Exhibit 10.1
[****] Certain information in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions.
EXECUTION COPY     
CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
     This Co-Development and Commercialization Agreement (this “Agreement”) is
entered into as of the 18th day of September, 2008 (“Effective Date”) by and
between Astellas Pharma Inc., a Japanese corporation, with its principal place
of business at 3-11, Nihonbashi-Honcho 2-chome, Chuo-ku, Tokyo 103-8411 Japan
(“Astellas”) and Maxygen, Inc., a Delaware corporation with its principal place
of business at 515 Galveston Drive, Redwood City, California, 94063 (“Maxygen”).
Astellas and Maxygen are each referred to herein by name or, individually, as a
“Party” or, collectively, as the “Parties.”
BACKGROUND
     A. Maxygen owns or possesses certain Patents (as defined below) and
Know-How (as defined below) with respect to certain CTLA-4 proteins with
potential applications in autoimmune and inflammatory disease or as an
immunosuppressant;
     B. Maxygen desires to collaborate with a pharmaceutical company with
development, manufacturing and commercialization expertise with regard to
pharmaceutical products, so as to pursue the therapeutic and commercial
potential of such CTLA-4 proteins, and Astellas desires to collaborate with
Maxygen in the development, manufacturing and commercialization of such CTLA-4
proteins for one or more indications in accordance with the terms and conditions
of this Agreement;
     C. Astellas possesses pharmaceutical development, manufacturing and
commercialization capabilities; and
     D. Maxygen and Astellas desire to collaborate in the further discovery,
research, development, manufacture and commercialization of pharmaceutical
products incorporating CTLA-4 proteins, all on the terms and conditions set
forth herein below.
     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

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ARTICLE 1
DEFINITIONS
     The following capitalized terms shall have the corresponding meanings as
used in this Agreement:
     1.1 “Accounting Standards” means generally accepted accounting principles
applicable internationally or in a particular country (e.g., International
Accounting Standards, Japanese Accounting Standards, U.S. Accounting Standards),
as consistently applied by or on behalf of the relevant Party.
     1.2 “Affiliate” means any corporation or other business entity that
controls, is controlled by, or is under common control with a Party, for so long
as such control exists. A corporation or other entity shall be regarded as in
control of another corporation or entity if it owns or directly or indirectly
controls at least fifty percent (50%) of the outstanding shares or other voting
rights of the other corporation or entity having the right to elect directors or
such lesser percentage that is the maximum permitted to be owned by a foreign
entity in those jurisdictions where majority ownership by foreign entities is
prohibited, or (i) in the absence of the ownership of at least fifty percent
(50%) of the outstanding shares or other voting rights of a corporation, or
(ii) in the case of a non-corporate business entity, if it possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of the corporation or non-corporate business entity, as applicable,
whether through the ownership or control of voting securities, by contract or
otherwise.
     1.3 “Alliance” means, individually and collectively, any and all of the
activities performed by or on behalf of either Party (i) pursuant to the Plans
or (ii) otherwise directed to any CTLA-4 Variant (including Preclinical
Development, Development, and Commercialization of Compounds and Products)
during the Term, but excluding those activities performed by or on behalf of a
Party in the course of performance of a Separate Program as described in
Section 7.2. For the avoidance of doubt, activities related to belatacept as
permitted under Section 7.1.3 are not within the scope of the Alliance.
     1.4 “Alliance Technology” means all Know-How and other subject matter
conceived, generated or reduced to practice solely or jointly by or on behalf of
the Parties in the course of conducting the Alliance together with any and all
intellectual property rights (including Patents) therein; provided, however,
Alliance Technology excludes Shuffling Technology.
     1.5 “Asia” means the countries listed on Exhibit 1.5.
     1.6 “Astellas Technology” means (i) Astellas Know-How, (ii) Astellas
Patents, and (iii) Astellas’ rights and interest in all other Alliance
Technology.
          1.6.1 “Astellas Know-How” means any and all Know-How, and any and all
non-Patent intellectual property rights therein, Controlled by Astellas or its
Affiliates during the Term that is reasonably necessary or useful for the
Preclinical Development, Development, Manufacture or Commercialization of a
Compound or Product within the Field in the Territory in accordance with this
Agreement.

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          1.6.2 “Astellas Patents” means any and all Patents Controlled by
Astellas or its Affiliates during the Term claiming or covering (specifically or
generically) (i) compositions of matter of any Compound or Product (or any
formulation of either), (ii) methods or processes for the manufacture or
synthesis of any Compound or Product (or any formulation of either) or
(iii) methods of use, administration or formulation of any Compound or Product
(or any formulation of either), including Patents that claim Astellas
Independent Inventions and Astellas’ interest in Patents claiming Joint
Inventions.
     1.7 “Backup Clinical Candidate” means any Clinical Candidate that is so
designated in accordance with Section 3.3 and is intended to replace a Lead
Clinical Candidate that has not been successful for whatever reason.
     1.8 “BLA” means a Biologics License Application, as more fully defined in
21 C.F.R. §601.2 et. seq. and the regulations promulgated thereunder by the FDA.
     1.9 “Budget” means, individually, the applicable budget set forth in any
Plan, as may be modified from time-to-time as set forth herein; and “Budgets”
means any and all such budgets, collectively.
     1.10 “Bulk Drug Substance” means, any Clinical Candidate, manufactured in
accordance with applicable cGMP in bulk form meeting the applicable
specifications and other requirement set forth in the chemistry, manufacturing
and controls (CMC), or equivalent section of the applicable Regulatory Filing or
Marketing Approval for such bulk form or as otherwise established by consensus
of the JPT.
     1.11 “Business Day” means any day other than a Saturday, Sunday or any
other day on which commercial banks in Tokyo, Japan or San Francisco, California
(as applicable) are authorized or required by Law to remain closed.
     1.12 “Clinical Candidate” means any Compound that is so designated in
accordance with Section 3.3 (including any Lead Clinical Candidate, any Backup
Clinical Candidate, and any Next Generation Clinical Candidate). For the
avoidance of doubt, once a Compound has been designated a Clinical Candidate in
accordance with Section 3.3, it shall remain a Clinical Candidate (and a
Compound) for purposes of this Agreement, even if subsequently determined to not
meet the Clinical Candidate Criteria or the Compound Criteria.
     1.13 “Co-Development Indication” means any and all Indications other than
an Exclusive Indication.
     1.14 “Commercialization” means any and all processes and activities with
respect to a Product, whether conducted prior or subsequent to Marketing
Approval of such Product, (i)  directed to marketing (including education and
advertising activities), promoting (including detailing), selling, storing,
transporting, distributing, and importing of such Product (including market
research and pre-launch and launch activities); (ii)  directed to obtaining and
maintaining pricing and reimbursement approvals (including patient access
programs), as applicable, with respect to such Product, (iii)  directed to line
extensions and lifecycle management with respect to such Product, and (iv) all
Phase IV Clinical Trials other than Phase IV Clinical Trials which are (x) label
expansion

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studies intended to support Regulatory Approval (or evaluate the potential for
Regulatory Approval) of the applicable Product for new Indications, or
(y) postmarketing study commitments (as set forth in Section 506B of 21 U.S.C.
356b) required by the FDA and foreign equivalents of such study commitments;
provided, however, Commercialization excludes Preclinical Development,
Development and Manufacture. “Commercialize” and “Commercializing” have their
correlative meanings.
     1.15 “Committee” means, individually, the JSC and JPT; and “Committees”
means such joint committees, collectively.
     1.16 “Compound” means any CTLA-4 Variant that was discovered, invented, or
reduced to practice (i) by, for, or on behalf of Maxygen or its Affiliates on or
before the Effective Date, that has been identified by Maxygen as meeting the
Compound Criteria (subject to Section 3.3.4), including those CTLA-4 Variants
described on Exhibit 1.16 (each, an “Existing Compound”) or (ii) by, for, or on
behalf of either Party or its Affiliates (alone or jointly with others) during
the Term that meets the Compound Criteria. For clarity, except as conducted by,
for, or on behalf of Maxygen prior to the Effective Date or as mutually agreed
by the Parties in the Preclinical Development Plan, neither Party shall be
required to screen or otherwise determine whether any specific CTLA-4 Variant
meets the Compound Criteria.
     1.17 “Compound Criteria” means (i) those criteria set forth in
Exhibit 1.17, as may be modified by the Parties in writing. For clarity, besides
the criteria set forth in Exhibit 1.17, no other criteria shall be deemed
Compound Criteria unless and until such criteria are formally approved in
writing by both Parties, regardless of whether such criteria are used informally
or discussed by the JPT or the Parties in the course of the Preclinical
Development Program. For the avoidance of doubt, any agreed upon change in the
Compound Criteria shall not have the effect of rendering a Compound no longer a
Compound unless such change in status is expressly agreed to by the Parties.
     1.18 “Control” means, with respect to particular Know-How and any and all
non-Patent intellectual property rights therein, or a particular Patent,
possession by the Party granting the applicable right, license or sublicense to
the other Party as provided herein, of the power and authority, whether arising
by ownership, license, or other authorization, to disclose and, if applicable,
to deliver the particular Know-How to the other Party, and to grant and to
authorize under such Know-How or Patent the right, license or sublicense, as
applicable, to such other Party in this Agreement without giving rise to a
violation of the terms of any written agreement with any Third Party:
(i) executed prior to the Effective Date; or (ii) entered into on or after the
Effective Date in accordance with Section 10.4. “Controlled” and “Controlling”
have their correlative meanings.
     1.19 “Co-Promotion” means, with respect to a Product, to jointly promote a
Product for the Co-Development Indications through the use of Astellas and
Maxygen’s respective sales personnel under a Mark (as hereinafter defined) in a
given country in the Joint Commercialization Territory, in order to encourage
appropriate prescribing or other ordering of such Product, including conducting
details and other sales and promotional activities, with Astellas managing such
activities and booking sales of the Products and handling its distribution.
“Co-Promote” when used as a verb means to engage in such Co-Promotion.

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     1.20 “Co-Promotion Country” means, with respect to a Product for
Co-Development Indications, the countries in the Joint Commercialization
Territory for which Maxygen has exercised its Co-Promotion Option with respect
to such Product in accordance with Section 5.2. For clarity, in the event that
Maxygen terminates its Co-Promotion of a given Product in a given country
pursuant to Section 5.2.9, such country shall, on a prospective basis from and
after the effective date of such termination, be part of the Royalty Bearing
Territory (including with respect to determination of applicable royalties due
pursuant to Sections 2.1.1 and 2.1.2 of the Financial Exhibit) and no longer be
a “Co-Promotion Country” with respect to such Product (including for purposes of
determining Distributable Profits pursuant to the Financial Exhibit).
     1.21 “Current Good Manufacturing Practices” or “cGMP” means any and all
applicable then-current good manufacturing practices (and equivalent
requirements) under applicable Law or designated by Regulatory Authorities and
applicable to the manufacture, filling, finishing, transportation, packaging or
storage of pharmaceutical products including relevant guidelines promulgated by
the FDA (e.g., 21 CFR parts 210 and 211) and ICH (e.g., ICH Q7A Guide to GMPs
for Active Pharmaceutical Ingredients).
     1.22 “CTLA-4 Variant” means (i) any amino acid (including any natural,
synthetic, modified or other amino acid analogue) chain that is a Cytotoxic T
lymphocyte associated antigen 4 or any variant, homolog, derivative, mutant or
fragment thereof (each, a “CTLA-4 Molecule”) and (ii) any CTLA-4 Molecule that
is conjugated or otherwise coupled to any other molecule (e.g., polyethylene
glycol, immunoglobulin domain, sialylation, pegylated, or glycosylation).
     1.23 “Data” means any and all research data, results, pharmacology data,
medicinal chemistry data, preclinical data, clinical data (including
investigator reports (both preliminary and final), statistical analysis, expert
opinions and reports, safety and other electronic databases), in any and all
forms, including files, reports, raw data, source data (including patient
medical records and original patient report forms (excluding patient-specific
data to the extent required by applicable law) and the like, in each case
directed to, or used in the Preclinical Development or Development, Manufacture
or Commercialization of a Product hereunder.
     1.24 “Development” means, with respect to a Product for an Indication,
(i) any and all processes and activities conducted to obtain Marketing Approvals
for such Product after the date that is [****] from the filing of an IND
(without the applicable Regulatory Authority issuing a clinical hold) with
respect to such Product, or, as applicable, such other time after filing of an
IND at which human clinical trials may be first initiated with respect to such
Product that supports such Indication, which processes and activities may
include non-clinical and preclinical testing, toxicology, Phase I, II and III
Clinical Trials (and other pre-approval clinical trials), Phase IV Clinical
Trials which are (x) label expansion studies intended to support Regulatory
Approval (or evaluate the potential for Regulatory Approval) of the applicable
Product for new Indications, or (y) postmarketing study commitments (as set
forth in Section 506B of 21 U.S.C. 356b) required by the FDA and foreign
equivalents of such study commitments, Process Development, regulatory affairs
and compliance, and (ii) further activities related to development of such
Product for such Indication after the filing
 

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of an IND that supports such Indication to the point of commencement of
Commercialization of such Product for such Indication; provided, however,
Development excludes Preclinical Development, Manufacture and Commercialization.
For clarity, the Parties acknowledge that all Phase IV Clinical Trials other
than those expressly described above under (x) and (y) shall be considered
Commercialization. “Develop” and “Developing” have their correlative meanings.
     1.25 “Development Plans” means the then-current Co-Development Product
Plans.
     1.26 “Diligent Efforts” means, with respect to a Party, a commitment by or
on behalf of such Party of a [****] (provided, however, that [****] shall not be
considered in such factors with regard to [Astellas] and [****] shall not be
considered in such factors with regard to [****]), the [****]. For clarity, it
is understood that with respect to [****]. The Parties acknowledge and agree
that [****]. It is understood by both the Parties that after receipt of [****],
Diligent Efforts will likely require (absent special circumstances or
significant changes in circumstances) [****].
     1.27 “Dollars” or “$” refers to United States dollars.
     1.28 “EMEA” means the European Medicines Agency, or any successor entity
thereto.
     1.29 “Europe” means all countries in the European Economic Area and
Switzerland.
     1.30 “Exclusive Indication” means (i) solid organ transplant rejection
(including, for the avoidance of doubt, Treatment thereof) and (ii) any other
Indication that may be designated by written agreement of the Parties as an
“Exclusive Indication” referencing this Section 1.30.
     1.31 “FDA” means the United States Food and Drug Administration, or any
successor entity thereto.
     1.32 “Field” means the discovery, research, development, manufacture,
commercialization or other exploitation of CTLA-4 Variants for Treatment of any
and all Indications. Any and all applications not specifically set forth in the
preceding sentence are excluded from the Field.
     1.33 “Financial Exhibit” means Exhibit 1.33.
     1.34 “Finished Drug Product” means any Product, manufactured in accordance
with applicable cGMP using Bulk Drug Substance, in finished form for human use
meeting the applicable specifications and other requirement set forth in the
chemistry, manufacturing and controls (CMC), or equivalent section of the
applicable Regulatory Filing or Marketing Approval for such finished form and
including all applicable labeling, packaging and package inserts therefor.
     1.35 “Fiscal Year” means each twelve (12) month period beginning on 1 April
of each year and ending on the following 31 March and so on year-by-year.
“Fiscal Year 2010” means such period beginning on 1 April 2010 and ending on 31
March 2011; “Fiscal Year 2011” means such period beginning on 1 April 2011 and
ending on 31 March 2012, and so on, year-by-year.
 

