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Collaboration Agreement

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Sectors: Biotechnology / Pharmaceuticals
Governing Law: Massachusetts, View Massachusetts State Laws
Effective Date: October 01, 1996
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DIACRIN, INC., HAS REQUESTED THAT THE MARKED PORTIONS OF THIS DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.


EXHIBIT 10.18


COLLABORATION AGREEMENT


among


DIACRIN, INC.,


GENZYME CORPORATION


and


DIACRIN/GENZYME LLC


dated as of October 1, 1996 2
TABLE OF CONTENTS


ARTICLE 1. DEFINITIONS .................................................. 1
1.1. "Affiliate" .............................................. 1
1.2. "Biologics Regulatory Scheme" ............................ 2
1.3. "Collaboration Product" .................................. 2
1.4. "Commercialization Costs" ................................ 2
1.5. "Commercialization Plan" ................................. 2
1.6. "Dedicated Facility" ..................................... 3
1.7. "Dedicated Facility Costs" ............................... 3
1.8. "Development Costs" ...................................... 3
1.9. "Development Plan" ....................................... 4
1.10. "Development Program" .................................... 4
1.11. "Diacrin Patent Rights" .................................. 4
1.12. "Diacrin Technology" ..................................... 4
1.13. "Effective Date" ......................................... 4
1.14. "Field" .................................................. 4
1.15. "FDA" .................................................... 5
1.16. "Fully Absorbed Cost of Goods" ........................... 5
1.17. "Genzyme Patent Rights" .................................. 5
1.18. "Genzyme Technology" ..................................... 5
1.19. "Manufacturing Know-how" ................................. 5
1.20. "Net Pretax Profit" ...................................... 6
1.21. "Net Sales" .............................................. 6
1.22. "Patent Rights" .......................................... 7
1.23. "Program" ................................................ 7
1.24. "Program Costs" .......................................... 7
1.25. "Program Management Team" ................................ 7
1.26. "Regulatory Approvals" ................................... 7
1.27. "Specifications" ......................................... 7
1.28. "Steering Committee" ..................................... 7
1.29. "Technology" ............................................. 7
1.30. "Third Party" ............................................ 7


ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION ..................... 8
2.1. General .................................................. 8
2.2. Exclusive Relationship ................................... 8


ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS ............................ 8
3.1. Licenses of Rights by Diacrin and Genzyme to Diacrin/
Genzyme LLC .............................................. 8
3.2. Sublicenses of Rights from Diacrin/Genzyme
LLC to Diacrin and Genzyme ............................... 9


(i) 3
3.3. Rights of Diacrin/Genzyme LLC to Technology or
Patent Rights Developed Outside the Program .............. 9
3.4. Reservation of Rights .................................... 9
3.5. Assignment of Orphan Drug Designation. ................... 10


ARTICLE 4. CAPITAL CONTRIBUTIONS; FINANCIAL ARRANGEMENTS ............... 11
4.1. Program Funding Commitments .............................. 11
4.1.1. Genzyme's Program Funding Commitment ............. 11
4.1.2. Diacrin's Program Funding Commitment ............. 11
4.1.3. Program Funding Capital Contributions. ........... 11
4.2. Genzyme's Stand-by Line of Credit ........................ 12
4.3. Distribution of Net Pretax Profits ....................... 13
4.4. Audit .................................................... 14


ARTICLE 5. THE DEVELOPMENT PROGRAM ...................................... 14
5.1 Conduct of the Development Program ....................... 14
5.1.1. General .......................................... 14
5.1.2. Development Plan ................................. 15
5.1.3. Initial and Updated Development Plan ............. 15
5.1.4. Execution and Performance ........................ 16
5.1.5. Attendance at Regulatory Meetings ................ 16
5.2. Development Information .................................. 16
5.2.1. Reports and Information Exchange ................. 16
5.2.2. Adverse Reaction Reporting ....................... 17
5.2.3. Clinical and Regulatory Audits ................... 17
5.3. Regulatory Approval Filings .............................. 17
5.4. Facilities Visits ........................................ 18


ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES ................. 18
6.1. Sales and Marketing Services ............................. 18
6.1.1. General .......................................... 18
6.1.2. Initial and Updated Commercialization Plans ...... 19
6.1.3. Execution and Performance ........................ 19
6.2. General and Administrative Services ...................... 20


ARTICLE 7. MANUFACTURE AND SUPPLY ....................................... 20
7.1. Process Development; Manufacturing Approvals ............. 20
7.2. Manufacture and Supply of Collaboration Products for
Clinical Trials .......................................... 20
7.3. Manufacture and Supply of Collaboration Products for
Commercial Sale .......................................... 21
7.3.1. General .......................................... 21
7.3.2. Manufacturing Capacity Requirements .............. 21
7.3.3. Forecasts ........................................ 21


(ii) 4
7.4. Certificates of Analysis ............................... 21
7.5. Certificates of Manufacturing Compliance ............... 21
7.6. Access to Facilities ................................... 22


ARTICLE 8. MANAGEMENT ................................................. 22
8.1. Program Management Team ................................ 22
8.1.1. General ........................................ 22
8.1.2. Development Program Functions .................. 23
8.1.3. Commercialization Functions .................... 23
8.1.4. Minutes ........................................ 23
8.2. Steering Committee ..................................... 23
8.2.1. General ........................................ 23
8.2.2. Functions ...................................... 24
8.2.3. Minutes ........................................ 24
8.3. General Disagreements .................................. 24


ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS ............................... 25
9.1. Ownership .............................................. 25
9.1.1. Ownership of Discoveries and Improvements ...... 25
9.1.2. Ownership of Trademarks ........................ 25
9.1.3. Cooperation of Employees ....................... 25
9.2. Filing, Prosecution and Maintenance of Patent Rights ... 26
9.2.1. Filing, Prosecution and Maintenance ............ 26
9.2.2. Patent Filing Costs ............................ 26
9.3. Cooperation ............................................ 26
9.4. Notification of Patent Term Restoration ................ 27
9.5. No Other Technology Rights ............................. 27
9.6. Enforcement of Patent Rights; Defense of
Infringement Actions ................................... 27
9.6.1. First Right to Respond ......................... 27
9.6.2. Sharing of Litigation and Settlement Expenses .. 28
9.6.3. Second Right to Respond ........................ 28


ARTICLE 10. CONFIDENTIALITY ........................................... 28
10.1. Nondisclosure Obligations .............................. 28
10.2. Terms of this Agreement ................................ 29
10.3. Publications. .......................................... 29


ARTICLE 11. REPRESENTATIONS AND WARRANTIES ............................ 30
11.1. Authorization .......................................... 30
11.2. Intellectual Property Rights ........................... 30
11.3. Warranties ............................................. 30
11.3.1. Genzyme Warranties ............................. 31
11.3.2. Diacrin Warranties ............................. 31
11.4. Disclaimer of Representations and Warranties ........... 31


(iii) 5
11.5. Limitation of Liability ................................ 31


ARTICLE 12. INDEMNITY ................................................. 31
12.1. Diacrin/Genzyme LLC Indemnity Obligations .............. 31
12.2. Insurance .............................................. 32


ARTICLE 13. TERM AND TERMINATION ...................................... 32
13.1. Term ................................................... 32
13.2. Termination. ........................................... 32
13.2.1. For Breach ..................................... 32
13.2.2. For Convenience ................................ 32
13.3. Effect of Termination by Diacrin. ...................... 32
13.3.1. For Breach ..................................... 32
13.3.2. For Convenience ................................ 33
13.4. Effect of Termination by Genzyme. ...................... 34
13.4.1. For Breach ..................................... 34
13.4.2. For Convenience ................................ 35
13.5. Survival of Rights and Duties. ......................... 35


