Research & Option Agreement W/genentech

EXHIBIT 10.15


CuraGen Corporation has omitted from this Exhibit 10.15 portions of the Agreement for which CuraGen Corporation has requested confidential treatment from the Securities and Exchange commission. The portions of the Agreement for which confidential treatment has been requested are marked with X's in brackets and such confidential portions have been filed separately with the Securities and Exchange Commission.


Execution Copy
RESEARCH AND OPTION AGREEMENT


This Research and Option Agreement ("Agreement") is made effective as of November 20, 1997 ("Effective Date") by and between GENENTECH, INC., a Delaware corporation having its principal business office at 1 DNA Way, South San Francisco, CA 94080 ("GENENTECH"), and CURAGEN CORPORATION, a Delaware corporation with its principal place of business at 555 Long Wharf Drive, 11th Floor, New Haven, Connecticut 06511 ("CURAGEN"). GENENTECH and CURAGEN are each hereafter referred to individually as a "Party" and together as the "Parties".


WHEREAS, GENENTECH desires to have access to CURAGEN's genomics technologies (including GeneScape(R), QEA/GeneCalling, MIM/PathCalling and all additional services provided by CURAGEN) and to have CURAGEN apply such technologies to certain GENENTECH Proprietary Material in order to expedite the discovery of information which may lead to the development of novel pharmaceutical products;


WHEREAS, GENENTECH and CURAGEN have previously collaborated on genomics projects pursuant to the terms of that certain Research Services and Evaluation Agreement dated June 12, 1996 and that certain Research and License Agreement dated December 27, 1996 (together, the "Collaboration Agreements");


WHEREAS, GENENTECH and CURAGEN wish to initiate the performance of certain additional research by GENENTECH and CURAGEN;


WHEREAS, GENENTECH wishes to obtain an option to evaluate and license the inventions obtained or made by GENENTECH and/or CURAGEN in the performance of the previous Collaboration Agreements and the performance of the research pursuant to this Agreement, as well as an option to evaluate and license certain other inventions of CURAGEN;


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WHEREAS, CURAGEN wishes to retain rights to data and inventions made by GENENTECH and CURAGEN hereunder and not licensed by GENENTECH;


WHEREAS, GENENTECH wishes to make an equity investment in CURAGEN Common Stock in the amount of Five Million Dollars ($5,000,000), such investment to be made in a private placement contemporaneously with the initial public offering of CURAGEN's Common Stock;


WHEREAS, GENENTECH will also agree to loan CURAGEN up to Twenty-Six Million Dollars ($26,000,000) on the terms and conditions as set forth herein; and


WHEREAS, GENENTECH and CURAGEN therefore agree to undertake the foregoing, all under the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agrees as follows:


1. DEFINITIONS

Whenever used in the Agreement with an initial capital letter, the terms defined in this Section 1 shall have the meanings specified.


1.1 "AFFILIATE" shall mean any corporation, firm, limited liability company, partnership or other entity which directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. "Control" means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a party controls or has the right to control the Board of Directors or equivalent governing body of a corporation or other entity.


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1.2 "CLONE" shall mean a segment of DNA representing a whole or partial gene whose sequence or utility is determined from the analysis of one or more Data Sets or from the Extended Research during the term of this Agreement.


1.3 "CURAGEN BACKGROUND INVENTIONS" shall mean all patent rights and know-how of CURAGEN, other than those relating primarily to Inventions, which CURAGEN has the right to license and which would be infringed by the activities of GENENTECH permitted by this Agreement or by the development, manufacture, use, sale or importation of a Licensed Product by GENENTECH; provided, however, that CURAGEN Background Inventions shall expressly exclude (i) any patent rights or know-how relating to Clones not licensed by GENENTECH pursuant to an executed License Agreement and (ii) any patent rights or know-how arising from any CURAGEN collaboration with a third party, except to the extent permitted thereby.


1.4 "CURAGEN DATA" shall mean all information obtained by CURAGEN from the processing of specified CURAGEN samples, including QC data, QEA/GeneCalling data, MIM/PathCalling data, sequence data and any other information obtained or generated by CURAGEN in the performance of a discrete CURAGEN Project outside the performance of the Research Program.