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     1.36 “IND” means, with respect to the United States, an investigational new
drug application filed with the FDA as more fully defined in 21 C.F.R. §312.3
or, with respect to a jurisdiction other than the United States, a corresponding
filing with the applicable Regulatory Authority for purposes of obtaining
permission to initiate human clinical testing in such jurisdiction (e.g., a
clinical trial authorization in the United Kingdom or other countries within
Europe).
     1.37 “IND Enabling Studies” means, with respect to a particular Compound,
any and all studies which in each case are reasonably necessary to support
filing of an IND for such Compound, including pharmacokinetic, pharmacodynamic,
preclinical safety, toxicology and any other studies (including studies relating
to manufacturing, analytical methods and purity analysis, and formulation and
Process Development studies) required for an IND filing. For clarity, all IND
Enabling Studies shall be included within Preclinical Development.
     1.38 “Indication” means the autoimmune diseases and conditions and other
conditions treated, prevented and/or palliated by immunosuppression including
those listed in Exhibit 1.38 and solid organ transplant rejection (including,
for the avoidance of doubt, Treatment of any of the foregoing), and such other
autoimmune diseases and conditions (i.e., those autoimmune diseases and
conditions not treated, prevented and/or palliated by immunosuppression) as the
Parties agree.
     1.39 “Initiation” means, with respect to a particular clinical trial, the
date of dosing of the first subject in such trial.
     1.40 “Joint Commercialization Territory” means Canada, Mexico and the
United States, including in each case their territories, protectorates and
possessions.
     1.41 “Joint Development Territory” means the Joint Commercialization
Territory and each of the then-current countries in Europe, including in each
case their territories, protectorates and possessions.
     1.42 “Know-How” means any and all data, information and tangible materials
including (i) ideas, discoveries, inventions, improvements or trade secrets;
(ii) research and development data, such as medicinal chemistry data,
nonclinical data, preclinical data, pharmacology data, chemistry data (including
analytical, product characterization, manufacturing, and stability data),
toxicology data, clinical data (including investigator reports (both preliminary
and final), statistical analyses, expert opinions and reports, safety and other
electronic databases), analytical and quality control data and stability data,
in each case together with supporting data; (iii) databases, specifications,
formulations, formulae; (iv) practices, knowledge, techniques, methods,
formulas, processes, manufacturing information; and (v) research materials,
reagents and compositions of matter, including Compounds, Clinical Candidates
and biological material. Know-How excludes any Patent rights with respect
thereto (but does include information in unpublished patent applications).
     1.43 “Law” means, individually and collectively, any and all laws,
ordinances, rules, directives and regulations of any kind whatsoever of any
governmental or regulatory authority within the applicable jurisdiction.
     1.44 “Lead Clinical Candidate” means any Clinical Candidate that is so
designated in accordance with Section 3.3.

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     1.45 “Licensed Technology” means, with respect to Astellas, Astellas
Technology, and with respect to Maxygen, Maxygen Technology.
     1.46 “Major Market Country” means each country listed on Exhibit 1.46.
     1.47 “Manufacturing” means, with respect to any Compound or Product
(whether as Bulk Drug Substance, Finished Drug Product or other form), any and
all processes and activities conducted for the manufacture or other production
(including fermentation, isolation and purification) by, for, or on behalf of a
Party, or otherwise obtaining the supply of such Compound or Product under cGMP
for Development or Commercialization thereof, including, as applicable, filling,
packaging, labeling and other finishing and quality control and assurance
testing; for clarity, Manufacturing shall also include activities for the
manufacture of batches of Compound or Product not intended to be under cGMP or
intended to be under cGMP but which fail for any reason. For purposes of this
Agreement, Manufacturing includes all production of any Compound or Product in
accordance with applicable cGMP. “Manufacture” has a correlative meaning. For
clarity, Manufacturing of Compound or Product in accordance with cGMP related to
preparation for commercial launch of such Compound or Product shall be
Development, and Manufacturing of commercial supplies of Product shall be
Commercialization (which shall include Compound or Product from successful cGMP
validation lots produced prior to filing of any Marketing Approval to the extent
Compound or Product produced from such lots becomes inventory available for
Commercialization).
     1.48 “Marketing Approval” means, with respect to a Product in a particular
jurisdiction, all approvals, licenses, registrations or authorizations necessary
for the Commercialization of such Product in such jurisdiction (including, where
applicable, pricing approvals necessary to obtain reimbursement). Marketing
Approval shall be deemed to have been received upon first receipt by a Party or
its designee of notice from the applicable Regulatory Authority that
Commercialization of such Product has been approved (and not merely approvable)
in such jurisdiction.
     1.49 “Marketing Approval Application” or “MAA” means, with respect to a
Product, a BLA or any corresponding foreign application, registration or
certification with the applicable Regulatory Authority in a jurisdiction for
purposes of obtaining permission to Commercialize such Product in such
jurisdiction.
     1.50 “Maxygen Technology” means (i) Maxygen Know-How, (ii) Maxygen Patents,
and (iii) Maxygen’s rights and interest in all other Alliance Technology. For
clarity, the Maxygen Technology excludes any Shuffling Technology.
          1.50.1 “Maxygen Know-How” means any and all Know-How, and any and all
non-Patent intellectual property rights therein, Controlled by Maxygen or its
Affiliates during the Term that is reasonably necessary or useful for the
Preclinical Development, Development, Manufacture or Commercialization of a
Compound or Product within the Field in the Territory in accordance with this
Agreement.
          1.50.2 “Maxygen Patents” means any and all Patents Controlled by
Maxygen or its Affiliates during the Term claiming or covering (specifically or
generically) (i) compositions of matter of any Compound or Product (or any
formulation of either), (ii) methods or processes for the

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manufacture or synthesis of any Compound or Product (or any formulation of
either), (iii) methods of use, administration or formulation of any Compound or
Product (or any formulation of either), (iv) nucleic acid sequences encoding any
Compound, or (v) cell lines expressing any Compound, including (A) those Patents
set forth on Exhibit 1.50.2 as of the Effective Date, and (B) Patents that claim
Maxygen Independent Inventions. For clarity, Maxygen Patents include Maxygen’s
interest in Patents claiming Joint Inventions.
     1.51 “Next Generation Clinical Candidate” means any Clinical Candidate that
(i) is expected to possess a superior profile (in terms of efficacy and/or
safety) to another Clinical Candidate which has been Commercialized or is in
active clinical Development in at least one Major Market Country prior to the
Release of the first GMP batch of Bulk Drug Substance for the applicable Next
Generation Clinical Candidate, (ii) is anticipated to be differentiable in the
market from such prior Clinical Candidate or is otherwise intended to be
Developed and Commercialized without discontinuation of Development and
Commercialization of such prior Clinical Candidate, and (iii) is designated as a
Next Generation Clinical Candidate by the JSC in accordance with Section 3.3.
     1.52 “North America” means the United States, Canada and Mexico.
     1.53 “Patent” means any of the following, existing at any time in any
country or other jurisdiction anywhere in the world: (i) any issued patent
(including inventor’s certificates, utility model, petty patent and design
patent), extensions, confirmations, reissues, re-examination, renewal,
supplementary protection certificates or any like governmental grant for
protection of inventions; and (ii) any pending application for any of the
foregoing, including any request for continued examination (RCE), continuations,
continuations-in-part, divisionals, provisionals, converted provisionals,
continued prosecution applications, or substitute applications.
     1.54 “Phase I Clinical Trial” means any human clinical trial conducted in
any country that generally provides for the first introduction into humans of a
pharmaceutical product which provides a preliminary assessment of safety and
tolerability of such pharmaceutical product in healthy volunteers or patient
volunteers, or otherwise generally consistent with U.S. 21 C.F.R. §312.21(a)
with respect to the United States (or corresponding Laws with respect to other
jurisdictions as applicable).
     1.55 “Phase II Clinical Trial” means any human clinical trial conducted in
any country that is designed (i) to evaluate the efficacy of the pharmaceutical
product for a particular indication or indications in patient volunteers with
the indication under study and to assess side effects or (ii) to support an
additional Phase II Clinical Trial or any Phase III Clinical Trial, or otherwise
generally consistent with U.S. 21 C.F.R. §312.21(b) with respect to the United
States (or corresponding Laws with respect to other jurisdictions as
applicable). For purposes of this Agreement, any Phase I/II clinical trial shall
be deemed to be a Phase I Clinical Trial.
     1.56 “Phase III Clinical Trial” means any human clinical trial conducted in
any country after preliminary evidence suggesting acceptable efficacy and safety
of the pharmaceutical product has been obtained in prior studies, which is
intended to gather additional information to evaluate the overall safety and
efficacy of the pharmaceutical product and provide and adequate basis for
physician labeling, or otherwise generally consistent with 21 C.F.R. §312.21(c)
with respect to the

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United States (or corresponding Laws with respect to other jurisdictions as
applicable). For purposes of this Agreement, any Phase II/III clinical trial
shall be deemed to be a Phase II Clinical Trial.
     1.57 “Phase IV Clinical Trial” means any human clinical trial conducted for
a pharmaceutical product under an IND or MAA (as applicable) in a particular
jurisdiction after such pharmaceutical product has received Marketing Approval
in such jurisdiction including any such clinical trials, the purpose of which is
to continue testing the pharmaceutical product including to collect information
about its safety or efficacy in broader or various populations, long-term safety
and side effects associated with long-term use in an Indication for which
Marketing Approval was previously granted whether or not sales of pharmaceutical
product has commenced, as well as label expansion studies, quality of life
assessments, pharmacoeconomic studies, post-marketing studies and other such
activities conducted with respect to a Product after Marketing Approval has been
obtained, whether or not such studies were required as a condition of Marketing
Approval, are required to maintain Marketing Approval or for regulatory
compliance, or otherwise.
     1.58 “Plan” means, individually, the Preclinical Development Plan,
Co-Development Indication Plan, and Co-Promotion Plan, in each case as may be
modified from time-to-time as set forth herein; and “Plans” means any and all
such plans, collectively.
     1.59 “Preclinical Development” means any and all processes and activities
for the discovery and research of CTLA-4 Variants and development of Compounds
and associated Products for a particular Indication before the date that is
[****] from the filing of an IND (without the applicable Regulatory Authority
issuing a clinical hold) with respect to such Product, or, as applicable, such
other time after filing of an IND at which human clinical trials may be first
initiated with respect to such Product that supports such Indication with
respect to the particular Compound, including those processes and activities,
whether in vitro or in vivo conducted to: (i) discover, screen, optimize, clone,
express, purify, formulate, characterize or enhance any Compound, including
synthesis or Shuffling of any Compound, conjugation thereof, or similar
activities; (ii) perform IND Enabling Studies with respect to a Compound and
(iii) discover, develop, optimize, characterize or enhance technologies and
tools including assays, screens, biological models, software and databases
reasonably for the support of or in connection with any of the activities
described in clauses (i) and (ii) above or Development or Manufacture. For
purposes of this Agreement, production of Compounds (and corresponding
Product(s)) that are not intended to be manufactured in accordance with cGMP
shall be Manufacturing and not Preclinical Development.
     1.60 “Process Development” means, with respect to a Compound or Product
(whether as Bulk Drug Substance, Finished Drug Product or other form),
(i) development, optimization and qualification of any and all manufacturing
processes (including fermentation, cell culture, purification, virus removal and
inactivation, storage, assay and analytical testing protocol development,
qualification and validation) and other activities performed in support of CMC
(chemistry, manufacturing and controls, or equivalent) section of an IND or MAA
or, if applicable, DMF (Drug Master File) for such Compound or Product,
(ii) creation, development, selection and
 

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cloning of cell lines, and (iii) establishment, qualification, validation and
scaling-up of methods, equipment facilities for Manufacture of such Compound or
Product. All Process Development activities other than Process Development
activities after commercial launch of the applicable Product anywhere in the
Territory shall be a part of Development.
     1.61 “Product” means any pharmaceutical product that contains a Clinical
Candidate as an ingredient. For avoidance of doubt, Product shall include any
formulation, delivery device, dispensing device or packaging required for
effective use of the Product. Each Product that has a different generic name
shall be deemed a different Product for purposes of this Agreement.
     1.62 “Regulatory Authority” means any federal, national, multinational,
state, provincial or local regulatory agency, department, bureau or other
governmental entity with authority over the Preclinical Development,
Development, Manufacture, Commercialization or other exploitation (including the
granting of Marketing Approvals) with respect to any Product in any
jurisdiction, including the FDA, EMEA, and the Ministry of Health, Labor and
Welfare in Japan.
     1.63 “Regulatory Filing” means any documentation comprising or relating to
or supporting any filing or application with any Regulatory Authority with
respect to a Compound or corresponding Product or its use or potential use in
humans, including any documents submitted to any Regulatory Authority and all
supporting Data, including INDs and MAAs, and all correspondence with any
Regulatory Authority with respect to such Compound or Product (including minutes
of any meetings, telephone conferences or discussions with any Regulatory
Authority).
     1.64 “Rest of World” or “ROW” means all jurisdictions throughout the
Territory excluding the Joint Development Territory.
     1.65 “Royalty Bearing Territory” means (i) with respect to Products for
Exclusive Indications (including those Indications deemed as such pursuant to
Section 4.1.4(b)), all jurisdictions throughout the Territory and (ii) with
respect to Products for Co-Development Indications, all jurisdictions throughout
the Territory excluding, with respect to a given Product, the Co-Promotion
Countries for such Product.
     1.66 “Shuffle” means techniques, methodologies, processes, materials or
instrumentation for performing recombination-based modification of genetic
material for the creation of potentially useful variant nucleic acids or
proteins. “Shuffled” and “Shuffling” have their correlative meanings.
     1.67 “Shuffling Technology” means Know-How or Patents Controlled by Maxygen
directed to the use of or comprising or claiming compositions or methods for
Shuffling.
     1.68 “Territory” means all countries and territories of the world.
     1.69 “Third Party” means any entity other than Astellas or Maxygen, or
their respective Affiliates. For the avoidance of doubt, sublicensees which are
not an Affiliate of Astellas or Maxygen shall be included in the definition of
Third Party.

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     1.70 “Treatment” means, with respect to a particular Indication, the
prophylaxis, cure, reduction, mitigation, prevention, slowing or halting the
progress of, or otherwise management of such Indication. “Treat” and “Treating”
means providing Treatment.
     1.71 “Valid Claim” means a claim specifically related to the Compound
(including a use or composition of matter claim, or a use or composition of
matter claim directed to a genus encompassing the Compound or a composition of
matter claim directed to the nucleic acid sequences encoding such Compound or to
a genus encompassing such nucleic acid sequences) of an issued and unexpired
patent included in the Maxygen Patents or Joint Patents and licensed to Astellas
hereunder which has not been held invalid or unenforceable by a court of
competent jurisdiction, unappealable or unappealed within the time allowed for
appeal, and which has not been admitted to be invalid by the owner through
reissue, disclaimer or otherwise.
     1.72 “United States” means the United States of America and its possessions
and territories.
     1.73 Additional Definitions. Each of the following definitions shall have
the meaning defined in the corresponding sections of this Agreement indicated
below:

          Definitions   Section  
Adverse Drug Reaction
    6.2.4  
Adverse Safety/Tox Results
    13.2.2  
Affected Area
    13.4.2 (e)(i)
Agreement Wind-Down Period
    13.6.2  
Approved Maxygen CMO
    6.1.1 (a)
Approved Astellas CMO
    6.1.5  
Astellas Indemnitees
    12.5.1 (a)
Astellas Independent Inventions
    10.2.2 (a)
Astellas’ Requirements
  6.1.1(a)(iii)
Astellas-Selected New Compounds
    13.4.2 (e)(v)
Backup Manufacturer
  6.1.6(b)(iv)
Bundled Products
    5.4  
CDI Cessation Notice
    13.4.2 (a)
Claims
    12.5.1 (a)
Clinical Candidate Criteria
    3.3.1  
Co-Chair
    2.5.2  
Co-Development Activities
    2.3 (b)
Co-Development Indication Plan
    4.1.2  
Maxygen’s Co-
    13.4.2 (c)
Joint Steering Committee or JSC
    2.3  
JSC Matter
    2.7.1  
Losses
    12.5.1 (a)
Manufacturing Costs
    Fin. Ex. 5.13
Marketing Costs
   Fin. Ex. 5.14
Marks
    10.7  
Maxygen Indemnitees
    12.5.1 (b)
Maxygen Independent Inventions
    10.2.2 (a)
Maxygen Mark
    5.2.7  
Maxygen Opt-Out Right
    4.1.4 (b)
Maxygen Reverted Compound Activities
  13.4.2(e)(vii)
Maxygen-Selected New Compounds
    13.4.2 (e)(v)
Milestone
  Fin. Ex. 1.1.1
Net Sales
  Fin. Ex. 5.15
New Manufacturer
  6.1.6(a)(iii)
New Libraries
    13.4.2 (e)(v)
No-Fault Cause
    6.1.6 (a)(i)
Notifying Party
    7.2  
Operating Expenses
  Fin. Ex. 5.16

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          Definitions   Section  
DevelopmentIndication Costs
       
