner Products are or may be licensed or assigned to Aviron pursuant to agreements with one or more third parties, which such agreements existing as of the Effective Date are set forth on Schedule 2 (the "Prior License Agreements"). Sang-A further acknowledges that its rights granted hereunder are subject to the terms and conditions of such Prior License Agreements including, without limitation, those terms and conditions contained in the Cold Adapted Influenza Agreement as further discussed in Section 3.4 below. Sang-A further understands and agrees that in no event shall the rights contained in this Agreement with respect to the Aviron Technology be construed as conferring upon Sang-A any greater rights than are conferred upon Aviron by such third party licensors under their respective agreements with Aviron. Sang-A further understands and agrees that in no way shall ARCH Development Corporation, as Aviron's licensor, be responsible for Aviron's performance under this Agreement.



3.4 COLD ADAPTED INFLUENZA PRODUCT.



3.4.1 Sang-A understands and acknowledges that, with respect to the Cold Adapted Influenza Product, the license granted under Section 3.1 is a sublicense of rights received by Aviron from the University of Michigan and the National Institutes of Health ("NIH"), and is subject to the terms and conditions of the Cold Adapted Influenza Agreement attached hereto as Exhibit B and the Cooperative Research and Development Agreement referred to in Schedule 2. For convenience only, attached hereto as Exhibit C hereto is a list of the major terms and conditions contained in the Cold Adapted Influenza Agreement that affect Sang-A's rights and obligations hereunder as a sublicensee of Aviron's rights to the Cold Adapted Influenza Product, including in particular, restrictions regarding the handling and use of the Master Seeds. Sang-A explicitly acknowledges and understands that these terms and conditions, as more fully reflected in the Cold Adapted Influenza Agreement itself, are incorporated into this Agreement and have the same force and effect as if such terms were included in the main text of this Agreement.



3.4.2 Any material breach by Sang-A of the applicable terms of the Cold Adapted Influenza Agreement shall be deemed a breach hereunder, and shall subject Sang-A to possible termination of this Agreement with respect to the Cold Adapted Influenza Product.









CONFIDENTIAL TREATMENT REQUESTED



3.4.3 In the event the Cold Adapted Influenza Agreement is terminated for any reason, [



]







ARTICLE 4

TECHNOLOGY ACCESS PAYMENTS; ROYALTIES



4.1 TECHNOLOGY ACCESS PAYMENTS. In consideration for access to the Aviron Technology hereunder, Sang-A agrees that within forty-five (45) days after the occurrence of the following milestone events for each Partner Product, Sang-A shall pay to Aviron the nonrefundable milestone payments listed below in U.S. dollars:



4.1.1 [

]and



4.1.2 [

]



4.2 ROYALTIES.



4.2.1 Except as provided in Section 4.2.2 below Sang-A shall pay to Aviron, on a Product-by-Product basis, a royalty equal to [ ] of Net Sales for each Partner Product sold by Sang-A, its Affiliates or permitted sublicensees.



4.2.2 With respect to the Cold Adapted Influenza Product, Sang-A shall pay to Aviron a royalty equal to [ ] of Net Sales for each such Partner Product sold by Sang-A, its Affiliates or permitted sublicensees.



4.2.3 Sang-A shall pay royalties under Sections 4.2.l and 4.2.2 for each Partner Product for a term of [ ] such Partner Product in South or North Korea.





ARTICLE 5

PAYMENT PROCEDURES; RECORDS; AUDITS



5.1 PAYMENT PERIOD; REPORTS. Sang-A shall pay to Aviron royalties as set forth in Article 4 as follows: (i) within sixty (60) days after the end of each calendar quarter if (a) Aviron has completed an initial public offering under the Securities Act of 1933, (b) Aviron is a reporting company under the Securities and Exchange Act of 1934, or (c) if Aviron has been acquired or merged with a third party; or (ii) within one hundred and twenty (120) days after each calendar year if none of the facts set forth in (a), (b) or (c) of clause (i) apply. Each respective payment period will be referred to in this Agreement as a "PAYMENT PERIOD". Such









CONFIDENTIAL TREATMENT REQUESTED



payment shall be accompanied by a report identifying Net Sales of each Partner Product, and the computation of the royalties payable to Aviron, and any other additional information regarding the marketing and sales of Partner Products as is necessary to allow Aviron to comply with its obligations under the Prior License Agreements.