1.5 "CURAGEN DATA SET" shall mean all CURAGEN Data resulting from a discrete CURAGEN Project that CURAGEN can make exclusively available to GENENTECH.


1.6 "CURAGEN PROJECT" shall mean a particular project undertaken by CURAGEN on its own outside the Research Program to process and analyze a specified set of samples which do not contain GENENTECH Proprietary Material, and as to which CURAGEN is free to grant rights to GENENTECH hereunder.


1.7 "CURAGEN PROJECT INVENTION" shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN in the performance of a CURAGEN Project that results in CURAGEN Data that becomes part of an Exclusive Data Set, that is based on, incorporates or makes material use of the corresponding CURAGEN Data.


1.8 "CURAGEN PROJECT PATENT RIGHTS" shall mean Patent Rights containing a claim or claims covering CURAGEN Project Inventions. CURAGEN Project Patent Rights shall


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also include Patent Rights containing a claim or claims covering CURAGEN Project Inventions exclusively licensed in by CURAGEN, with the right to sublicense, now or in the future.


1.9 "CURAGEN PROJECT PROPRIETARY MATERIAL" shall mean all substances made by CURAGEN in the performance of CURAGEN Projects, including mRNA pools. CURAGEN Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN in the performance of a CURAGEN Project.


1.10 "CURAGEN ROYALTY PRODUCT" shall have the meaning set forth in Section 7.7.


1.11 "DATA SET," which may be either a Project Data Set or a CURAGEN Data Set, shall mean all Project Data resulting from a discrete Research Project or all CURAGEN Data resulting from a discrete CURAGEN Project, respectively.


1.12 "EXCLUSIVE DATA SET" shall mean any Project Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.4.1 or any CURAGEN Data Set during the corresponding Exclusive Evaluation Period as provided in Section 2.5.2.


1.13 "EXCLUSIVE EVALUATION PERIOD" shall have the meaning set forth in Section 2.4.1 or 2.5.2.


1.14 "EXTENDED RESEARCH" shall mean the research undertaken by CURAGEN pursuant to Sections 2.4.1, 2.5.2 and/or 7.1.3 hereof.


1.15 "EXTENDED RESEARCH DATA" shall mean all information and results obtained by CURAGEN from its performance of Extended Research.


1.16 "EXTENDED RESEARCH INVENTIONS" shall mean any discovery, invention, know-how or trade secret conceived or made by employees of CURAGEN in the performance of Extended Research, other than such discoveries, inventions, know- how or trade secrets that are deemed to be defined as Research Project Inventions pursuant to the terms of this Agreement or an executed License Agreement.


1.17 "EXTENDED RESEARCH PATENT RIGHTS" shall mean all rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent that the claims of such continuations-in-part cover Extended Research Inventions), divisions, and


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renewals thereof, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter, solely or jointly by CURAGEN, and wherein at least one claim of such patent right covers an Extended Research Invention.


1.18 "FTE" shall mean the equivalent of a full year of effort on a full time basis of a researcher possessing skills and experience necessary to carry out applicable tasks under the Research Program.


1.19 "GENENTECH PROPRIETARY MATERIAL" shall mean substances made by GENENTECH or provided by GENENTECH to CURAGEN in the performance of the Research Program, including without limitation (a) tissue samples provided by GENENTECH to CURAGEN and (b) the nucleic acids and other substances actually contained in such tissue samples, and (c) full length genes cloned by GENENTECH.


1.20 "GENESCAPE(R)" shall mean the web-based software and database product for accessing and storing Data Sets generated through the application of CURAGEN's QEA/GeneCalling and MIM/PathCalling technologies.


1.21 "INVENTION" shall mean either a CURAGEN Project Invention or a Research Project Invention.


1.22 "KNOW-HOW INFORMATION" shall have the meaning set forth in Section 2.1.4(c).


1.23 "KNOW-HOW INFORMATION PRODUCT" shall have the meaning set forth in Section 2.1.4(c).


1.24 "LICENSED CLONE" shall mean any Clone licensed by GENENTECH pursuant to an executed License Agreement.


1.25 "LICENSED PRODUCT", as to each Clone, shall mean:


[XXXXX]


[XXXXX]


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[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


1.26 "LICENSE AGREEMENT" shall mean a license agreement in the form of Appendix C attached hereto executed by the Parties upon exercise of any Option - ---------- pursuant to Section 7.