Combination Product
  Fin. Ex. 2.1.3(c)
Competing Activities
    7.1.1  
Competing Infringing Activities
    10.6  
Confidential Information
    11.1  
Controlling Party
    10.3.3  
Cooperating Party
    11.5.2  
Co-Promotion Notice
    5.2  
Co-Promotion Option
    5.2  
Co-Promotion Percentage
    5.2.1  
Co-Promotion Plan
    5.2.2 (a)
Co-Promotion Product
    5.2  
Core Countries
    10.3.1 (a)
Costs
  Fin. Ex. 5.2
Damages
    10.5  
Development Costs
  Fin. Ex. 5.3
Distributable Profits
  Fin. Ex. 5.4
Divest
    7.2.3  
Direct Country
    9.1.3 (a)
Enforcement Action
    10.6  
Excluded Compounds
  13.4.2(e)(iii)
Exclusivity Period
    7.1.1  
Existing Manufacturer
  6.1.6(a)(iii)
Existing Third Party Licenses
       
Fault
    12.5.1 (a)
FTE
  Fin. Ex. 5.8
Indemnified Party
    12.6  
Indemnifying Party
    12.6  
Initial Preclinical Development Plan
    3.2  
Joint Inventions
    10.2.2 (a)
Joint Patent
    10.3.2  
Joint Program Team or JPT
    2.4  
Opt-Out Notice
    4.1.4 (b)
Opt-Out Event
    4.1.4 (b)
Other Party
    7.2  
Permitted Activities
    7.1.3  
Post-Execution Affiliate
    7.2  
Preclinical Development Costs
  Fin. Ex. 5.20
Preclinical Development Program
    3.1  
Preclinical Development Plan
    3.2  
Prior CDA
    11.3  
Prosecution and Maintenance
    10.3.5  
Publishing Party
    11.4.1  
Recoveries
    10.6.2  
Representing Party
    12.1  
Requesting Party
    11.5.2  
Responsibility Transfer Plan
    6.1.6 (b)(i)
Reverted Compounds
  13.4.2(e)(iii)
Reviewing Party
    11.4.1  
Selected Indication
    4.1.3 (a)
Selected Indication Notice
    4.1.3 (a)
Separate Program
    7.2  
Shuffling Improvement
    10.2.2 (b)
Subcommittee
    2.9  
Subject Transaction
    7.2  
Supplies Requirement Plan
  6.1.1(a)(iii)
Target
    11.2  
Term
    13.1  
Third Party License
    10.4.2  
Third Party Payments
  Fin. Ex. 2.1.3(a)
Third Party Reverted Compound Activities
  13.4.2(e)(viii)
Walled-Off Programs
    11.2  

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     1.74 Interpretation. The captions and headings to this Agreement are for
convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement. Unless specified to the
contrary, references to Articles, Sections or Exhibits mean the particular
Articles, Sections or Exhibits to this Agreement and references to this
Agreement include all Exhibits hereto. Each accounting term used herein that is
not specifically defined herein shall have the meaning given to it under
applicable Accounting Standards, but only to the extent consistent with its
usage and the other definitions in this Agreement. Unless context otherwise
clearly requires, whenever used in this Agreement: (i) the words “include” or
“including” shall be construed as incorporating, also, “but not limited to” or
“without limitation;” (ii) the word “day” or “year” means a calendar day or
calendar year unless otherwise specified; (iii) the word “notice” means notice
in writing (whether or not specifically stated) and shall include notices,
consents, approvals and other communications contemplated under this Agreement;
(iv) the words “hereof,” “herein,” “hereby” and derivative or similar words
refer to this Agreement (including all Exhibits); (v) the word “or” shall be
construed as the inclusive meaning identified with the phrase “and/or;”
(vi) provisions that require that a Party, the Parties or any committee or team
hereunder “agree,” “consent” or “approve” or the like shall require that such
agreement, consent or approval be specific and in writing, whether by written
agreement, letter, approved minutes or otherwise; (vii) words of any gender
include the other gender; (viii) references to any specific Law or article,
section or other division thereof shall be deemed to include the then-current
amendments thereto or any replacement Law thereof; (ix) references to a “Plan”
shall be construed to mean the then-current Plan as approved by the JSC,
(x) references to Product(s) “for” an Exclusive Indication and Product(s) “for”
a Co-Development Indication refer to a Product that is developed, labeled,
marketed or promoted for the applicable Indication and, unless expressly
indicated, shall include Products that are developed, labeled, marketed or
promoted for both Exclusive Indications and Co-Development Indications and
therefor, unless expressly stated otherwise, shall not be limited to Products
that are solely developed, labeled, marketed or promoted for Exclusive
Indications or Co-Development Indications, but not both, and (xi) references to
Preclinical Development and Development “for” the Joint Development Territory,
“for” the ROW, and “for” outside the Joint Development Territory shall include
all applicable activities intended to support (i.e., one of the main purposes
for undertaking such activities is to support) the filing of a Marketing
Approval Application in at least one jurisdiction within the applicable
territory (including activities under an IND intended for such a filing) without
regard to country or location where such activity actually occurs; however, such
references shall not include applicable activities intended to support (i.e.,
one of the main purposes for undertaking such activities is to support) the
filing of Marketing Approval Applications in jurisdictions outside of the
applicable territory which are not also intended to support Marketing Approval
Applications in jurisdictions within the applicable territory, regardless of
whether resulting information or data is anticipated to be, or is in fact, also
contained in regulatory filings to support a Marketing Approval Application in
one or more jurisdiction within the applicable territory (it being understood
that activities intended to support Marketing Approval Applications in one or
more jurisdictions within the applicable territory as well as one or more
jurisdictions outside the applicable territory, shall be deemed to be both “for”
the applicable territory and also “for” outside the applicable territory). This
Agreement was prepared in the English language, which language shall govern the
interpretation of, and any dispute regarding, the terms of this Agreement.

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ARTICLE 2
SCOPE AND GOVERNANCE OF THE ALLIANCE
     2.1 Scope and Conduct of the Alliance; Diligence. Subject to the terms and
conditions of this Agreement, Maxygen and Astellas shall collaborate and each
use Diligent Efforts to perform Preclinical Development, Development,
Manufacturing and Commercialization of both (i) Compounds and Products for
Exclusive Indications and (ii) Compound and Products for Co-Development
Indications (which, for clarity, may be the same as Compounds and Products for
Exclusive Indications). Accordingly, the Parties shall establish each of the
Plans hereunder to provide for a commitment of resources by each Party so as to
satisfy its diligence obligations described in the preceding sentence. Each
Party shall make all decisions and conduct all of its obligations under the
Alliance in a manner in its good faith determination to be consistent with the
terms of this Agreement. Each Party shall cooperate with and provide reasonable
support to the other Party in the conduct of such activities. For the avoidance
of doubt, a Party’s obligations to use Diligent Efforts in this Section 2.1 or
anywhere else in this Agreement may be satisfied by such Party’s Affiliates and
permitted contractors and sublicensees.
     2.2 Maxygen Inquiry; Cessation of Commercialization and Development. Upon
request by Maxygen to the JSC, Astellas shall confirm whether or not Astellas
has made a decision not to obtain Marketing Approval for, or not to launch and
Commercialize, at least one Product for Exclusive Indications and/or
Co-Development Indications in any one or more of the Major Market Countries, or
has made a decision to discontinue or in fact discontinued Preclinical
Development, Development and Commercialization of all Products for Exclusive
Indications or Co-Development Indications with respect to any one or more of the
Major Market Countries. For the avoidance of doubt, any such request by Maxygen
shall not obligate Astellas to make any such decision but rather just obligates
Astellas to confirm any such decision that Astellas has made as of the date of
such request.
     2.3 Joint Steering Committee. Promptly after the Effective Date, the
Parties shall establish a joint steering committee (the “Joint Steering
Committee” or “JSC”). All other committees and teams established under this
Agreement, including the JPT shall be subordinate to the JSC. The JSC shall be
responsible for:
               (a) overseeing, reviewing and monitoring all activities by or
under authority of the Parties, worldwide, with respect to Preclinical
Development, Development, Manufacturing and Commercialization of Compounds and
Products and facilitating communications between the Parties regarding
activities related to Compounds and Products;
               (b) managing and providing strategic direction for activities by
or under the authority of the Parties with respect to (i) Preclinical
Development, Development and Manufacture of Compounds and Products not
specifically related to a particular Indication, (ii) Preclinical Development
and Development for the Joint Development Territory of Compounds and Products
for any Co-Development Indications, (iii) Manufacture of Compounds and Products
(other than Manufacturing activities of Astellas and its contract manufacturers
after first commercial sale following receipt of Marketing Approval in the first
Major Market Country, provided that such Manufacturing activities shall remain
subject to oversight, review and monitoring pursuant to (a) above), and (iv)
Commercialization of Products for Co-Development Indications within the Joint

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Commercialization Territory (to the extent such Commercialization is in
countries in the Joint Commercialization Territory for which, either (A) Maxygen
has exercised its Co-Promotion Option in accordance with Section 5.2 for such
Product or (B) the deadline set forth in Section 5.2 for Maxygen to provide a
Co-Promotion Notice for such Product in such country has not yet expired, but,
for clarity, excluding Commercialization which is solely in countries other than
those described in (A) or (B)) (collectively, the “Co-Development Activities”);
               (c) upon agreement of both Parties’ representatives to the JSC
establishing, and delegating matters within the authority of the JSC to, other
committees or teams having representatives from both Parties, to facilitate the
conduct of matters within the JSC’s authority;
               (d) reviewing and monitoring the activities and progress of the
JPT and all other committees, teams and/or alternative processes (if any)
established by the JSC;
               (e) reviewing and approving all Plans and associated Budgets for
the Co-Development Activities including any amendments thereto and reviewing the
Parties’ performance against such Plans and Budgets, and reviewing and
commenting on plans for Preclinical Development and Development for Exclusive
Indications (including planning of related Manufacturing and coordination with
Manufacturing of Compounds and Products for other Alliance activities);
               (f) designating all activities under the Plans and associated
Budgets for Co-Development Activities as (i) solely for a Co-Development
Indication(s), (ii) solely for an Exclusive Indication(s), or (iii) for both a
Co-Development Indication and an Exclusive Indication;
               (g) designation of Clinical Candidates, and further designation
of such as Lead Clinical Candidates, Backup Clinical Candidates or Next
Generation Clinical Candidates;
               (h) determining the activities that the Parties will conduct with
respect to any Backup Compound under the Preclinical Development Program;
               (i) reviewing and discussing intellectual property matters
relating to Compounds and/or Products and determining whether to seek licenses
from Third Parties with respect to intellectual property or technology
reasonably necessary or useful for the conduct of the Alliance;
               (j) reviewing the Compound Criteria and Clinical Candidate
Criteria and proposing modifications to them for approval by the Parties based
upon target Product profiles established by the JSC;
               (k) establishing target profiles for Products for any
Co-Development Indications for the Joint Development Territory based upon
technical feasibility and commercial assessment, pharmacoeconomic analyses and
product positioning;
               (l) reviewing and coordinating pharmacoeconomic alignment across
Products and markets;

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               (m) approving any material agreements to be entered into by
either Party with any Third Party contractor for the conduct of any
Co-Development Activity where the costs under such material agreement would
cause the Costs for activities to which such material agreement relates to
exceed by more than [****] percent ([****]%) the annual amount allocated in an
approved Budget for such activities;
               (n) reviewing concerns raised by either Party that activities or
proposed activities with respect to Exclusive Indications, or activities or
proposed activities that are for outside the Joint Development Territory with
respect to Co-Development Indications, may have detrimental impact on the
Preclinical Development, Development or Commercialization of Products for
Co-Development Indications for the Joint Development Territory, and discussing
proposed resolutions to avoid such detrimental impact;
               (o) resolving disputes, disagreements and deadlocks that pertain
to matters within the purview of other committees and teams established under
this Agreement which are not resolved by such committees and teams; and
               (p) undertaking or approving such other matters as are
specifically and expressly provided for the JSC under this Agreement.
Except as the Parties may otherwise expressly agree in writing, the JSC’s
authority shall be limited to the matters set forth above.
     2.4 Joint Program Team. Promptly after the Effective Date, the Parties
shall establish a Joint Program Team (the “Joint Program Team” or “JPT”) to
oversee, review and coordinate the operational implementation of the
Co-Development Activities in accordance with the terms of this Agreement and
direction and decisions of the JSC. The JPT shall be responsible for:
               (a) preparing and updating each Plan and associated Budget for
the Co-Development Activities (the Initial Preclinical Development Plan and
associated Budget, is attached hereto as Exhibit 3.2) including allocation of
responsibilities between the Parties thereunder in accordance with the
applicable terms and conditions of this Agreement and presenting such Plans and
Budgets to the JSC for approval;
               (b) reviewing and monitoring the performance of each Party of
activities assigned to it under the Plans for the Co-Development Activities and
making recommendations regarding the optimization of time and cost with respect
to the performance of such activities to the JSC;
               (c) monitoring and reporting to the JSC on the expenditures with
respect to the Co-Development Activities against the applicable Plans and
Budgets for such activities (unless and until such time as the JSC may institute
another subcommittee or alternative process for such purpose);
 

*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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               (d) evaluating the Plans for the Co-Development Activities based
on the results and progress of the activities thereunder, and preparing draft
Plans and/or modifications to Plans for approval of the JSC;
               (e) reviewing any material agreements to be entered into by
either Party with a Third Party contractor for the conduct on any Co-Development
Activity and making related recommendations to the JSC;
               (f) establishing and updating practices and procedures for the
coordination between the Parties of the Manufacture and supply of Compounds and
Products (including Bulk Drug Substance and Finished Drug Product), including
appropriate technology transfer and timing thereof to allow timely transition to
Astellas of Manufacture of finished Product using Bulk Drug Substance supplied
by Maxygen (or obtained by Astellas from Third Parties as expressly permitted
hereunder) in accordance with Article 6, on a Product-by-Product basis, to be
completed prior to the Initiation of the first Phase III Clinical Trial for such
Product; and
               (g) undertaking or approving such other matters that pertain to
the Co-Development Activities as are specifically provided for the JPT under
this Agreement.
          2.4.1 During Preclinical Development Program. In addition to the other
responsibilities set forth in Section 2.4, in connection with the Preclinical
Development Program, the JPT shall be responsible for: (i) establishing the
direction and objectives for the Preclinical Development Program; (ii) reviewing
the possibility of allocating additional resources of the Parties to perform
Preclinical Development specifically directed to Compounds and identification or
verification of potential Clinical Candidates, and providing for such additional
resources of the Parties as appropriate, consistent with the Plans; and
(iii) nominating Compounds as Clinical Candidates in accordance with
Section 3.3; (iv) overseeing and coordinating (A) prompt conduct of IND-Enabling
Studies with respect to at least one Clinical Candidate for a Co-Development
Indication and one Clinical Candidate for an Exclusive Indication (which
Clinical Candidate may be the same as for Co-Development Indications) and
(B) subject to Section 6.2, preparing and filing INDs for the Joint Development
Territory for one or more Clinical Candidates for a Co-Development Indication
and (monitoring and reviewing only) for one or more Clinical Candidates for an
Exclusive Indication (which Clinical Candidate may be the same as for
Co-Development Indications); and (v) other matters related to the Preclinical
Development of Products in the Field in the Territory, in each case subject to
the terms and conditions of this Agreement, and consistent with the Plans and
with decisions of the JSC.
          2.4.2 During Development. In addition to the other responsibilities
set forth in Section 2.4, in connection with Co-Development Activities for the
Joint Development Territory, the JPT shall be responsible for: (i) coordinating
and integrating the direction and objectives for Development activities for the
Joint Development Territory related to Development for Co-Development
Indications; (ii) monitoring and reporting on the competitive landscape for the
Products for any Co-Development Indications for the Joint Development Territory;
(iii) subject to the overview of the JSC, developing the strategy and plans for
Development of Products within the Co-Development Activities (including
regulatory strategies and strategies and plans for the Manufacture of Products
for such Development purposes); (iv) reviewing and approving (as provided
herein) the contents and timing of material Regulatory Filings and the protocol
(and any