ARTICLE 14. MISCELLANEOUS ............................................. 36
14.1. Cooperation ............................................ 36
14.2. Exchange Controls ...................................... 36
14.3. Withholding Taxes ...................................... 36
14.4. Interest on Late Payments .............................. 36
14.5. Force Majeure .......................................... 37
14.6. Assignment ............................................. 37
14.7. Severability ........................................... 37
14.8. Notices ................................................ 37
14.9. Applicable Law ......................................... 39
14.10. Arbitration ............................................ 39
14.10.1. General ....................................... 39
14.10.2. Procedure ..................................... 39
14.11. Entire Agreement ....................................... 40
14.12. Headings ............................................... 40
14.13. Independent Contractors ................................ 40
14.14. Agreement Not to Solicit Employees ..................... 41
14.15. Waiver ................................................. 41
14.16. Counterparts ........................................... 41


(iv) 6
COLLABORATION AGREEMENT


THIS COLLABORATION AGREEMENT dated as of October 1, 1996 (the "Agreement") is made among Diacrin, Inc., a Delaware corporation having its principal place of business at Charlestown Navy Yard, Building 96, 13th Street, Charlestown, Massachusetts 02129 ("Diacrin"), Genzyme Corporation, a Massachusetts corporation having its principal place of business at One Kendall Square, Cambridge, Massachusetts 02139 ("Genzyme") and Diacrin/Genzyme LLC, a Massachusetts limited liability company having its principal place of business at One Kendall Square, Cambridge, Massachusetts 02139 ("Diacrin/Genzyme LLC"). Diacrin, Genzyme and Diacrin/Genzyme LLC are sometimes referred to herein individually as a "Party" and collectively as the "Parties."


R E C I T A L S


A. Diacrin is currently developing populations of transplantable porcine fetal cells for the treatment of Parkinson's Disease and Huntington's Disease and technology for the immunomodulation of major histocompatibility complex class I antigens on cell populations prior to transplantation to prevent immune system rejection of transplanted cells.


B. Genzyme has expertise in the areas of development and marketing of bio-pharmaceutical products.


C. Diacrin/Genzyme LLC has been organized by Diacrin and Genzyme as a joint venture to develop and commercialize the Collaboration Products (as herein defined) throughout the world.


NOW THEREFORE, in consideration of the premises and of the covenants herein contained, the Parties mutually agree as follows:


ARTICLE 1. DEFINITIONS


For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below. Certain other capitalized terms are defined elsewhere in this Agreement.


1.1. "Affiliate" shall mean any corporation or other entity which controls, is controlled by, or is under common control with a Party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly


-1- 7 or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other entity. For purposes of this Agreement, HealthCare Investment Corporation ("HealthCare") and its Affiliates shall not be regarded as Affiliates of Diacrin for so long as HealthCare and its Affiliates own or directly or indirectly control less than fifty percent (50%) of the voting stock of Diacrin.


1.2. "Biologics Regulatory Scheme" shall mean the United States Public Health Service Act and the regulations, interpretations and guidelines promulgated thereunder by the FDA or the regulatory scheme applicable to the Collaboration Products in any country other than the United States, as such statutes, regulations, interpretations and guidelines or regulatory schemes may be amended from time to time.


1.3. "Collaboration Product" shall mean any product or process developed for use in the Field by a Party to this Agreement utilizing, based upon or arising out of the Diacrin Patent Rights, the Genzyme Patent Rights, the Diacrin Technology, the Genzyme Technology or the Manufacturing Know-How owned or controlled by any Party, including NeuroCell(TM)-PD, NeuroCell(TM)-HD and any and all improvements, combination products, delivery systems and dosage forms related thereto.


