definiens: means the reasonable Out - of - Pocket Costs and internal costs incurred by a Party ( or for its account by an Affiliate ora Third Party ) on and after the exercise by [COMPANY] of the applicable Co - Development Option that are generally consistent with the respective activitiesallocated to such Party in the Co - Development Plan and/or Co - Development Marketing and Sales Plan and, in any case, are specifically attributable to theDevelopment of a Co - Developed Product in the Co - Development Territory . For purposes of this definition ( a ) Out - of - Pocket Costs relate to the costsattributable to specific external Development activities, and/or Commercialization related to pre - commercial marketing activities, applicable to a Co - Developed Product, including, without limitation ( i ) all filing fees required for, and other costs associated with, any Regulatory Filings and Drug ApprovalApplications and ( ii ) all Third Party Required Payments ; ( b ) internal costs means all direct labor costs to the extent attributable to the Development of a Co - Developed Product in accordance with the Co - Development Plan and/or Co - Development Marketing and Sales Plan, including, without limitation, anyemployees of a Party that perform project management and other activities attributable to such Development, all as calculated on the basis of an annual rateequal to the Party ’s specific FTE Rate ; and ( c ) the reasonable Out - of - Pocket Costs and internal costs of manufacturing or obtaining Co - Developed Productsin final dosage form for use in the activities in clause ( a ) shall be included in the definition of Co - Development Costs . For the avoidance of doubt, Co - Development Costs ( a ) shall include the costs incurred by either Party in conducting clinical trials with respect to a Co - Developed Product, other than costsincurred with respect to Shared Clinical Trials as defined in 1.128(b ), which shall be allocated between the Parties in accordance with Section 5.1.4 andPivotal MAY Compound Process Development Costs, which shall be paid by [COMPANY] in accordance with Section 5.1.5 ; and ( b ) shall not include ( i ) milestonepayments made by [COMPANY] to [COMPANY] pursuant to Section 6.3.1, and ( ii ) any Co - Development Option Exercise Fee to be paid by [COMPANY] pursuantto Section 5.1.1