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material amendment thereof) for each clinical trial for a Product for any
Co-Development Indications for the Joint Development Territory or other studies
that are Co-Development Activities; (v) coordinating the exchange of Development
information and Data relating to studies for Products for any Co-Development
Indications or other studies that are Co-Development Activities and interactions
with Regulatory Authorities in the Joint Development Territory; (vi) reviewing
material agreements (generally an agreement with an expense above a certain
threshold determined by the JSC) with Third Parties to be entered into by either
or both Parties related to the Development of Products within the Co-Development
Activities; and (vii) other matters related to the monitoring, review,
coordination and approval of Development of Products within the Co-Development
Activities. In addition, the JPT shall facilitate the exchange of information
regarding the planning, conduct and progress of Development of Products for
Exclusive Indications and for Co-Development Indications for outside the Joint
Development Territory, and provide a forum for discussion and coordination of
such Development activities with the Co-Development Activities.
          2.4.3 During Commercialization. In addition to the other
responsibilities set forth in Section 2.4, in connection with Commercialization
hereunder to the extent that Maxygen has exercised its Co-Promotion Option in
accordance with Section 5.2 with respect to a given Product, the JPT shall, with
respect to applicable Co-Promotion Countries for such Product, be responsible
for: (i) coordinating design of pharmacoeconomic studies, and the use and
dissemination of resulting Data with respect to the Co-Promotion Products (as
defined hereinafter) within the Co-Promotion Countries; (ii) monitoring and
reporting on the competitive landscape for the Co-Promotion Products within the
Co-Promotion Countries; (iii) subject to the overview of the JSC, developing the
strategy and plans for the Co-Promotion activities within the Co-Promotion
Countries including strategies and plans for the Manufacture of Co-Promotion
Products for such Commercialization purposes; (iv) coordinating branding,
positioning and advertising plans and strategies (including but not limited to
medical education, symposia, opinion leader development, peer-to-peer
development, publications and journal ads) for Co-Promotion Products within the
Co-Promotion Countries; (v) establishing, overseeing and coordinating the
Co-Promotion activities of the Parties including sales force activities, such as
training, the number of sales representatives and medical affairs personnel,
territory alignment, and number and allocation of details, promotional
materials, and the like for the Co-Promotion Products within the Co-Promotion
Countries; (vi) reviewing material agreements (generally an agreement with an
expense above a certain threshold determined by the JSC) with Third Parties to
be entered into by either or both Parties with respect to Co-Promotion Products
within the Co-Promotion Countries; and (vii) other matters related to the
monitoring, review and coordination of Co-Promotion Products within the
Co-Promotion Countries. In addition, the JPT shall facilitate the exchange of
information regarding the planning, conduct and progress of Commercialization of
Products for Exclusive Indications in the Territory and for Co-Development
Indications for outside the Co-Promotion Countries, and provide a forum for
discussion and coordination of such Commercialization activities with the
Co-Development Activities.
          2.4.4 For Manufacturing. In addition to the other responsibilities set
forth in Section 2.4, the JPT shall be responsible for coordinating the supply
by Maxygen of Bulk Drug Substance and Finished Drug Product in accordance with
the terms of Section 6.1.

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     2.5 Committee Membership.
          2.5.1 General. Each Committee shall be comprised of representatives
from each of Maxygen and Astellas, and each Party shall, in its discretion,
appoint at least two (2), but not more than four (4), representatives to each
Committee at any given time. Maxygen’s initial representatives to the JSC and
JPT are set forth on Exhibit 2.5, and Astellas shall appoint its initial
representatives to the JSC and JPT within [****] after the Effective Date. Each
Party shall appoint to each Committee at least one representative with relevant
decision-making authority from such Party such that the applicable Committee is
able to effectuate all of its decisions within the scope of such Committee’s
responsibilities. Subject to the foregoing, either Party may at any time replace
or remove its respective Committee representatives (provided that such Party is
left with at least two (2) representatives on such Committee at any given time),
or name additional Committee representatives (up to a total of four
(4) representatives of such Party at any given time), upon prior written notice
to the other Party, provided that any replacement shall be of comparable
authority and scope of functional responsibility within that Party’s
organization as the person he or she is replacing. It is understood that the
composition of the Committees is intended to be cross-functional and include
such individuals from each Party over time that will allow for consistency
between each phase of the Co-Development Activities with the goal of promoting
the likelihood of technical and commercial success of such activities.
          2.5.2 Co-Chairs. For each Committee, each Party shall appoint one of
its members to such Committee to co-chair the meetings for such Committee (each,
a “Co-Chair”). The Co-Chairs for each Committee shall (i) coordinate and prepare
the agenda and ensure the orderly conduct of such Committee’s meetings,
(ii) attend (subject to below) each meeting of such Committee, (iii) prepare and
issue minutes of each meeting within [****] thereafter accurately reflecting the
discussions and decisions of such Committee, and (iv) call ad hoc meetings if
necessary to address pressing matters. Such minutes from each Committee’s
meeting shall not be finalized until the applicable Co-Chair from each Party has
reviewed and confirmed the accuracy of such minutes in writing. The Co-Chairs
shall solicit agenda items from its Committee members and provide an agenda
along with appropriate information for such agenda reasonably in advance of any
meeting. It is understood that such agenda will include all items requested by
either Co-Chair for inclusion therein. In the event the Co-Chair or another
Committee member from either Party is unable to attend or participate in a
particular Committee meeting, the Party who designated such Co-Chair or member
may designate a substitute Co-Chair or other representative for the meeting.
     2.6 Committee Meetings. The JSC shall meet at least three (3) times during
each year, or as more often as otherwise agreed by the Parties by telephone,
videoconference or in person as determined by the JSC, provided that at least
once annually such meeting shall be held in person. The JPT shall meet
quarterly, or as more or less often as otherwise agreed by the Parties, and such
meeting may be conducted by telephone, videoconference or in person as
determined by the JPT, provided that at least once annually such meeting shall
be held in person. The JPT shall meet approximately [****] in advance of each
JSC meeting in order to prepare any issues to be presented at such upcoming JSC
meeting. All in-person Committee meetings shall be held on an alternating
 

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basis between Maxygen’s and Astellas’ facilities, unless otherwise agreed by the
Parties. As appropriate, other representatives of the Parties and their
Affiliates may attend Committee meetings as nonvoting observers, but no Third
Party personnel may attend unless otherwise agreed by the Parties (such
agreement not to be unreasonably withheld). Each Party may also call for special
meetings on an ad hoc basis to resolve particular matters requested by such
Party. Each Committee’s Co-Chairs shall provide its Committee members with no
less than [****] notice of each regularly scheduled meeting, and no less than
[****] notice of any special meetings called by either Party. The first meeting
of each the JSC and JPT shall occur within [****] of the Effective Date.
     2.7 Decision Making.
          2.7.1 Generally. Decisions of each Committee shall be made by
unanimous vote of the members present in person or by other means (e.g.,
telephone or video) at any meeting, with each Party having one vote (regardless
of the number of representatives such Party has appointed to the applicable
Committee). In order to make any decision, any Committee, Subcommittee or team
established under this Agreement must have present (in person or telephonically)
at least one representative of each Party. Unless otherwise specified by the
JSC, in the event that the JPT, team or any Subcommittee does not reach
consensus with respect to a particular matter within the scope of its authority
related to any Co-Development Activities after endeavoring for [****] (or such
other agreed period) to do so, then, such matter shall be referred by either
Party (through its JSC Co-Chair) to the JSC for resolution. If the JSC does not
reach consensus with respect to a particular matter within the scope of its
authority as stated under Section 2.3 of the Agreement (a “JSC Matter”) after
endeavoring for [****] (or such other agreed upon period) to do so, then such
JSC Matter shall be referred to the CEOs (or an executive officer designated by
the CEO) of the Parties for resolution as provided in Section 14.1.2.
          2.7.2 Deciding Vote; Limitations. If the CEOs (or designated executive
officers) of the Parties are unable to resolve such JSC Matter within the time
provided under Section 14.1.2 (or such other agreed upon period), then:
(i) Maxygen’s Co-Chair to such Committee shall thereafter have the right to cast
a deciding vote on any JSC Matter that pertains to Preclinical Development of
each Compound (provided, however, that Maxygen shall not have a deciding vote
with respect to the content, preparation or filing of any IND) under the terms
and conditions of this Agreement, and (ii) Astellas’ Co-Chair to such Committee
shall thereafter have the right to cast a deciding vote on any JSC Matter other
than those set forth in (i) above and the Manufacturing activities by Astellas
or its contract manufacturer under the terms and conditions of this Agreement;
provided, however, neither Party shall have the right to cast a deciding vote on
(A) [****]; (B) [****]; (C) [****]; (D) [****]; (E) [****]; or (F) matters
expressly stated in this Agreement to require either the agreement or approval
of both Parties’ representatives to the JSC or other JSC Matters expressly
stated in this Agreement to require the approval, agreement or consent of the
other Party. In the event that either Party exercises its deciding vote in a
manner that increases the costs or expenses that the other Party is obligated to
bear (i.e., the portion thereof borne by such other Party taking into account
applicable sharing pursuant to the Financial Exhibit) pursuant to this Agreement
 

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by more than [****] Dollars ($[****]), or by more than [****] percent ([****]%),
in each case during any 12-month period as compared to the most recent Budget
that was agreed to by the other Party (consistent with the other Party’s
obligations to use Diligent Efforts under Section 2.1 at the time such previous
Budget was agreed), unless the other Party agrees to such increase, then
(notwithstanding the other terms and conditions of this Agreement or the
Financial Exhibit) the Party so exercising such deciding vote shall be
responsible to pay the other Party’s share for such increased costs and
expenses. In the event that the Parties agree to expand the authority of the JSC
to cover matters that are not within the authority of the JSC pursuant to this
Agreement as of the Effective Date, such additional matters shall not be subject
to a deciding vote of either Party unless expressly agreed in writing by the
Parties.
          2.7.3 Matters Outside Deciding Vote or Outside Authority of JSC. If
the JSC (and the CEOs (or designated executive officers)) is unable to resolve,
after using good faith efforts to do so, any JSC Matter brought before it that
requires resolution (where neither Party has the right to cast a deciding vote
or neither Party can agree on whether a Party has the right to cast a deciding
vote, including matters described in (A), (B), (C), (D), (E), or (F), above),
such JSC Matter shall be resolved by the Parties in accordance with
Section 14.2. In the event that exigent circumstances require, either Party may
take such action as (and only to the extent) such exigent circumstances require
prior to the relevant Committee reaching consensus, or such matter otherwise
being resolved hereunder, until such time as such Committee has reached
consensus, the JSC has resolved such issue, or such issue has otherwise been
resolved pursuant to this Agreement, and in taking such action, such Party shall
use reasonable efforts to preserve the ability to pursue alternative courses of
action once such issue has been resolved in accordance with this Agreement.
Notwithstanding anything herein to the contrary, no Committee shall have any
authority to amend, modify or waive compliance with this Agreement, and neither
Party may exercise its deciding vote in any manner inconsistent with the terms
and conditions of this Agreement. For the avoidance of doubt, neither Party
shall have a deciding vote in the JSC with respect to any matter that is not
within the scope of the JSC’s authority (including any matter or dispute which
is not otherwise a JSC Matter but which is submitted to the JSC for attempted
resolution pursuant to Section 14.1), and the JSC’s decision making authority
does not extend to (and therefore neither Party shall have the deciding vote
regarding) (i) intellectual property related matters arising under this
Agreement, which matters are governed by Article 10, (ii) modification of the
Compound Criteria or of the Clinical Candidate Criteria (which can only modified
in accordance with Section 3.3.1), (iii) matters that are to be decided or
agreed upon by the Parties directly, as expressly specified in this Agreement,
or (iv) any determination of royalties due, calculations of Costs to be shared
or Distributable Profits, or other financial matters, which are matters of
compliance of the terms and conditions of this Agreement that may discussed by
the JSC where a dispute arises, but are not within the scope of the JSC’s
decision making authority.
     2.8 Reporting to the Committees. Each Party shall keep the Committees fully
informed of progress and results of activities for which it is responsible under
the Plans, as well as progress and results of its other activities with respect
to Preclinical Development, Development,
 

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Manufacture and Commercialization of Compounds and Products, through its members
on the Committees and as otherwise provided herein.
     2.9 Subcommittees. From time to time, the JSC or JPT may establish
subcommittees and teams to oversee particular projects or activities, and such
subcommittees will be constituted as such Committee approves (each, a
“Subcommittee”). If any Subcommittee is unable to reach a decision on any matter
after endeavoring for [****] (or such other agreed period) to do so, such matter
shall be referred to the applicable Committee that established such Subcommittee
for resolution as provided in Section 2.7. Notwithstanding anything herein to
the contrary, no Committee (including the JSC or JPT) or Subcommittee (or other
committee or team organized hereunder) shall have any authority to amend, modify
or waive compliance with this Agreement.
     2.10 Interactions Between Committees and Internal Teams. The Parties
recognize that while they will establish the various committees and teams for
the purpose of the Alliance, each Party possesses internal structures (including
its own committees, teams and review boards) that will be involved in
administering such Party’s activities under this Agreement. The Parties shall
establish procedures to facilitate communications between the various committees
and teams hereunder and the relevant internal committees, teams or boards within
the Party in order to promote the efficiency of the Alliance. In addition, each
of the JSC and JPT and any Subcommittee shall coordinate with each other as
appropriate. For the avoidance of doubt, references in this Article 2 to the
JSC, JPT or any Subcommittee, having authority or responsibility to “discuss”,
“monitor”, “review”, “comment”, “coordinate” or “evaluate” shall not include the
authority or right to approve, determine or control unless expressly provided
otherwise herein.
     2.11 Performance of Representatives. Maxygen and Astellas shall cause each
of their representatives on the JSC, JPT and any Subcommittees or team
established under this Agreement to vote, and shall otherwise perform their
respective activities under this Agreement, in a good faith manner consistent
with the terms and conditions of this Agreement and such Party’s respective
obligation to use Diligent Efforts under Section 2.1, including with the use of
Diligent Efforts in the performance of Co-Development Activities.
     2.12 Day-to-Day Decision Making Authority. Each Party (itself or through a
designee) shall have decision making authority with respect to the day-to-day
operations of the Preclinical Development, Development, Manufacturing and
Commercialization of Products in the Field in the Territory for which it is
responsible under the Plans, provided that such decisions are not inconsistent
with such Plans or the express terms and conditions of this Agreement (including
the allocation of operation responsibility for various activities as set forth
herein).
     2.13 Oversight of Costs. During each calendar quarter, the JPT shall review
the actual and expected Costs against the Budgets in the applicable Plans for
Co-Development Activities. If the JPT determines that such Costs for the current
budgeting cycle exceed or are likely to exceed the
 

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aggregate Budget for such cycle by more than [****] percent ([****]%), the JPT
shall promptly determine the cause of the cost overrun and recommend to the JSC
appropriate action to be taken, including making revisions to the applicable
Plan(s) or other appropriate remedial steps as may be agreed to bring such
activities back in accordance with applicable Budget(s). Otherwise cost overruns
shall be subject to the appropriate terms and conditions set forth in the
Financial Exhibit.
     2.14 Use of the Other Party’s Resources; Compliance with Plans. Each Party
shall use Diligent Efforts to comply with its obligations as set forth in the
relevant Plans, provided, however, that, without prejudice to either Party’s
Diligent Efforts and other express obligations herein, no Plan shall assign to a
Party obligations unless it so agrees.
     2.15 Use of Contractors. Maxygen and Astellas shall each have the right to
use the services of Third Party contractors, including contract research
organizations, contract manufacturing organizations (subject to Astellas’
approval in accordance with Section 6.1.1(a)), contract sales forces (subject to
Astellas’ approval in accordance with Section 5.2) and the like, to assist such
Party in fulfilling its obligations and exercising its rights under this
Agreement, provided that such Third Party is bound by a written agreement that
is consistent with terms of this Agreement, including intellectual property
ownership and confidentiality provisions consistent with those set forth in
Article 10 and Article 11, and the terms of such written agreement is consistent
with industry norms for payments, quality and in other material respects. When
practicable, each Party shall compare the services available from multiple
contractors for each task to optimize the time, cost and quality delivered to
the Alliance. Notwithstanding the foregoing, each Party shall consider the
possibility of using the other Party’s resources to perform such activities as
an alternative to utilizing the services of a contractor. Each Party shall
remain responsible for ensuring the compliance of its Affiliates with the
applicable terms of this Agreement. In addition, each Party shall remain
responsible for ensuring compliance with the applicable terms of this Agreement
by Third Party licensees and Third Party sublicensees to which such Party has
granted rights with respect to Compounds or Products under this Agreement
(provided, for clarity, that licensees and sublicensees of Astellas and its
Affiliates shall not be construed as licensees or sublicensees of Maxygen for
purposes of this sentence), and by Third Party contractors retained by such
Party for the performance of Alliance activities by, for or on behalf of such
Party under this Agreement; provided, however, that breach thereof by such Third
Parties shall not (absent a breach by the applicable Party or its Affiliate) be
a terminable breach for purposes of Section 13.3. Each Party shall contractually
obligate its licensees, sublicensees and contractors that are performing
activities by, for or on behalf of such Party under this Agreement or are
otherwise licensed or sublicensed under the Maxygen Technology or the Astellas
Technology to comply with all relevant restrictions, limitations and obligations
in this Agreement applicable to such licensees, sublicensees and contractors,
and agrees to reasonably enforce such contractual obligations in the event of
material breach by one of its licensees, sublicensees and contractors of such
obligations. For the avoidance of doubt, failure to reasonably enforce such
contractual obligations may be a terminable breach under Section 13.3.
 