1.4. "Commercialization Costs" with respect to a Collaboration Product shall mean the direct variable costs and direct fixed costs incurred by Diacrin/Genzyme LLC with respect to work performed by the Parties and their Affiliates and subcontractors in connection with the conduct of the Commercialization Plan for such Collaboration Product, including without limitation sales and marketing costs related to performing market research, advertising, producing promotional literature, sponsoring seminars and symposia, originating sales and providing reimbursement and other patient support services. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of the Commercialization Plan, as well as royalties payable to Third Parties, including royalties payable to Massachusetts General Hospital. Direct fixed costs shall be deemed to be the cost of facilities, utilities, insurance, equipment depreciation and other fixed costs directly related to the conduct of the Commercialization Plan, allocated based upon the proportion of such costs directly attributable to support of the Commercialization Plan or by such other method of cost allocation as may be approved by the Steering Committee. All cost determinations made hereunder shall be made in accordance with United States generally accepted accounting principles, consistently applied.


1.5. "Commercialization Plan" shall mean the comprehensive plan for the commercialization of a Collaboration Product, as more specifically described in Section 6.1.1. of this Agreement.


-2- 8
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.


1.6. "Dedicated Facility" shall mean the facilities to be used to manufacture Collaboration Products for commercial sale.


1.7. "Dedicated Facility Costs" shall mean the direct variable costs and direct fixed costs incurred by Diacrin/Genzyme LLC with respect to (i) the design, construction, validation and operation of the Dedicated Facility, including without limitation (a) costs for preparing, submitting, reviewing or developing data or information for the purpose of submission of applications to obtain Regulatory Approval for the Dedicated Facility and (b) the scale up of the manufacturing process for Collaboration Products to be manufactured in the Dedicated Facility, and (ii) the manufacture of Collaboration Products in the Dedicated Facility. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the design, construction, validation and operation of the Dedicated Facility and in the manufacture of Collaboration Products in the Dedicated Facility. Direct fixed costs shall be deemed to be the cost of facilities, utilities, insurance, equipment depreciation and other fixed costs related to the operation of the Dedicated Facility and the manufacture of Collaboration Products in the Dedicated Facility. If the Dedicated Facility is used to manufacture Collaboration Products and products for other programs of either Diacrin or Genzyme, direct fixed costs shall be allocated in proportion to the use of the Dedicated Facility for the manufacture of Collaboration Products and products for such other programs. Dedicated Facility Costs shall exclude all costs otherwise reimbursed pursuant to this Agreement. Except as otherwise provided in this Agreement, all cost determinations made hereunder shall be made in accordance with United States generally accepted accounting principles, consistently applied.


1.8. "Development Costs" with respect to a Collaboration Product shall mean the direct variable costs and direct fixed costs incurred by Diacrin/Genzyme LLC with respect to work performed by the Parties and their Affiliates and subcontractors in connection with the conduct of the Development Plan for such Collaboration Product, including without limitation (a) direct, out-of-pocket external costs, including clinical grants, clinical laboratory fees, positive controls and the cost of studies conducted and services provided by contract research organizations and individuals, consultants, toxicology contractors, and manufacturers necessary or useful for the purpose of obtaining Regulatory Approvals for such Collaboration Product, (b) amounts paid to Diacrin and Genzyme by Diacrin/Genzyme LLC in respect of research and development and pre-commercialization sales and marketing efforts as set forth in the Development Plan for such Collaboration Product, including the efforts of Diacrin and Genzyme to develop a process for the manufacture of such Collaboration Product and Diacrin's **************************** for batches of such


-3- 9 Collaboration Product manufactured and supplied by Diacrin for use in clinical trials, (c) costs related to data management, statistical designs and studies, document preparation and other expenses associated with the clinical testing program, and (d) costs for preparing, submitting, reviewing or developing data or information for the purpose of submission of applications to obtain Regulatory Approvals for such Collaboration Product. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of the Development Program. Direct fixed costs shall be deemed to be the cost of facilities, utilities, insurance, equipment depreciation and other fixed costs directly related to the conduct of the Development Program, allocated based upon the proportion of such costs directly attributable to support of the Development Program or by such other method of cost allocation as may be approved by the Steering Committee. All cost determinations made hereunder shall be made in accordance with United States generally accepted accounting principles, consistently applied.


1.9. "Development Plan" shall mean the comprehensive plan and budget for the development of a Collaboration Product under the Development Program, as more specifically described in Section 5.1.2. of this Agreement.