1.27 "MIM/PATHCALLING" shall mean the technology employed by CURAGEN for identifying protein-protein interactions from libraries of cDNAs.


1.28 "NET SALES" shall mean [XXXXX]


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[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


[XXXXX]


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[XXXXX]


1.29 "OPTIONED CLONE" shall have the meaning set forth in Section 7.1.


1.30 "OPTION PERIOD" shall have the meaning set forth in Section 7.3.


1.31 "PATENT COORDINATORS" shall mean a patent attorney or patent agent representing CURAGEN and a patent attorney or patent agent representing GENENTECH, as further described in Section 6.2.


1.32 "PATENT RIGHTS" means the rights and interests in and to issued patents and pending patent applications in any country, including, but not limited to, all provisional applications, substitutions, continuations, continuations-in-part (solely to the extent claims of such continuations-in-part cover Inventions) , divisions, and renewals, all letters patent granted thereon, and all reissues, reexaminations and extensions thereof, whether owned now or hereafter, solely or jointly by a Party, wherein at least one claim of such patent right covers an Invention.


1.33 "PREVIOUSLY COMMITTED CLONE" shall mean any Clone which, at the relevant time under Section 7.1.1, (a) is subject to a license or an option previously granted by CURAGEN to any third party, or (b) a third party collaborator of CURAGEN or subscriber to CURAGEN's GeneCalling or PathCalling database has requested CURAGEN to full-length clone such Clone or has itself commenced full-length cloning of such Clone and notified


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CURAGEN thereof, and provided that such third party still retains evaluation, option or license rights to such Clone pursuant to the terms of a written agreement with CURAGEN.


1.34 "PRIME RATE" shall mean the prime rate of interest as reported by Citibank, N.A. In the event that Citibank, N.A. ceases to report such a rate, the term "Prime Rate" shall mean the generally prevailing base corporate lending rate of Fleet National Bank.


1.35 "PROJECT DATA" shall mean all information obtained by CURAGEN from the processing of GENENTECH Proprietary Material in a particular Research Project, including QC data, QEA/GeneCalling data, MIM/PathCalling data, sequence data and any other information obtained or generated by CURAGEN in the performance of each Research Project in the Research Program.


1.36 "PROJECT DATA SET" shall mean all Project Data resulting from a discrete Research Project.


1.37 "QEA/GENECALLING" shall mean the software, database and other technologies employed by CURAGEN for tagging and identifying the expression level of specific gene fragments within a cDNA pool.


1.38 "RESEARCH COMMITTEE" or "RC" shall have the meaning set forth in Section 2.2.1.


1.39 "RESEARCH PLAN" shall mean the written description of the Research Program to be performed by CURAGEN and GENENTECH under this Agreement, as further described in Section 2.1.3. The Research Plan may specify one or more independent Research Projects.


1.40 "RESEARCH PROJECT" shall mean a particular project to process and analyze a specified set of samples approved pursuant to Section 2.1.3. Each individual Research Project shall involve the analysis of [XXXXX] samples, unless otherwise agreed by the Parties.


1.41 "RESEARCH PROJECT INVENTION" shall mean any discovery, invention, know-how or trade secret conceived or made (a) by employees of CURAGEN or GENENTECH or jointly by employees of both in the performance of the Research Program, (b) by GENENTECH employees in performing the specific following activities utilizing any Data Set: (i) QEA and MIM data analysis, confirmation of QEA or MIM data, fragment cloning and sequencing of a Clone, and (ii) full- length cloning of a Clone, or (c) any discovery, invention, know-how or trade secret deemed to be a Research Project Invention pursuant to the terms of this Agreement or an


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executed License Agreement. Research Project Inventions shall not include inventions conceived or made solely by GENENTECH outside of the Research Program except as specifically set forth in (b) above.


1.42 "RESEARCH PROJECT PATENT RIGHTS" shall mean Patent Rights containing a claim or claims covering Research Project Inventions.


1.43 "RESEARCH PROJECT PROPRIETARY MATERIAL" shall mean all substances made by CURAGEN in the performance of the Research Program other than mRNA pools extracted from GENENTECH Proprietary Material. Research Project Proprietary Material shall include, without limitation, QEA fragments, MIM constructs and materials derived or constructed from QEA fragments and MIM constructs, including, without limitation, fragment and full length cDNA clones made by CURAGEN in the performance of a Research Project.