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     2.16 Role of Committees with Respect to Activities Other Than
Co-Development Activities. Notwithstanding anything to the contrary in this
Agreement other than matters (A), (B), (C), (D), (E) and (F) under Section 2.7
for which neither party has the deciding vote, and still subject to
Sections 4.2.2 and 4.2.4, the Parties agree that the JSC’s and JPT’s role with
respect to the Alliance for activities other than the Co-Development Activities
including Development and Commercialization of Compounds (and their
corresponding Product(s)) for Exclusive Indications, and Commercialization of
Products for any Indication (except for Co-Promotion Products in the applicable
Co-Promotion Countries) shall be reviewing, discussing and commenting upon such
activities in an advisory capacity only (i.e., the JSC shall not have
decision-making authority over such matters, and Astellas shall have the sole
right to control and make decisions and determinations with respect to such
matters consistent with the terms and conditions of this Agreement). For the
avoidance of doubt, this Section 2.16 is intended as a statement and
clarification of the JSC’s and JPT’s decision-making role with respect to
certain matters (and to clarify certain rights of Astellas to control and make
certain decisions and determinations, as between the Parties, subject to the
other terms and conditions of this Agreement), and shall not be construed (i) to
limit the JSC’s or JPT’s discussion, review or coordination in an advisory
capacity, of various matters as provided in this Agreement, (ii) to limit the
obligations of either Party to provide reports or information to the JSC or JPT,
or (iii) to expand, limit or otherwise affect the rights and licenses conveyed
to, or the obligations of, Astellas as set forth in this Agreement other than to
state and clarify the decision-making authority of the JSC and the JPT with
respect to such matters (and to clarify certain rights of Astellas to control
and make certain decisions and determinations, as between the Parties, subject
to the other terms and conditions of this Agreement).
ARTICLE 3
PRECLINICAL DEVELOPMENT
     3.1 Preclinical Development Program. Maxygen and Astellas shall conduct a
research and discovery program directed toward Preclinical Development of
Compounds for applications in the Field on a collaborative basis (the
“Preclinical Development Program”) in accordance with the Preclinical
Development Plan (as defined below), with Astellas having lead and operational
control responsibility with respect to activities under the Preclinical
Development Program directed solely toward Exclusive Indications and Maxygen
having lead and operational control responsibility for all other activities
under the Preclinical Development Program, subject to the JPT’s oversight,
coordination, and/or direction with respect to matters within its purview
pursuant to this Agreement. Each Party will be responsible for conducting, and
shall use Diligent Efforts to conduct, the activities allocated to such Party
under the Preclinical Development Plan to progress and complete such activities
within the timeframes set forth therein, including by allocating such personnel
as reasonably necessary to progress and complete the tasks assigned to it in the
then-current Preclinical Development Plan within the timeframes as set forth
therein, but no less than the number of personnel set forth for such Party in
the then-current Preclinical Development Plan on a task-by-task basis. The goals
of the Preclinical Development Program shall include: (i) identifying and
selecting one or more Clinical Candidate(s) (including, if appropriate, Backup
Clinical Candidate(s) or Next Generation Clinical Candidates) to Treat (A) the
Co-Development Indications and (B) the Exclusive Indications, and
(ii) conducting IND Enabling Studies and other studies with respect to such
Clinical Candidates, with the overall goal to promote the likelihood of
technical and commercial success of the Clinical Candidates and corresponding
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the contrary, Maxygen shall have the sole right to conduct and shall use
Diligent Efforts to conduct Shuffling activities and in vitro screening
activities for the identification of Clinical Candidate(s) (including Backup
Clinical Candidate(s) or Next Generation Clinical Candidates) whether directed
toward Exclusive Indications or Co-Development Indications as part of the
Preclinical Development Program, which the Parties acknowledge shall only occur
if the Existing Compounds remain entirely inapplicable to the Exclusive
Indications and Co-Development Indications.
     3.2 Preclinical Development Plan. The Preclinical Development Program shall
be carried out in accordance with a detailed workplan and budget (“Preclinical
Development Plan”) covering the Preclinical Development activities to be
conducted with respect to any CTLA-4 Variant. The preliminary initial
Preclinical Development Plan is attached hereto as Exhibit 3.2 (the “Initial
Preclinical Development Plan”), and shall govern the performance of the
Preclinical Development Program until approval of the final version thereof as a
Preclinical Development Plan in accordance with the following. The Parties shall
use Diligent Efforts to have the JPT finalize and submit to the JSC for JSC
approval, and have the JSC approve, a mutually agreed final and revised form of
the Initial Preclinical Development Plan as soon as reasonably practicable, and
no later than [****] days, following the Effective Date. Once finalized,
reviewed and approved by the JSC, such plan shall become the Preclinical
Development Plan hereunder (superseding the Initial Preclinical Development
Plan) and shall govern the performance of the Preclinical Development Program
through the period beginning on the Effective Date and ending on [****] (or such
other time as the JSC may decide). Thereafter beginning with Fiscal Year [****]
and until such time as agreed by both Parties’ representatives to the JSC, at
least [****] days prior to the beginning of each Fiscal Year, the JPT shall
prepare a detailed Preclinical Development Plan for the following Fiscal Year,
consistent with the allocation of responsibilities set forth in the research
allocations of the Initial Preclinical Development Plan (except to the extent
revised in any subsequently approved Preclinical Development Plan) and to meet
the applicable diligence requirements of this Agreement and further the goals
described in Section 3.1 or as otherwise agreed by both Parties’ representatives
to the JSC and submit such Preclinical Development Plan to the JSC for review,
comment and approval. Unless otherwise determined by agreement of both Parties’
representatives to the JSC, each Preclinical Development Plan shall include a
detailed description of the Preclinical Development activities to be conducted
thereunder including a detailed Budget for all such activities. The JPT shall
review the Preclinical Development Plan on an ongoing basis and propose changes
thereto to the JSC for approval, any such approval shall be reflected in agreed
and approved minutes of JSC meetings or otherwise agreed in writing.
     3.3 Designation of Clinical Candidates.
          3.3.1 General Designation of Clinical Candidates. The Parties have
established criteria, set forth in Exhibit 3.3 (“Clinical Candidate Criteria”,
as may be amended by mutual written agreement of the Parties), for the
designation of Compounds as Clinical Candidates. From time to time, the
Co-Chairs of the JPT acting by mutual consensus may nominate a particular
Compound, which is reasonably believed to meet the Clinical Candidate Criteria
therefor based on the results for such Compound from the Preclinical Development
Program (or other similar activities
 

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prior to or outside of the Preclinical Development Program), for designation by
the JSC as a Clinical Candidate for commencement of IND Enabling Studies and
other studies and based thereon commencement of Development as a Product. Upon
designation by the JSC of any Compound as a Clinical Candidate, the JSC shall
further determine whether each such Clinical Candidate shall be treated as a
“Lead”, “Backup”, or “Next Generation” (for a specified Indication) Clinical
Candidate and determine the prioritization of the activities including IND
Enabling Studies under the Preclinical Development Program with respect thereto.
For clarity, any such designation of a Clinical Candidate or designation as a
“Lead”, “Backup”, or “Next Generation” Clinical Candidate may be modified by
subsequent action of the JSC. Designation of a Clinical Candidate as a “Lead”,
“Backup”, or “Next Generation” Clinical Candidate, and any subsequent
modification of such designation, shall only be made in accordance with the
JSC’s decision making authority as provided in Section 2.7 (subject to
Section 2.16), and shall not be subject to a deciding vote of either Party.
Further, promptly after designation of a Compound as a Clinical Candidate the
Preclinical Development Plan shall be updated to include activities with respect
to such Clinical Candidate including the conduct of IND Enabling Studies and
other studies with respect thereto. During the term of this Agreement, neither
Party shall conduct human clinical trials of or make any Regulatory Filings for,
or Commercialize, any Compound that has not been designated a Clinical
Candidate.
          3.3.2 Intellectual Property Matters. Upon nomination of a Compound for
and prior to any designation as a Clinical Candidate, the Parties, subject to
the oversight of the JSC, shall conduct a freedom to operate analysis and such
other analysis with respect to intellectual property matters with respect to
such Compound as requested by the JSC and provide such analysis to the JSC.
          3.3.3 Limitations. No Compound shall be deemed a Clinical Candidate
unless so designated by the JSC. Except for activities set forth in the
Preclinical Development Plan to determine whether a Compound meets Clinical
Candidate Criteria, or as otherwise approved by the JSC, each Party agrees not
to undertake any IND Enabling Studies with respect to any CTLA-4 Variant unless
and until such CTLA-4 Variant is designated as a Clinical Candidate in
accordance with this Section 3.3.
          3.3.4 Review of Existing Compounds. The Parties acknowledge that
Maxygen has identified the Existing Compounds and performed certain analyses
with respect thereto. Accordingly, without limiting Section 3.3.1, the Parties
agree that promptly after the Effective Date, the JSC shall review such Existing
Compounds for designation as Clinical Candidates with the anticipation that one
or more of such Compounds will be designated as Clinical Candidates, and IND
Enabling Studies would be commenced as soon thereafter as would be advisable
under the Preclinical Development Program. The Parties acknowledge that it is in
the interest of the Alliance to not perform additional Compound discovery
activities under the Preclinical Development Program unless such activities are
necessary as a result of the Existing Compounds being unsatisfactory as Clinical
Candidates, and agree that screening to identify whether additional molecules
meet the Compound Criteria shall only occur upon agreement of both Parties’
representatives to the JSC. Notwithstanding the foregoing, in the event that all
of the Existing Compounds have been found unsatisfactory as Clinical Candidates
as determined by both Parties’ representatives to the JSC and/or both Parties’
representatives to the JSC determine that further testing of Existing Compounds
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upon reasonable and objective scientific evidence and criteria supporting such
determination, Maxygen shall use Diligent Efforts to screen (or otherwise
identify from existing libraries if suitable) additional CTLA-4 Variants to be
designated as new Compounds for inclusion in the Alliance. Maxygen shall make
appropriate personnel reasonably available to Astellas upon reasonable request
for discussion and consultation regarding Maxygen’s efforts and results in
identifying CTLA-4 Variants, selecting CTLA-4 Variants as Compounds, and
consideration of Compounds as Clinical Candidates.
     3.4 Preclinical Development Program Information and Reports. Subject to the
terms of this Agreement, each Party shall make available and disclose to the
other Party its respective Technology (i.e., Maxygen shall disclose Maxygen
Technology, and Astellas shall disclose Astellas Technology) to the extent
reasonably necessary for the other Party to perform the activities assigned to
such Party under the Plans or as otherwise reasonably requested by a Party to
allow better collaboration between the Parties; provided, however, that with
respect to tangible research material within Licensed Technology, the Parties
shall exchange such material as determined by the JPT in accordance with the
applicable Plan or as otherwise determined by agreement of both Parties’
representatives to the JSC. Maxygen and Astellas shall use Diligent Efforts to
make available and disclose to each other all Alliance Technology, including all
Patents and Know-How therein regarding Compounds and results of in vitro and in
vivo studies, assay techniques and new assays arising from the Preclinical
Development, with significant discoveries or advances being communicated as soon
as reasonably practical after such Alliance Technology is discovered or its
significance is appreciated; provided, however, that with respect to tangible
research material within Alliance Technology, the Parties shall exchange such
material as determined by the JPT in accordance with the applicable Plan or as
otherwise determined by agreement of both Parties’ representatives to the JSC.
The Parties shall exchange, at least once quarterly during the performance of
the Preclinical Development Program, and thereafter on a semi-annual basis, a
detailed written report of each Party’s progress and activities under the
Preclinical Development Program or other Preclinical Development activities
performed hereunder since the last such report, including: (i) the experiments
conducted, (ii) any Alliance Technology developed and (iii) the data,
conclusions and results generated.
     3.5 Cost Sharing. The Costs incurred with respect to the performance of the
Preclinical Development Program shall be shared, allocated and accounted for by
the Parties in accordance with Section 3.1 of the Financial Exhibit.
ARTICLE 4
DEVELOPMENT
     4.1 Development of Products for Co-Development Indications for the Joint
Development Territory.
          4.1.1 Development. Astellas and Maxygen shall use Diligent Efforts to
conduct, on a collaborative basis, a program to Develop Compounds and associated
Products for Co-Development Indications designed to seek and obtain Marketing
Approvals in each case throughout the Joint Development Territory (i.e., in or
for countries within the Joint Development Territory other than those countries
where failure to conduct such activities is consistent with Diligent Efforts as
defined herein) in accordance with the Co-Development Indication Plans, subject
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oversight, direction and coordination, with the principal goals of
(i) conducting Development for the Joint Development Territory to support
Regulatory Filings, (ii) making and maintaining Regulatory Filings in the Joint
Development Territory and (iii) seeking and obtaining Marketing Approvals in the
Joint Development Territory, with Astellas having lead and operational control
responsibility with respect to such activities (subject to Section 4.1.3,
below), in each case (x) subject to the JPT’s oversight and direction, and
(y) to the extent consistent with Diligent Efforts. Each Party shall be
responsible for conducting, and shall use Diligent Efforts (including by
allocating those personnel as reasonably necessary and consistent with Diligent
Efforts) to conduct, the activities allocated to such Party under then-current
Co-Development Indication Plans for purposes of seeking and obtaining Marketing
Approvals within the Joint Development Territory and to progress and complete
such activities within the timeframes set forth therein. Except as otherwise
expressly permitted herein, each Party agrees not to perform any Development
activities with respect to Co-Development Indications for the Joint Development
Territory except as consistent with the applicable Co-Development Indication
Plans.
          4.1.2 Co-Development Indication Plans.
               (a) The activities for the Joint Development Territory for
Development of Products for Co-Development Indications shall be carried out in
accordance with detailed workplans and budgets on a Product-by-Product basis (a
“Co-Development Indication Plan”), which shall include the applicable Supplies
Requirements Plan for such Products for the Joint Development Territory as
described in Section 6.1. Within [****] days of the JPT’s decision to file an
IND in the Joint Development Territory with respect to a particular Product for
a Co-Development Indication, the JPT shall prepare a detailed Co-Development
Indication Plan for Development activities for the Joint Development Territory
for such Product for the period through the end of three full Fiscal Years (and
if the next Opt-Out event is not covered in a given Co-Development Indication
Plan or update thereof, the Co-Development Indication Plan or update shall also
include a good faith estimate of costs for activities to the next Opt-Out
Event), consistent with the applicable diligence requirements stated in this
Agreement and to further the goals described in Section 4.1.1 or as otherwise
agreed by both Parties’ representatives to the JSC, and submit such
Co-Development Indication Plan to the JSC for review, comment and approval.
Thereafter, at least [****] days prior to the beginning of each following Fiscal
Year, the JPT shall prepare an update for each such Co-Development Indication
Plan and submit such update to the JSC for review, comment and approval. Unless
otherwise determined by agreement of both Parties’ representatives to the JSC,
each Co-Development Indication Plan shall include a detailed description of the
Development activities to be conducted thereunder including a detailed Budget
for all such activities. The JPT shall review the Co-Development Indication
Plans on an ongoing basis and propose changes thereto to the JSC for approval,
any such approval shall be reflected in agreed minutes of JSC meetings or
otherwise agreed in writing.
               (b) Subject to the oversight of the JSC, the JPT shall assign to
each Party, in the Co-Development Indication Plans, responsibilities in
connection with the Development of each Product for Co-Development Indications,
including with respect to clinical development,
 