1.10. "Development Program" shall mean the preclinical and clinical development of Collaboration Products, including the preparation and filing of all applications for Regulatory Approvals for each Collaboration Product.


1.11. "Diacrin Patent Rights" shall mean all present and, to the extent such Patent Rights claim Inventions or Joint Inventions (as such terms are defined in Section 9.1.1.) that are discovered, made or conceived during and in connection with the Program, future Patent Rights owned or controlled by, or licensed (with the right to sublicense) to, Diacrin, to the extent that such Patent Rights cover a compound, composition, biological or other material, product-by-process, method, apparatus, manufacturing or other process, or immunomodulation technology relating to or useful in the Field.


1.12. "Diacrin Technology" shall mean all present and, to the extent such Technology is discovered, made or conceived during and in connection with the Program, future Technology owned or controlled by, or licensed (with the right to sublicense) to, Diacrin relating to or useful in the Field.


1.13. "Effective Date" shall mean the date appearing on the cover page of this Agreement.


1.14. "Field" shall mean the treatment of Parkinson's Disease or Huntington's Disease in humans using porcine fetal cells.


-4- 10
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.


1.15. "FDA" shall mean the United States Food and Drug Administration, any successor agency, or the regulatory authority of any country other than the United States with responsibilities comparable to those of the United States Food and Drug Administration.


1.16. "Fully Absorbed Cost of Goods" with respect to a Collaboration Product shall mean the direct variable costs and direct fixed costs associated with the manufacture of batches of such Collaboration Product. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the manufacture of batches of such Collaboration Product. Direct fixed costs shall be deemed to be the cost of facilities, utilities, insurance, equipment depreciation and other fixed costs directly related to the manufacture of batches of such Collaboration Product. Direct fixed costs shall be allocated to such Collaboration Product based upon the proportion of such costs directly attributable to support of the manufacturing process for such Collaboration Product. If a facility is used to manufacture Collaboration Products and products for other programs of either Diacrin or Genzyme, direct fixed costs shall be allocated in proportion to the use of such facility for the manufacture of Collaboration Products and products for such other programs. Fully Absorbed Cost of Goods shall exclude all costs otherwise reimbursed pursuant to this Agreement. Except as otherwise provided in this Agreement, all cost determinations made hereunder shall be made in accordance with United States generally accepted accounting principles, consistently applied.


1.17. "Genzyme Patent Rights" shall mean Patent Rights claiming Inventions or Joint Inventions discovered, made or conceived during and in connection with the Program that are owned or controlled by, or licensed (with the right to sublicense) to, Genzyme, to the extent that such Patent Rights cover a compound, composition, biological or other material, product-by-process, method, apparatus, manufacturing or other process, relating to or useful in the Field.


1.18. "Genzyme Technology" shall mean Technology discovered, made or conceived during and in connection with the Program, that is owned or controlled by, or licensed (with the right to sublicense) to, Genzyme relating to or useful in the Field.


1.19. "Manufacturing Know-how" shall mean all information, techniques, inventions, discoveries, improvements, practices, methods, knowledge, skill, experience, and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon, relating to or necessary or useful for the production, packaging, storage and transportation of Collaboration


-5-


11 Products, including without limitation specifications, acceptance criteria, manufacturing batch records, standard operating procedures, engineering plans, installation, operation and process qualification protocols for equipment, validation records, master files submitted to the FDA, process validation reports, environmental monitoring processes, test data including pharmacological, toxicological and clinical test data, cost data and employee training materials.


1.20. "Net Pretax Profit" of Diacrin/Genzyme LLC for any period shall be equal to (a) the sum during such period of (i) Net Sales of all Collaboration Products, (ii) all revenues received by Diacrin/Genzyme LLC from Third Parties as consideration for sublicensing the manufacture, use, distribution or sale of Collaboration Products and (iii) all other revenues of Diacrin/Genzyme LLC from any source other than the sale of Diacrin Property (as defined in
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