1.44 "RESEARCH PROGRAM" shall mean the Research Projects to be performed by CURAGEN and GENENTECH under this Agreement as described in the Research Plan and amendments thereto.


1.45 "RESEARCH TERM" shall have the meaning set forth in Section 2.3.1.


1.46 "RETAINED GENE" shall have the meaning set forth in Section 7.7.


1.47 "TERM" shall have the meaning set forth in Section 8.1.


1.48 "TERRITORY" shall mean the world.


1.49 "VALID CLAIM(S)" shall mean an unexpired claim of any issued patent within Patent Rights which has not been finally declared invalid or unenforceable by a patent office or by a court or other body of competent jurisdiction in any unappealed or unappealable decision and which has not been lost through an interference or opposition proceeding.


2. RESEARCH PROGRAM


2.1 IMPLEMENTATION OF RESEARCH PROGRAM.
----------------------------------


2.1.1 Basic Provisions of Program.
---------------------------


(a) The objective of the Research Program will be to generate Project
Data Sets by performing Research Projects utilizing GENENTECH
Proprietary Material. CURAGEN and GENENTECH shall each use
commercially reasonable efforts to


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perform such tasks as are set forth in the Research Plan, including
the provision of such facilities, samples and materials (including
GENENTECH Proprietary Material), equipment and consultants as each
deems necessary to the achievement of such Research Plan. In carrying
out the Research Program, CURAGEN shall devote an average of at least
[XXXXX] FTEs per year to the Research Program over its five year
duration (the "Staffing Level") unless GENENTECH and CURAGEN have
agreed on an increase in the Staffing Level as provided in (b) below.


(b) GENENTECH may request an increase in the Staffing Level of up to
[XXXXX] additional FTEs per year to be devoted to the Research
Program, subject to the agreement of CURAGEN. CURAGEN will use
commercially reasonable efforts to increase the staffing level if
mutually agreed as promptly as practical. Once the Staffing Level is
increased, it may not be decreased [XXXXX] without the consent of
CURAGEN, which consent may be withheld at CURAGEN's sole discretion.


2.1.2 Collaborative Efforts and Reports.
---------------------------------


(a) The Parties agree that the successful execution of the Research
Program will require the collaborative use of both Parties' areas of
expertise. Each Party shall keep the RC fully informed about the
status of the portions of the Research Program they respectively
perform including, without limitation, summaries of their direct uses
of the Project Data itself for so long as GENENTECH shall have an
option to license such Project Data hereunder. CURAGEN shall promptly
provide GENENTECH with a description of Project Data Sets from
completed Research Projects. All information provided hereunder will
be treated as Confidential Information of the disclosing Party
pursuant to the provisions of Article 4.


(b) Scientists at CURAGEN and GENENTECH shall cooperate in the performance
of the Research Program and, subject to any confidentiality
obligations to third parties, shall exchange information and materials
as necessary to carry out the Research Program, subject to the
provisions of Section 4. Each Party will attempt


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to accommodate any reasonable request of the other Party to send or
receive personnel for purposes of collaborating or exchanging
information under the Research Program. Such visits and/or access will
have defined purposes and be scheduled in advance.


(c) CURAGEN will give written notice to GENENTECH and the RC promptly upon
completion of the Project Data Set from each Research Project.
"Completion" of a Project Data Set shall occur upon generation of all
completed QEA/GeneCalling data or MIM/PathCalling data from a Research
Project as contemplated by the Research Plan. Provision of access to
such data shall be promptly provided to GENENTECH through the
GeneScape(R) database.


(d) CURAGEN shall set up and maintain, throughout the Research Term, a
secure partition of its GeneScape(R) database and software for the
exclusive use of GENENTECH and CURAGEN solely for the purpose of
identifying genes from Exclusive Data Sets, and shall provide online
E-mail and telephone help during normal business hours in the use
thereof to GENENTECH. CURAGEN and GENENTECH shall jointly set up and
maintain a secure connection to said partition of the GeneScape(R)
database and software in order to give GENENTECH on-line access
thereto.