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consistent with each Party’s capabilities and expertise, and taking into account
existing relationships of the Parties with contract manufacturers, contract
research organizations and other relevant Third Parties.
          4.1.3 Maxygen Involvement in Clinical Trials.
               (a) Astellas Selection. Astellas shall select in its sole
discretion either the first or the second Indication within the Co-Development
Indications for which clinical trials for any Product(s) are conducted (the
“Selected Indication”) and offer Maxygen the opportunity to undertake
operational responsibility for the conduct of clinical trials of the applicable
Product for such Selected Indication for the Joint Development Territory through
completion of Phase II Clinical Trials. Astellas shall make such offer by
written notice (a “Selected Indication Notice”) identifying the Selected
Indication, the applicable Product and (to the extent not already set forth in
the then-current Plan and Budget) the anticipated timing and budget for all
Phase I Clinical Trials and/or Phase II Clinical Trials of such Product for the
Selected Indication. Such notice shall be given by Astellas at least [****] days
prior to the anticipated start date of the activities for which Maxygen would
potentially undertake operational responsibility (including without limitation
protocol design, site selection, and negotiation of site agreements).
               (b) Maxygen Election. Maxygen shall respond in writing within
[****] days after receipt of the Selected Indication Notice and state whether
Maxygen elects to take operational responsibility for the Phase I Clinical
Trials and Phase II Clinical Trials for the applicable Product for the Selected
Indication. If Maxygen does not elect to undertake such operational
responsibility, or if Maxygen fails to respond within [****] days after receipt
of the Selected Indication Notice, then such clinical trials shall be conducted
in accordance with the other provisions of this Agreement, and Astellas shall
not be obligated to offer Maxygen operational responsibility of other clinical
trials of Products. If Maxygen elects within such [****] day period to undertake
operational responsibility for the Phase I Clinical Trials and Phase II Clinical
Trials for the applicable Product for the Selected Indication for the Joint
Development Territory, then Maxygen shall use Diligent Efforts to conduct the
clinical studies therefor as set forth in the applicable Plan and Budget, and
shall have the lead role for the conduct of such clinical studies, including
protocol design; monitoring; selection, training and management of sites and/or
investigators; investigator meetings; submissions and interactions with
institutional review boards; statistical analysis of resulting data; report
writing; establishing and overseeing an independent data safety monitoring board
(as appropriate); and other activities in connection with the conduct or
operational management of such studies, in each case consistent with the
applicable Plans and Budget and subject to the oversight, management and control
of the JSC (including applicable deciding vote of the Parties as set forth
herein). If Maxygen elects to not, or fails to elect within such [****] day
period to, undertake operational responsibility for the Phase I Clinical Trials
and Phase II Clinical Trials for the applicable Product for the Selected
Indication for the Joint Development Territory then Astellas shall be under no
further obligation to offer Maxygen such operational responsibility under this
Section 4.1.3 (but, for the avoidance of doubt, Maxygen may undertake
operational responsibility in the future if both Parties, each in their sole
discretion, agree
 

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to such). Maxygen shall conduct such activities either (i) itself,
(ii) utilizing Third Party contractors which are used by Astellas for other
clinical trials, or (iii) upon prior approval of Astellas, utilizing other Third
Party subcontractors. It is understood and agreed that Astellas will control and
conduct data management (including design and maintenance of the database) and
safety data management and reporting (including maintenance and control of the
worldwide safety database). The Parties acknowledge and agree that Maxygen’s
rights and obligations under this Section 4.1.3 apply only to the first two
Indications within the Co-Development Indications to enter clinical trials
without regard to whether the two Indications are for the same Compound or for
different Compounds (and such rights and obligations under this Section 4.1.3
shall not apply to any future Products, regardless of Indication – i.e., such
election may only be exercised by Maxygen one time). Because one or more Phase I
Clinical Trials conducted for a given Product might not be conducted “for” a
specific Indication, the Parties acknowledge that Maxygen’s operational
responsibility for conducting clinical trials as described in this Section 4.1.3
will include the conduct of Phase I Clinical Trials of the applicable Product
that are needed for the conduct of Phase II Clinical Trials for the Selected
Indication, as set forth in the applicable Plan; provided, however, that if
applicable Phase I Clinical Trials have already been conducted for such Product
(A) for an Exclusive Indication, (B) where the applicable Compound which is the
subject of such Phase I Clinical Trial has not been designated by the JSC
specifically for a Co-Development Indications and Astellas has not determined
whether or not such Compound is to be Developed for an Exclusive Indication, or
(C) (in the event that the Selected Indication is the second Co-Development
Indication) for the first Co-Development Indication, then Maxygen’s rights and
obligations under this Section 4.13 will not include operational responsibility
for such Phase I Clinical Trials of the applicable Product, but will include any
additional Phase I Trials of the applicable Product that are necessary in
connection with the Selected Indication.
               (c) Limitation on Opt-Out Right. In the event that Maxygen elects
to undertake operational responsibility for Phase I Clinical Trials and Phase II
Clinical Trials of a Product for the Selected Indication as set forth in this
Section 4.1.3, Maxygen shall not exercise its right to opt out of its
cost-sharing obligation pursuant to Section 4.1.4 with respect to such Product
without the prior written consent of Astellas until the earlier of (i) [****],
(ii) [****], or (iii) [****], provided that notwithstanding Maxygen’s opt out
under (iii), Maxygen shall continue to have operational responsibility (for
clinical trials it had responsibility for under Section 4.1.3(b) prior to such
opt out) through the completion of Phase II Clinical Trials for the Selected
Indication in accordance with Section 4.1.3(b).
               (d) Other Agreed Activities. For the avoidance of doubt,
regardless of whether Maxygen undertakes responsibility for the conduct of
clinical trials with respect to the Selected Indication as set forth in this
Section 4.1.3, Maxygen may undertake such other activities as the Parties may
mutually agree in connection with clinical trials or other Development of
Compounds and Products.
          4.1.4 Cost Sharing; Opt-Out.
 

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               (a) Subject to the Maxygen Opt-Out Rights set forth in
Section 4.1.4(b), the Costs incurred with respect to the performance of the
activities in accordance with Co-Development Indication Plans shall be shared,
allocated and accounted for by the Parties in accordance with Section 3.2 of the
Financial Exhibit.
               (b) Notwithstanding anything to the contrary herein, upon written
notice referencing this Section 4.1.4(b) given before the date [****] following
an applicable Opt-Out Event (each, an “Opt-Out Notice”), Maxygen shall have the
right in its sole discretion (but not the obligation) to elect to opt out of the
obligation to share its portion of the Costs with respect to the applicable
Product for which such Opt-Out Event is achieved, and/or for all Products, for
Co-Development Indications (each, a “Maxygen Opt-Out Right”) effective as of the
date of the applicable Opt-Out Event. Upon exercising such Opt-Out Right,
promptly following the occurrence of the applicable Opt-Out Event, Maxygen shall
provide an accounting of Costs previously borne by Maxygen in accordance with
the Preclinical Development Plan Budget, Development Plan Budget and Financial
Exhibit after the Effective Date (and not reimbursed) with respect to the
applicable Product(s) and an invoice therefor. In the event Maxygen provides an
Opt-Out Notice, then effective as of the applicable Opt-Out Event: (i) such
Product shall thereafter be deemed to be a “Product for an Exclusive
Indication(s)” (even though, and regardless of whether, such Product may
continue to be Developed and/or Commercialized for Co-Development Indications)
and not to be a “Product for a Co-Development Indication(s)” for all purposes
under this Agreement with respect to such Products, (ii) Astellas shall be
responsible for one hundred percent (100%) of all Preclinical Development Costs,
Development Costs and other costs and expenses that are incurred by or for
Astellas (including costs and expenses incurred by Maxygen and its Affiliates in
conducting activities by or for Astellas to the extent in the Budget or approved
by Astellas in writing as provided in Section 3.4 of the Financial Exhibit) in
connection with the Development, Manufacture or Commercialization of such
Product after the effective date of such opt-out, and (iii) Astellas shall
reimburse Maxygen without any interest for [****] prior to the provision of the
Opt-Out Notice as follows: all such Costs up to $[****] within [****] days of
the applicable invoice therefor provided upon or after the applicable Opt-Out
Event date, and Costs in excess of $[****] within [****] days of such invoice.
For purposes of this Section 4.1.4(b), “Opt-Out Event” shall mean with respect
to a particular Product for Co-Development Indications hereunder the
(A) Initiation of [****] for the Joint Development Territory for such Product
for a Co-Development Indication, (B) Initiation of [****] for the Joint
Development Territory for such Product for a Co-Development Indication, (C)
Initiation of [****] for the Joint Development Territory for such Product for a
Co-Development Indication, and (D) [****] for such Product for a Co-Development
Indication [****] (whichever is first). For clarity, any Opt-Out Notice once
given in accordance with this Section 4.1.4(b) shall be irrevocable with respect
to the Product(s) for which it is given.
     4.2 Development of Products for Exclusive Indications Worldwide and for
Co-Development Indications for Outside the Joint Development Territory.
          4.2.1 Development for Exclusive Indications. Astellas shall use
Diligent Efforts to conduct a program to Develop Products for Exclusive
Indication, at its sole expense, throughout the
 

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Territory (i.e., in or for countries within the Territory other than those
countries where failure to conduct such activities is consistent with Diligent
Efforts as defined herein), with the principal goals of (i) conducting
Development to support Regulatory Filings, (ii) making and maintaining
Regulatory Filings and (iii) seeking and obtaining Marketing Approvals. Astellas
shall be responsible for conducting, using Diligent Efforts, activities to
progress Development toward such goals.
          4.2.2 Exclusive Indication Plans. Within [****] days of the Astellas’
decision to file an IND with respect to a particular Product for an Exclusive
Indication, Astellas shall prepare a plan for Development activities for such
Product for the period through the end of the next full Fiscal Year, consistent
with the applicable diligence requirements stated in this Agreement and to
further the goals described in Section 4.2.1 and submit such plan to the JSC for
review and comment. Thereafter, at least [****] days prior to the beginning of
each following Fiscal Year, Astellas shall prepare an update for each such plan
and submit such update to the JSC for review and comment. The Parties
acknowledge that the comments of the JSC with respect to any such plan are
solely advisory in nature; provided, however, that if Maxygen reasonably
believes that the activities set forth in any such plan would be detrimental to
Development activities for Co-Development Indications with respect to such
Product in any then-current plans, Maxygen may refer such matter to the JSC for
discussion and decision by the JSC (and subject to Astellas’ deciding vote with
respect to those matters specified in Section 2.7). Each such plan shall include
a description of the Development activities to be conducted thereunder including
for informational purposes a budget for all such activities and shall also
include the Supplies Requirement Plan for Products for such activities as
described in Section 6.1. Astellas may review each plan on an ongoing basis and
make changes thereto, provided that it keep the JSC reasonably informed with
respect to such changes and seek its comments with respect thereto.
          4.2.3 Co-Development Indications for Outside the Joint Development
Territory. Astellas shall use Diligent Efforts to conduct a program to Develop
Products for Co-Development Indications for the ROW, at its sole expense,
subject to the JPT’s review, comment and coordination, with the principal goals
of (i) conducting Development to support Regulatory Filings in the ROW,
(ii) making and maintaining Regulatory Filings in the ROW and (iii) conducting
clinical studies and other Development activities for the ROW that are primarily
useful in seeking and obtaining Marketing Approvals in each case to the extent
consistent with Diligent Efforts. Astellas shall be responsible for conducting,
using Diligent Efforts, activities to progress Development toward such goals.
Except as otherwise expressly permitted herein, or as agreed or requested by
Astellas, Maxygen agrees not to perform any Development activities with respect
to Products (or, for the avoidance of doubt, the Corresponding Compound) in the
ROW (except for activities for the Joint Development Territory provided for in
the applicable Co-Development Indication Plan). In the event an activity is
within the scope of both Section 4.1.1 and Section 4.2.3, then the provisions of
Section 4.1.1 shall apply to such activity.
          4.2.4 ROW Co-Development Indication Plans. Within [****] of the
Astellas’ decision to file an IND with respect to a particular Product for a
Co-Development Indication in a
 

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country in the ROW, Astellas shall prepare a plan for Development activities for
such Product for the period through the end of the next [****], consistent with
the applicable diligence requirements stated in this Agreement and to further
the goals described in Section 4.2.3 and submit such plan to the JSC for review
and comment. Thereafter, at least [****] days prior to the beginning of each
following Fiscal Year, Astellas shall prepare an update for each such plan and
submit such update to the JSC for review and comment. The Parties acknowledge
that the comments of the JSC with respect to any such plan are solely advisory
in nature; provided, however, that if Maxygen reasonably believes that the
activities set forth in any such plan would be detrimental to Development
activities for Co-Development Indications in the Joint Development Territory
with respect to such Product in any then-current plans, Maxygen may refer such
matter to the JSC for discussion and decision by the JSC (and subject to
Astellas’ deciding vote with respect to those matters, as specified in
Section 2.7). Each such plan shall include a description of the Development
activities to be conducted thereunder including for informational purposes a
high-level budget for all such activities and shall also include the Supplies
Requirement Plan for Products for such activities as described in Section 6.1.
Astellas may review each plan on an ongoing basis and make changes thereto,
provided that it keep the JSC reasonably informed with respect to such changes
and seek its comments with respect thereto.
     4.3 Clinical Trials. Without limiting the foregoing provisions of this
Article 4, the protocol and any investigator’s brochures for each clinical trial
to be conducted in furtherance of the Development hereunder shall be subject to,
prior to the Initiation of such clinical trial, the review and comment (and in
the case of clinical trials for Co-Development Indications or Phase I Clinical
Trials with healthy volunteers, approval) of the JPT. The Parties acknowledge
that the comments of the JPT with respect to protocols and any investigator’s
brochures for clinical trials for Exclusive Indication are solely advisory in
nature, except that such matters may be reasonably referred to the JSC (and
subject to Astellas’ deciding vote with respect to those matters, as specified
in Section 2.7) if such protocols and any investigator’s brochures may have a
detrimental impact on the Preclinical Development, Development or
Commercialization of Products for Co-Development Indications in the Co-Promotion
Countries, in accordance with any then-current plans.
     4.4 Reports. As the JPT may designate from time to time, each Party shall
prepare and provide to the other Party a written report that (i) summarizes the
progress of the Development activities performed and Alliance Technology made by
such Party hereunder during the preceding period, (ii) identifies any issues or
circumstances of which it is aware that may prevent or adversely affect in a
material manner its performance of assigned activities under the Co-Development
Indication Plans in the then-current calendar quarter; and (iii) to the extent
reasonably practicable, identifies steps that may be taken, or changes that may
be made, to resolve such issues. Each Party shall maintain records in sufficient
detail as will properly reflect all work done, and Costs incurred, in the
performance of activities arising out of, in conducting, or otherwise in
connection with the Co-Development Indication Plans or Co-Development
Activities.
 