5.2 CURRENCY. Payments shall be in United States Dollars, remitted to Aviron at its address specified herein. Any conversion from Korean currency shall be made at the exchange rate utilized by the Exchange Bank of Korea prevailing at the close of the last business day of that Payment Period.



5.3 RECORDS. During the term of this Agreement, Sang-A shall keep full and accurate books and records setting forth, for each Partner Product on which royalties are due, gross sales, all deductions allowed in arriving at Net Sales and any other information sufficient in detail to allow the calculation of royalties to be paid by Sang-A. During the term of this Agreement and for a period of three (3) years thereafter, Sang-A shall permit Aviron, at Aviron's expense, by independent certified public accountants employed by Aviron and reasonably acceptable to Sang-A, to examine relevant books and records at any reasonable time, within five (5) years of the payment of such royalties. If it is determined that there was an underpayment of royalties due Aviron of five percent (5%) or more, without prejudice to any other rights Aviron may have, Sang-A shall promptly pay to Aviron the balance of the royalties due. Sang-A shall also reimburse Aviron for the cost of such verification examination. Where required, Sang-A shall also permit Aviron's licensors to examine its books and records, at such licensors' expense, on terms consistent with Aviron's rights to do the same.



5.4 WITHHOLDINGS. Payments to Aviron under Section 4.2 shall be made without deduction other than such amount (if any) as Sang-A is required by law to deduct or withhold in South or North Korea. Sang-A shall obtain a receipt from the relevant taxing authorities for all withholding taxes paid and forward such receipts to Aviron to enable Aviron to claim any and all tax credits for which it may be eligible. Sang-A shall reasonably assist Aviron in claiming exemption from such deductions or withholdings under any double taxation or similar agreement or treaty from time to time in force. All payments made to Aviron under Section 4.1 shall be made [

]





ARTICLE 6

DEVELOPMENT AND MANUFACTURING TECHNICAL ASSISTANCE



Aviron agrees to provide Sang-A with technical assistance in the establishment of Sang-A's vaccine clinical development and manufacturing capabilities in South and North Korea so as to enable it to perform its obligations under this Agreement. Upon the reasonable request of Sang-A, Aviron will do one or more of the following, as it deems appropriate under the circumstances:









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(a) Hire outside consultants, such as GMP consultants, contract research organizations or clinical trial consultants, to work on Sang-A's behalf in South and North Korea and/or in the U.S., all at Sang-A's expense;



(b) [













]



(c) [













]





ARTICLE 7

PROMOTION AND MARKETING OBLIGATIONS



7.1 MARKETING EFFORTS. Sang-A agrees to use [ ] to promote the sale, marketing and distribution of the Partner Products in South and North Korea [

]



7.2 COMMERCIAL MANUFACTURING. Sang-A agrees that, at a minimum, it will manufacture sufficient amounts of each Partner Product to satisfy demand for such Partner Product in South and North Korea. Sang-A shall manufacture all such Product in accordance with all applicable laws in South and North Korea.



7.3 SALES AND ADVERTISING ACTIVITIES. Sang-A will be responsible for packaging the Partner Products for sale under this Agreement, including, without limitation, designing and producing all packaging materials and product inserts, all in forms to be approved in writing by Aviron prior to first use by Sang-A, such approval not to be unreasonably withheld and to be provided within [

] after submission of materials to Aviron.



7.4 MARKETING PLANS. Sang-A will provide Aviron with English summaries of any marketing and/or strategic plans it develops for its internal use with respect to any Partner Product.









CONFIDENTIAL TREATMENT REQUESTED



7.5 SALES REPORTS. Throughout the Royalty Term and the Aviron Licensor Payment Term for each Partner Product, Sang-A shall submit to Aviron quarterly sales reports detailing Sang-A's sales of the Partner Product in the preceding quarter, which reports shall be submitted to Aviron within sixty (60) days after the end of each quarter. In addition, during the Royalty Term, Sang-A shall furnish Aviron with copies of any market research reports relating to Partner Product sales and Partner Product competition which Sang-A commissions or otherwise obtains, which reports shall be submitted to Aviron promptly after receipt thereof by Sang-A.