(e) GENENTECH will also receive, at its request, access to CURAGEN's
QEA/GeneCalling and MIM/PathCalling subscription databases and to
GeneTools pursuant to one or more subscription agreements to be
executed by the Parties with terms substantially as described in
Appendix E hereto. [XXXXX] Such subscription
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agreements may be terminated by GENENTECH at any time, without
affecting the Research Program, either in their entirety or with
respect to any database at GENENTECH's sole discretion upon three (3)
months prior written notice. GENENTECH shall have no rights to use the
GeneScape(R) database and software except as expressly set forth
herein or in an executed database subscription agreement.


(f) If, after receiving access to any Data Set under the terms of this
Agreement, GENENTECH becomes aware that analysis of such Data Set has
led GENENTECH to file a patent application on, or to full-length
sequence, any Clone whose sequence or utility was identified from such
Data Set, GENENTECH shall promptly notify the RC of such patent filing
or sequencing. Any full-length Clone sequenced by GENENTECH after the
identification of such Clone from a Data Set shall be a Research
Project Invention, unless at the time of such sequencing, such full-
length sequence: (i) is in the public domain, (ii) is in the
possession of GENENTECH (as can be documented by written or computer
records), or (iii) is independently developed by GENENTECH (as can be
documented by written or computer records). If CURAGEN becomes aware
that analysis of a Data Set during GENENTECH's Exclusive Evaluation
Period pertaining to such Data Set has led CURAGEN to file a patent
application on, or to full-length sequence, any Clone whose sequence
or utility was identified from such Data Set, CURAGEN shall promptly
notify the RC of such patent filing or sequencing, and any full-length
Clone sequenced by CURAGEN after the identification of such Clone from
a Data Set shall be deemed a Research Project Invention, unless at the
time of such sequencing, such full-length sequence: (i) is in the
public domain, (ii) is in the possession of CURAGEN (as can be
documented by written or computer records), or (iii) is independently
developed by CURAGEN (as can be documented by written or computer
records).


2.1.3 Research Plans.
--------------


The Research Plan for the first twelve months of the Research Program shall be agreed upon by the Parties within thirty (30) days of the Effective Date and shall include the initial


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Research Projects and plans to implement the installation of access to the GeneScape(R) database and software for GENENTECH. Every six (6) months during the Research Term or at any time on request of either GENENTECH or CURAGEN, the Research Plan shall be updated by CURAGEN and GENENTECH to cover the next twelve months and shall be approved by the RC no later than thirty (30) days before the end of each semi-annual period. The Research Plan shall set forth specific Research Projects for the period covered by the Research Plan. For each Research Project, the Research Plan will be deemed to include the following activities: [XXXXX] GENENTECH shall not perform the activities specified in (i)-(iii) above except as part of the Research Program, or as permitted in Section 2.4.3, in an executed License Agreement, or in a subscription agreement. During any Exclusive Evaluation Period for a Data Set, CURAGEN shall not utilize such Data Set in performing the activities specified in (i)-(iii) except as part of the Research Program. The RC will consider adjustments in the Research Plan at any time upon the request of GENENTECH or CURAGEN. Notwithstanding the foregoing, no project shall become a Research Project without the express consent of both GENENTECH and CURAGEN; provided, however, that CURAGEN shall consent to any reasonable proposed Research Project which is not substantially similar to a project that is ongoing, planned internally solely by CURAGEN, the subject of active negotiation with a third party or subject to a prior commitment to a third party, all the above as evidenced by written or computer records, and which would not violate a prior restriction under an agreement with a third party. During the Research Term, once a Research Project becomes part of the Research Plan, such Research Project will not be discontinued (unless such discontinuation is approved by the RC) regardless of any other negotiations or commitments with third parties.


2.1.4 Exclusivity.
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(a) CURAGEN agrees that, commencing upon inclusion of a Research Project
in the Research Plan, and continuing through the duration of any
subsequent Exclusive Evaluation Period, CURAGEN shall not undertake to
perform a substantially similar research project with any third party.


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(b) CURAGEN agrees that during any Exclusive Evaluation Period, CURAGEN
will not grant access to any Exclusive Data Set to any other party and
that during any Option Period, CURAGEN shall not grant to any third
party rights to any Optioned Clone or to any Licensed Product ...