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ARTICLE 5
COMMERCIALIZATION
     5.1 Commercialization.
          5.1.1 General. Subject to the terms and conditions of this Agreement,
as between the Parties, Astellas shall have the exclusive (even as to Maxygen
except as provided in Section 5.2) right to Commercialize Products in the Field
in the Territory, subject to the review of the JSC which review is solely
advisory in nature. Astellas shall use Diligent Efforts to Commercialize those
Products approved for Exclusive Indications, and to Commercialize those Products
approved for Co-Development Indications, in each case throughout the Territory
(i.e., in or for countries within the Territory other than those countries where
failure to conduct such activities is consistent with Diligent Efforts as
defined herein). Without limiting the foregoing, Astellas agrees to use Diligent
Efforts (i) to launch Products in the Field as soon as practicable in each Major
Market Country following Marketing Approvals for such Product in such country,
and thereafter (ii) to market, promote and sell such Products in the Field in
the Territory. It is understood and agreed that, except as otherwise expressly
provided herein, all Commercialization efforts for the Products in the Field in
the Territory by or for Astellas shall, as between the Parties, be at the sole
expense of Astellas. Astellas shall have sole authority and control (in its sole
discretion) over all issues and decisions regarding price and price terms and
other contract terms respecting Product sales (including all issues and
decisions with respect to contracting with managed care entities, hospitals,
GPOs, PBMs and government), and specifically includes issues and decisions about
the offer of discounts or rebates for formulary placement for Products.
          5.1.2 Product Commercialization Plans. At least [****] months in
advance of the anticipated approval of a MAA for a Product anywhere in the
Territory, Astellas shall prepare a detailed plan for Commercialization
activities for such Product in applicable Major Market Countries for the period
through launch, consistent with the diligence requirements in Section 5.1.1 and
submit such plan to the JSC for review and comment. Thereafter, at least [****]
days prior to the beginning of each following Fiscal Year, Astellas shall
prepare an update for each such plan annually and submit such update to the JSC
for review and comment. The Parties acknowledge that the comments of the JSC
with respect to any plan are solely advisory in nature. Each plan shall include
a description of the Commercialization activities to be conducted thereunder.
Astellas may review each plan on an ongoing basis and make changes thereto,
provided that it keep the JSC reasonably informed with respect to such changes
and seek its comments with respect thereto.
     5.2 Co-Promotion. With respect to each country within the Joint
Commercialization Territory, Maxygen shall have an option to Co-Promote each
Product for Co-Development Indications in each such country within the Joint
Commercialization Territory according to the terms and conditions set forth in
this Section 5.2 (the “Co-Promotion Option”), provided that, for the avoidance
of doubt, the option to Co-Promote in this Section 5.2 shall not apply to
Products for which Maxygen has exercised the Maxygen Opt Out Right in accordance
with Section 4.1.4. Maxygen may exercise the Co-Promotion Option for a Product
for Co-Development Indications in
 

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any countries within the Joint Commercialization Territory by providing written
notice to Astellas (the “Co-Promotion Notice”) no later than [****]days from the
later of (i) Astellas notifying Maxygen that it has filed a MAA for such Product
in such country and (ii) Astellas providing to Maxygen (in English, or together
with English translations thereof) the information of its internal projections
and plans for the period through at least the [****] after the launch of such
Product regarding Commercialization of such Product for Co-Development
Indications within the Joint Commercialization Territory and other related
information, in each case which is customarily or actually prepared by Astellas
for presentation to, and including pre-meeting materials and information which
is actually made available to, Astellas’ applicable executive committee(s)
regarding Commercialization of such Product, including in any event projected
Cost for Commercialization (including launch Costs), commercial assessments for
such Product, and forecasts for sales and number and type of details, in each
case on a country-by-country basis with respect to each country in the Joint
Commercialization Territory. During such [****] day period, Astellas shall
(i) promptly (and in any event within [****] days) provide such additional
information as Maxygen may reasonably request regarding aspects of
Commercialization of the applicable Product, to the extent Controlled by
Astellas and available (for the avoidance of doubt, “available” shall mean that
such information and materials already exist and that Astellas has already
prepared or obtained them for its own internal use, and Astellas is not under
any obligation to prepare, create or modify any such information or materials
for Maxygen but instead need only provide them in their existing form, other
than making applicable redactions as described in the following clause),
excluding know-how and techniques proprietary to Astellas that are utilized in
developing or obtaining such information but including information resulting
therefrom to the extent applied to the applicable Product (and provided that if
documents or materials contain both such proprietary know-how or techniques as
well as information that is otherwise to be provided hereunder, Astellas shall
provide such documents or materials, but may redact such proprietary know-how or
techniques), including (A) the activities that would be undertaken in promoting
such Product in the applicable countries, including plans for product
positioning, key message delivery, market segmentation, target population
identification, competitor analysis and other key promotional activities
(including background market research and analysis as applied specifically to
the Product at issue) in support thereof, (B) projections of applicable Costs
(including Manufacturing Costs, Sales Costs and Marketing Costs, Phase IV
commitments and other necessary post-approval activities) related to the
applicable Product with respect to such countries, (C) projections of sales and
market penetration of such Product in such countries, including forecast data
and assumptions related to sales growth, peak sales, time to peak and
Commercialization personnel required, brandswitch strategy, pricing and
reimbursement assumptions, target market sizes and unit volume projections, and
(D) such other information regarding commercial potential of such Product in
such country as is material to a decision to launch such Product in each country
within the Joint Commercialization Territory on a country-by-country basis, and
(ii) be available (promptly, and in any event within [****] following the
applicable request) for consultation as reasonably requested by Maxygen
regarding information provided under this or the preceding sentence. In the
event Maxygen exercises the Co-Promotion Option with respect to a particular
Product (each, a “Co-Promot ion Product”), the provisions of this Section 5.2
shall apply with respect thereto. For the avoidance of doubt, all information
and
 

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materials provided by Astellas under this Section 5.2 are provided “AS IS”
without representation or warranty of any kind (and no assurances are provided
hereunder that any particular piece of information described above in
subsections A through D will be available for provision to Maxygen) and Maxygen
shall be solely responsible for its decision as to whether or not to exercise
the Co-Promotion Option hereunder.
          5.2.1 Co-Promotion Percentage. At such time as Maxygen exercises its
Co-Promotion Option with respect to a Co-Promotion Product, Maxygen shall notify
Astellas of the percentage of the total details (within the limits described
below) that Maxygen intends to perform or have performed annually for such
Co-Promotion Product in the applicable Co-Promotion Countries (such total being
referred to as the “Co-Promotion Percentage” for such Product for the
Co-Promotion Countries). The Co-Promotion Percentage shall be as elected by
Maxygen, but not greater than [****] percent ([****]%) of the total details made
to physicians and other health care providers and customers to be conducted for
such Product in the applicable country in any Fiscal Year, nor less than [****]
percent ([****]%) of the total details made to physicians and other health care
providers and customers relating to at least one Indication within the
Co-Development Indications for which such Product has been approved in the
applicable country in any Fiscal Year, unless otherwise agreed by the Parties.
          5.2.2 Co-Promotion Plan. Upon Maxygen’s exercise of the Co-Promotion
Option with respect to a Product in a particular country within the Co-Promotion
Countries:
               (a) The Parties shall cooperate to coordinate the Co-Promotion
activities under this Section 5.2, and shall promptly agree upon a sales and
marketing plan for such Co-Promotion Product in the applicable country (the
“Co-Promotion Plan”), which shall include detailed plans and budgets for
performance of details for such Co-Promotion Product in specific sales
territories, and provide at all times for Maxygen sales personnel to conduct at
least the Co-Promotion Percentage of details, sales representatives, managed
market representatives and medical affairs personnel for each sales in such
country. In addition the Co-Promotion Plan shall provide Maxygen reasonable
allocation of a proportionate share of thought leaders, key decision makers
(e.g., persons buying or influencing the buying of Products) and institutions in
the applicable therapeutic areas across the Co-Development Indications, taking
into consideration Maxygen’s existing relationships and capabilities.
               (b) Maxygen shall be responsible for the hiring of its sales
personnel performing Co-Promotion activities for such Co-Promotion Product
hereunder, and may subcontract its Co-Promotion obligations to a Third Party,
subject to Astellas’ prior written approval not to be unreasonably withheld,
delayed or conditioned, provided that Maxygen shall remain ultimately
responsible for the performance thereof. In all events, Maxygen’s Co-Promotion
activities shall be conducted in accordance with the Co-Promotion Plan for the
applicable Co-Promotion Product. Astellas shall provide to Maxygen sales
personnel such Product-specific training and promotional materials (including
samples) as are reasonably necessary to effectively promote the particular
Co-Promotion Product consistent with the Co-Promotion Plan.
 

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          5.2.3 Co-Promotion Obligations. Each Party shall use Diligent Efforts
to Co-Promote Co-Promotion Products for Co-Development Indications in the
applicable Co-Promotion Countries and employ professional and trained sales
representatives and medical affairs personnel, meeting the standards of
competence and professionalism as is common in the pharmaceutical industry, to
do so. In all events, each Party’s Co-Promotion activities shall be conducted in
accordance with the then current Co-Promotion Plan and in accordance with Laws,
applicable industry codes and applicably industry standards and shall not engage
in any promotional activities with respect to such Co-Promotion Product with
respect to the Co-Development Indications outside of the applicable Co-Promotion
Plan. Each of Maxygen’s sales personnel (including permitted subcontractors)
shall be trained on Astellas’ compliance policies at least [****] (or as
frequently as Astellas’ own sales personnel are so trained, if less than [****])
and shall comply with such policies (including providing an annual certification
as to having been trained on such policies). Furthermore, nothing in this
Agreement shall be deemed to require Astellas to act in a manner not in
accordance with its own internal regulatory compliance guidelines. Astellas
shall have overall authority to manage all sales and promotional activities for
Co-Promotion Products.
          5.2.4 Co-Promotion Coordination.
               (a) The JPT shall be responsible for coordinating the
Co-Promotion activities under the Co-Promotion Plan, and shall develop the
strategies and programs to optimally carry-out the Co-Promotion in accordance
with this Section 5.2. Subject to the oversight of the JPT and within the
structures established for the Co-Promotion, it is understood that all
Co-Promotion activities by the Parties prior to and after launch of a particular
Co-Promotion Product shall be closely coordinated and to facilitate such close
coordination the Parties shall regularly communicate with respect to such
matters.
               (b) If a Co-Promotion Product is also Commercialized for an
Exclusive Indication(s), in order to reduce the chances that quantities of such
Product sold by or under authority of Astellas, its Affiliates or its
sublicensees for the Exclusive Indication will be used for the Co-Development
Indications in the applicable Co-Promotion Countries, the Parties shall work
together in good faith, through the JPT, to develop unique packaging, Marks and
names for such Product, with the goal of reducing the risk of such
substitutability. For clarity, nothing in this Section 5.2.4(b) is intended to
limit or preclude any particular packaging, Marks or names used for a Product,
but the Parties will use good faith in coordinating the same so as to reduce the
risk of such substitutability.
               (c) The Parties acknowledge that with respect to Products
approved for Exclusive Indications but not approved for Co-Development
Indications, off-label sales for use to Treat Co-Development Indications could
have an adverse impact on one or more Products for Co-Development Indications
that the Parties are Co-Promoting. Accordingly, in order to help protect the
value of any such Co-Promotion Product, Astellas agrees to comply with the
following principles to the extent permitted by Law: (i) use reasonable efforts
to differentiate such Products approved for Exclusive Indications from
Co-Promotion Products, (ii) use reasonable efforts to prevent sales of
 

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such Products approved for Exclusive Indications for off-label use for
Co-Development Indications and (iii) not promote any such Product approved for
Exclusive Indications for any Co-Development Indication for which a Product for
Co-Development Indication is being Developed or Commercialized.
               (d) The Parties acknowledge that with respect to Co-Promotion
Products approved for one or more Co-Development Indications but not approved
for Exclusive Indications, off-label sales for use to Treat Exclusive
Indications for which such Co-Promotion Products are not approved could have an
adverse impact on one or more Products for Exclusive Indications that Astellas
is Commercializing, but not Co-Promoting with Maxygen. Accordingly, in order to
help protect the value of any such other Products for Exclusive Indications,
Maxygen agrees to comply with the following principles to the extent permitted
by Law: (i) use reasonable efforts to differentiate such Co-Promotion Products
from such other Products for Exclusive Indications, (ii) use reasonable efforts
to prevent sales of such Co-Promotion Products for off-label use for Exclusive
Indications and (c) not promote any such Co-Promotion Product for any Indication
for which such Co-Promotion Product has not been approved.
          5.2.5 Co-Promoting Party is not a Distributor. The Parties recognize
that unless the Parties otherwise agree Maxygen shall not be a distributor.
Accordingly, Maxygen may receive orders from Third Parties for the applicable
Co-Promotion Product(s), but shall transmit such orders to Astellas (or its
designee) and Astellas (or its designee) shall book all sales resulting from
such orders.
          5.2.6 Separate Agreement. If Maxygen so exercises its Co-Promotion
Option for a Co-Promotion Product, Astellas (or its Affiliates) and Maxygen (or
its Affiliates) shall enter into good faith negotiations to conclude a
definitive agreement, within [****] days of Astellas’ receipt of Maxygen’s
Co-Promotion Notice, which will outline in more detail the overall framework for
the Co-Promotion activities of the Parties with respect thereto, including roles
and responsibilities of each Party, consistent with the provisions of this
Section 5.2. Such agreement shall address among other things: (i) number of
sales representatives, managed market representatives and medical affairs
personnel to be made available by Maxygen to be used and the proportion of their
time to be devoted to Co-Promotion of the Co-Promotion Product(s), including
assignment of detailing responsibilities by market segment within such country
(including number and position of such details) consistent with the Co-Promotion
Percentage; (ii) nature of Co-Promotion activities and call plans (including the
allocation of key decision makers); (iii) Co-Promotion of the Co-Promotion
Product to managed care providers; (iv) medical education programs and
materials, including professional symposia and speaker and peer-to-peer activity
programs, to be used in the Co-Promotion of the Co-Promotion Product;
(v) development and implementation of training programs and training materials
for sales representatives and medical affairs personnel engaged in Co-Promotion;
(vi) plans for the development and use of promotional materials for use in
Co-Promotion activities; (vii) coordination of administrative services and
resources used in Co-Promotion activities; (viii) alignment of territories
within the countries for which the Co-Promotion Option was
 

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exercised; (ix) detail reporting and auditing; (x) sharing of market data;
(xi) alignment of sales representative and medical affairs personnel incentive
compensation; and (xii) joint sales meetings.
          5.2.7 Maxygen Mark. Astellas hereby agrees to the extent allowable
under applicable Law to include on all labels of and package inserts and
marketing materials for Co-Promotion Product(s) the then-current Maxygen
corporate logo as designated by Maxygen from time to time (the “Maxygen Mark”).
It is understood that such inclusion of the Maxygen Mark shall be consistent
with industry standards and all applicable laws and shall be of equal prominence
to Astellas’, its Affiliate’s and its sublicensees’ trademarks included on such
labels, package inserts and marketing materials. In all cases the Maxygen Mark
shall be legible, conspicuous and have a size of no smaller than such corporate
logo of Astellas, its Affiliate or its sublicensees, as applicable on such
Co-Promotion Products. Accordingly, Maxygen hereby grants to Astellas a
non-exclusive, royalty-free license to use the Maxygen Mark solely in connection
with the marketing, promotion and sale of the Co-Promotion Product(s) in the
Field hereunder. Astellas shall obtain Maxygen’s prior approval as to the
appearance and placement of the Maxygen Mark on any label, packaging or other
materials as provided herein, provided that, in no event, shall Astellas be
obligated to display the Maxygen Mark in a manner that is inconsistent with
Astellas’ standard policies and procedures therefor or in a manner that is
inconsistent with applicable Laws and Astellas shall not be required to obtain
Maxygen’s prior approval as to placement of the Maxygen Mark on any label,
packaging or other materials to the extent Maxygen has previously approved such
placement or substantially similar placement on any other label, packaging or
other materials. If Maxygen notifies Astellas that Maxygen wants to change the
appearance and/or placement of the Maxygen Mark on such label, packaging or
other materials, Astellas will use reasonable efforts to accommodate such
request within a reasonable time period under the circumstances (taking into
account transition periods that may be required to accommodate such changes,
applicable Laws and similar factors) and Maxygen shall reimburse Astellas’
reasonable costs and expenses incurred in accommodating such request. Astellas
shall use reasonable efforts to keep Maxygen apprised through the JSC of any
significant concerns or complaints of which Astellas becomes aware with respect
to the quality of Products, and agrees to discuss concerns Maxygen may have
regarding such matters at Maxygen’s reasonable request. Notwithstanding anything
herein to the contrary, upon Maxygen’s written request, Astellas, its Affiliates
and its sublicensees agree to cease (or caused to be ceased) such use of the
Maxygen Mark with respect to any specified Co-Promotion Product in any specified
country to the extent permitted by applicable Laws, provided (i) that Astellas,
its Affiliates and its sublicensees may continue to use any labels, package
inserts and marketing materials in existence (or reasonably generated thereafter
during such transition period as is reasonably required to effectuate the
changes required to be made to such materials to accommodate such cessation) as
of the receipt of such notice and (ii) in such case Astellas’ obligation to
include the Maxygen Mark on labels, package inserts and marketing materials for
Co-Promotion Product(s) shall terminate.
          5.2.8 Costs; Profit Sharing.
               (a) Each Party shall maintain records in sufficient detail as
will properly reflect all work done, and Costs incurred, in the performance of
activities arising out of, in conducting, or otherwise in connection with the
Co-Promotion Plan.