7.6 EXPENSES. All expenses incurred by Sang-A in connection with its obligations hereunder will be borne solely by Sang-A. Sang-A will be responsible for appointing its own employees, agents and representatives, who will be compensated by Sang-A.



7.7 TRADEMARKS. Sang-A agrees to consult with Aviron on the use of trademarks for Partner Products and, where possible, to use trademarks now owned by Aviron or acquired by Aviron during the term of this Agreement. Sang-A may propose an alternate trademark for use in South and North Korea, which, if approved by Aviron, shall be jointly owned by the parties.





ARTICLE 8



[ ]



During the term of this Agreement and upon Sang-A's written request, Aviron will conduct, in collaboration with Sang-A, further research and development with respect to Aviron's [ ] on terms and conditions to be agreed upon by the parties, for Sang-A's use in South and North Korea.





ARTICLE 9

MANUFACTURING AGREEMENTS





9.1 RIGHT OF FIRST REFUSAL. Provided Sang-A satisfies the prerequisites set forth in Section 9.2 below and subject to Sang-A's obligation in Section 9.3 below, Aviron grants a right of first refusal to supply up to [ ] of Aviron's (and its Affiliates' and sublicensees') requirements for each Partner Product, except the Epstein Barr Virus Vaccine, in each of the countries listed in Schedule 3 hereto (the "MANUFACTURING TERRITORY"). Aviron shall promptly notify Sang-A upon the allowance of the first IND for each Partner Product in the Manufacturing Territory. Sang-A shall have until the earlier of (a) [

] or (b) [ ] to deliver written notice to Aviron that it intends to exercise its right of first refusal to commercially manufacture such Product. At that time, Sang-A shall specify which countries of the Manufacturing Territory, and the market percentages of each such country (up to the maximum of [ ] it intends to supply, and at what price. The parties shall then proceed to negotiate, in-good faith, a commercial supply agreement containing the terms upon which such









CONFIDENTIAL TREATMENT REQUESTED



Partner Product will be supplied by Sang-A to Aviron or Aviron's Affiliates or sublicensees; PROVIDED, HOWEVER, that if Sang-A cannot manufacture the product at a price and within a timeline that is competitive with other commercial suppliers, Aviron shall be free to refuse to enter into a supply arrangement with Sang-A. The "competitive" price and timeline referred to in the foregoing sentence shall be determined as follows: [













]



9.2 PREREQUISITES. Aviron may refuse to allow Sang-A to exercise its right of first refusal with respect to the manufacture of any given Partner Product in the event Sang-A cannot prove that it has satisfied, or will satisfy within a timeframe acceptable to Aviron, the following prerequisites:



9.2.1 [

]



9.2.2 [

]



9.2.3 [

] and



9.2.4 [

]



9.3 AVIRON CORPORATE PARTNERS. Sang-A acknowledges and understands that Aviron intends to enter into transactions with one or more corporate partners in which such corporate partners will acquire marketing rights to some or all of the Partner Products in some or all of the countries in the Manufacturing Territory. In the event Sang-A has exercised its right of first refusal pursuant to Section 9.1 above with respect to certain Partner Products in the Manufacturing Territory, and any of Aviron's corporate partners so desires, Sang-A agrees that, upon Aviron's request, [









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ARTICLE 10



10.1 CONFIDENTIALITY. During the term of this Agreement, and for [ ] thereafter, each party hereto will maintain in confidence all Confidential Information disclosed by the other party hereto, including without limitation Confidential Information disclosed to Sang-A pursuant to Sang-A's information rights under Article 15 of this Agreement. Neither party will use, disclose, transfer or grant use of such Confidential Information except as expressly authorized by this Agreement. To the extent that disclosure is authorized by this Agreement, the disclosing party will obtain prior written agreement from its employees, agents, consultants or clinical investigators to whom disclosure is to be made to hold in confidence and not make use of such information for any purpose other than those permitted by this Agreement. Each party will use at least the same standard of care as it uses to protect its own trade secrets, proprietary information or materials to ensure that such employees, agents, consultants and clinical investigators do not disclose or make any unauthorized use of such Confidential Information. Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information.



10.2 EXCEPTIONS. Confidential Information shall not include any information which:



10.2.1 was already known to the receiving party, other than under an obligation of confidentialit ...