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               (b) Profits (and Losses) arising from the activities under the
Co-Promotion Plan(s) shall be shared, allocated and accounted for by the Parties
as set forth in Section 3.3 of the Financial Exhibit.
          5.2.9 Termination. Subject to Section 4.5.2 (c)(ii)(B) of the
Financial Exhibit, Maxygen shall have the right to terminate its Co-Promotion of
any Co-Promotion Product, and its obligations under this Section 5.2 with
respect to such Co-Promotion Product, on a Product-by-Product and
country-by-county basis, upon [****] days’ prior notice to Astellas. From and
after the effective date of such termination by Maxygen such Co-Promotion
Product shall no longer be a Co-Promotion Product hereunder in the applicable
terminated country(ies), but, for the avoidance of doubt, shall remain a Product
for Co-Development Indications for which it has received Marketing Approval(s)
for all purposes of this Agreement.
     5.3 Reports. As the JPT may designate from time to time, each Party shall
prepare and provide to the other Party a written report that summarizes the
progress of the Co-Promotion activities performed and Alliance Technology made
by such Party hereunder during the preceding calendar quarter, identifies any
issues or circumstances of which it is aware that may prevent or adversely
affect in a material manner its performance of Co-Promotion in accordance with
this Article 5; and, to the extent reasonably practicable, identifies steps that
may be taken, or changes that may be made, to resolve such issues.
     5.4 Bundled Products. If Astellas or its Affiliate sells a Product to a
Third Party bundled with other products (such Product and other products are,
collectively, “Bundled Products”), the Net Sales of such Product, for the
purposes of the Financial Exhibit, shall be calculated by adjusting the Net
Sales of such Product to equal a pro rata portion of the Net Sales of all
Bundled Products in such bundle, determined on the basis of the Product’s
contribution to the fair market value of all the Bundled Products (which shall
be determined using the relative list prices of the applicable Product and other
products in the bundle if sold separately in a given country, otherwise based on
relative fair market value as the Parties may agree or as determined in
accordance with Article 14) to the extent that the Net Sales of such Bundled
Product are not already adjusted pursuant to Section 2.1.3(c) of the Financial
Exhibit.
ARTICLE 6
MANUFACTURING, REGULATORY & OTHER MATTERS
     6.1 Manufacturing.
          6.1.1 Initial Period; Certain General Terms.
               (a) Subject to the oversight of the Committees, as applicable,
Maxygen shall be responsible, using Diligent Efforts, for (1) the Manufacture
and supply of Bulk Drug Substance (in mutually agreed formats) to support
Preclinical Development and Development activities and all Process Development
with respect thereto, and (2) the Manufacture and supply of
 

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Finished Drug Product, on a Product-by-Product basis, to support Development
activities through the completion of all Phase II Clinical Trials for such
Product and all Process Development with respect thereto, in each case
consistent with the applicable Supplies Requirement Plan. Maxygen shall continue
to supply Bulk Drug Substance in accordance with its obligations under
Section 6.1.3, and upon Astellas’ request and reasonable advance notice, Maxygen
shall continue to supply Finished Drug Product under this Section 6.1.1 until
such time as Astellas has scaled-up the manufacturing process for Finished Drug
Product using Bulk Drug Substance supplied by Maxygen at Astellas’ (or its
permitted subcontractor’s) manufacturing facility or until such other time as
reasonably requested by Astellas. Maxygen may only utilize contractors in
fulfilling its responsibilities under this Section 6.1.1 which have been
approved in advance in writing by Astellas (each an “Approved Maxygen CMO”),
which approval shall not be unreasonably withheld or delayed, and Maxygen shall
not subcontract Manufacturing hereunder without such approval.
                    (i) The specifications (including any modifications and
updates established hereunder) for Bulk Drug Substance and Finished Drug
Product, including any applicable packaging, container-closure system component
and labeling specifications, shall be agreed upon in writing by the JPT
consistent with the relevant SOPs and any applicable chemistry, manufacturing
and controls (CMC), or equivalent section, of the applicable IND therefor and
all applicable commercial considerations.
                    (ii) All such Bulk Drug Substance and Finished Drug Product
supplied by Maxygen pursuant to this Section 6.1.1 shall be used by the Parties
solely in accordance with the applicable Preclinical Development Plans,
Co-Development Indication Plan, and development plans for Exclusive Indications
and for Co-Development Indications in the ROW, in each case in accordance with
the terms and conditions of this Agreement.
                    (iii) Each Preclinical Development Plan, Co-Development
Indication Plan and development plan for Exclusive Indications or Co-Development
Indications in the ROW (including updates thereof) for a Product, shall include
a plan setting forth in reasonable detail the requirements of the Parties for
supply of Products, including a good faith timeline and estimated quantities for
Bulk Drug Substance and Finished Drug Product for use in the Preclinical
Development and Development of such Product (each such plan, a “Supplies
Requirement Plan”). The Supplies Requirement Plan for each Product shall be
prepared by the JPT as described in Section 4.1.2(a), or by a Committee
appointed by the JPT to facilitate manufacture and supply of Bulk Drug Substance
and Finished Drug Product for such Product in accordance with Section 4.1.2(a),
and shall take into consideration the applicable Plans for such Product,
including without limitation, the size and number of clinical trials, and
timelines and doses for such clinical trials under such Plans, as well as
Astellas’ development plans for Exclusive Indications or for Co-Development
Indications for outside the Joint Development Territory. In any event, the
Supplies Requirement Plan shall be designed to meet the Parties’ requirements
for supplies of Bulk Drug Substance and Finished Drug Product to perform
Preclinical Development and Development hereunder. Maxygen shall use Diligent
Efforts to deliver to Astellas or its designee the specified quantities of Bulk
Drug Substance and Finished Drug Product in accordance with the delivery
schedule therefor set forth in the Supplies Requirement Plan (collectively,
“Astellas’ Requirements”). The Supplies Requirement Plan shall serve as the
mechanism to provide Maxygen reasonable advance notice of forecasted
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Development of Compounds and associated Products (including without limitation
Development activities for Exclusive Indications for the Territory and for
Co-Development Indications for outside the Joint Development Territory that are
not covered by the Plans) and shall specify the form, quantities, and delivery
schedule of Bulk Drug Substance and Finished Drug Product needed for Preclinical
Development and Development of such Product. The delivery schedules set forth in
the Supplies Requirement Plan shall provide sufficient advance notice as is
reasonably required to permit the Manufacture and supply of Astellas’
Requirements on the applicable delivery schedule and shall be adjusted by the
JPT as needed if any delay or change in the applicable Preclinical Development
Plan, Co-Development Indication Plan or development plan for Exclusive
Indications or Co-Development Indications in the ROW for a Product necessitates
such change to provide Maxygen with reasonable advance notice to Manufacture and
supply Astellas’ Requirements; provided, however, that neither Party shall have
the right to cast a deciding vote with respect to an adjustment in the delivery
schedule of the Supplies Requirement Plan.
                    (iv) Maxygen shall supply the quantity of Bulk Drug
Substance and Finished Drug Product subject to (iii) above, along with
appropriate documentation including Certificate of Analysis (describing the
specifications therefor, results of tests performed and certifying compliance
with such specifications and applicable cGMP requirements), BSE free statement,
GMP declaration statement, and other documentation to be defined by the Parties,
to locations designated by the Parties from time to time. The Parties shall
enter into a separate quality agreement related to the Manufacture and supply of
clinical supplies.
                    (v) Should Maxygen or its Approved Maxygen CMO
(s) experience Manufacturing difficulties that, or have reason to believe that
it is likely to experience difficulties that would, result in a significant
delay in delivery of such Bulk Drug Substance and Finished Drug Product or is
otherwise unable to supply Astellas’ Requirements in a given quarter, Maxygen
shall promptly notify Astellas of such delay and work together with Astellas in
good faith to develop a solution to address and minimize such delay and any
impact thereof. Furthermore, Section 6.1.6 shall apply in the case of certain
supply failures as provided below.
                    (vi) Maxygen shall permit Astellas, or its designees, upon
reasonable notice to audit the facilities, systems and personnel involved in
fulfilling its obligations under the Supplies Requirement Plan (and shall
contractually obligate Approved Maxygen CMOs to provide substantially similar
audit rights to Astellas or to Maxygen, which in the case of Maxygen shall be
exercised by Maxygen upon reasonable request by and for Astellas). Maxygen shall
consider in good faith and take reasonable action to follow any guidance given
by Astellas based on such audit in due course (as far as such guidance is
reasonable).
                    (vii) Maxygen hereby represents and warrants with respect to
Bulk Drug Substance and Finished Drug Product supplied to Astellas (or its
designee) by Maxygen, its Affiliates or an Approved Maxygen CMO hereunder, that:
such Bulk Drug Substance and Finished Drug Product will have been manufactured,
stored and shipped in accordance with applicable Law (including cGMP) and not be
adulterated or misbranded and will have been manufactured in accordance, and be
in conformity, with the specifications for the Bulk Drug Substance and Finished
Drug Product established by the JPT in accordance with this Section 6.1.1.
MAXYGEN EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES WITH RESPECT TO

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ANY BULK DRUG SUBSTANCE OR FINISHED DRUG PRODUCT SO SUPPLIED INCLUDING
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
                    (viii) Astellas hereby represents and warrants with respect
to Bulk Drug Substance and Finished Drug Product, if any, supplied to Maxygen
hereunder by Astellas or its Affiliate or an Approved Astellas CMO for the
conduct of clinical trials by Maxygen, that: such Bulk Drug Substance and
Finished Drug Product will have been manufactured, stored and shipped in
accordance with applicable Law (including cGMP) and not be adulterated or
misbranded and will have been manufactured in accordance, and be in conformity,
with the specifications for the Bulk Drug Substance and Finished Drug Product
established by the JPT in accordance with this Section 6.1.1, provided that this
representation and warranty shall not apply to Bulk Drug Substance or Finished
Product supplied by Maxygen, its Affiliates or an Approved Maxygen CMO to the
extent that Maxygen is in breach of its representation and warranty regarding
such Bulk Drug Substance or Finished Product under Section 6.1.1(a)(vii).
ASTELLAS EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES WITH RESPECT TO ANY
BULK DRUG SUBSTANCE OR FINISHED DRUG PRODUCT SO SUPPLIED INCLUDING
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. With respect to other Bulk
Drug Substance or Finished Drug Product, if any, manufactured by Astellas or its
Affiliate or an Approved Astellas CMO pursuant to this Agreement, in the event
(and to the extent) that such Bulk Drug Substance or Finished Drug Product is
not manufactured, stored and shipped in accordance with applicable Law
(including cGMP), or is adulterated or misbranded, or is not manufactured in
accordance, and in conformity, with the specifications for the Bulk Drug
Substance and Finished Drug Product established by the JPT in accordance with
this Section 6.1.1, except to the extent in each of the foregoing cases due to
Maxygen’s breach of its representation and warranty under Section 6.1.1(vii),
the Manufacturing Costs with respect to any such quantities of Bulk Drug
Substance or Finished Drug Product shall be borne by Astellas and shall not be
taken into account for purposes of determining Costs to be shared by the
Parties, or Operating Expenses or Distributable Profit, pursuant to the
Financial Exhibit,.
                    (ix) Each Party shall maintain, or cause to be maintained
(A) all records necessary to comply with all applicable Law relating to the
manufacture of the Bulk Drug Substance and Finished Drug Product supplied under
this Section 6.1.1 (or otherwise under this Agreement) and (B) all manufacturing
records, standard operating procedures, equipment log books, batch records,
laboratory notebooks and all raw data relating to the manufacture of such Bulk
Drug Substance and Finished Drug Product, which shall be retained for such
period as may be required by applicable Law.
               (b) Bulk Drug Substance and Finished Drug Product supplied by
Maxygen to the Alliance pursuant to this Section 6.1.1 shall be supplied to the
Alliance at [****] percent ([****]%) of Maxygen’s Manufacturing Costs, and
Manufacturing Costs of Bulk Drug Substance and Finished Drug Product supplied by
Maxygen pursuant to this Section 6.1.1 and Costs incurred by Maxygen for any
Process Development described in this Section 6.1.1 shall be shared, paid,
allocated and accounted for by the Parties as follows: (i) with respect to
Preclinical
 

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Development, shared, allocated and accounted by the Parties as set forth in
Section 3.1 of the Financial Exhibit; (ii) with respect to Development of
Products for Co-Development Indications for the Joint Development Territory,
shared, paid, allocated and accounted for by the Parties as set forth in
Section 3.2 of the Financial Exhibit, and (iii) with respect to Development of
Products for Co-Development Indications in the ROW and Development of Products
for Exclusive Indications throughout the Territory, solely borne by Astellas as
set forth in Section 3.2 of the Financial Exhibit.
          6.1.2 Beginning with Initiation of Phase III Clinical Trials and
Commercialization.
               (a) Subject to the oversight of the Committees, as applicable,
and transfer of Manufacturing Technology pursuant to Section 6.1.5, Astellas
shall be responsible for the Manufacture and supply of Finished Drug Product
using Bulk Drug Substance supplied by Maxygen pursuant to Section 6.1.3, unless
otherwise agreed in writing by the Parties, on a Product-by-Product basis, to
support Development activities beginning with the Initiation of the first Phase
III Clinical Trial for such Product and Commercialization, and all Process
Development with respect thereto, in each case consistent with the then-current
Plans (including the development plan for Exclusive Indications and for
Co-Development Indications in the ROW) and Supplies Requirement Plan; provided,
however unless otherwise agreed by the Parties, Maxygen shall continue to supply
Finished Drug Product for any clinical trials or other activities with respect
to such Product that are ongoing at the time of Initiation of such first Phase
III and, upon Astellas’ request and reasonable advance notice, Maxygen shall
continue to supply Finished Drug Product to Astellas until such time as Astellas
(or its permitted subcontractor) has scaled-up the manufacturing process at its
manufacturing facility or until such other time as reasonably requested by
Astellas.
               (b) Manufacturing Costs of Finished Drug Product supplied by
Astellas or Maxygen pursuant to this Section 6.1.2 and Costs incurred by
Astellas or Maxygen associated with the conduct of Process Development described
in Section 6.1.2 shall be shared, paid, allocated and accounted for by the
Parties as follows: (i) with respect to Development of Products for
Co-Development Indications for the Joint Development Territory, shared,
allocated and accounted by the Parties as set forth in Section 3.2 of the
Financial Exhibit, (ii) with respect to Commercialization of Co-Promotion
Products in the Co-Promotion Countries, shared, allocated and accounted by the
Parties as set forth in Section 3.3 of the Financial Exhibit and (iii) with
respect to Development in the ROW and Commercialization outside the Co-Promotion
Countries of Products for Co-Development Indications and Development and
Commercialization of Products for Exclusive Indications throughout the
Territory, solely borne by Astellas as set forth in Sections 3.2 or 3.4 of the
Financial Exhibit or the applicable supply agreement.
          6.1.3 Bulk Drug Substance Supply.
               (a) Subject to the oversight of the Committees, as applicable,
Maxygen shall use Diligent Efforts to Manufacture and supply (itself, or through
Affiliates or Approved Maxygen CMOs) Bulk Drug Substance to be incorporated in
Finished Drug Products described in Section 6.1.2 and all Process Development
with respect thereto. The Parties agree to enter into one or more separate
supply agreements on a Product-by-Product basis, as required, prior to the
Initiation of the first Phase III Clinical Trial for a Product for the supply of
the applicable Bulk Drug Substance by Maxygen to Astellas, which agreement(s)
shall be substantially consistent with the terms and conditions set out in
Exhibit 6.1.3(a) and this Section 6.1.3, and shall enter a separate

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quality agreement with respect thereto allocating the responsibilities with
respect to quality control and inspection matters. Each such supply agreement
and quality agreement shall contain terms and conditions standard and customary
for the pharmaceutical industry and shall be consistent with the terms and
conditions of this Agreement.
               (b) Manufacturing Costs of Bulk Drug Substance supplied by
Maxygen pursuant to this Section 6.1.3 and Costs incurred by Maxygen associated
with the conduct of Process Development described in this Section 6.1.3 for
Development purposes shall be shared, paid, allocated and accounted for by the
Parties as follows: (i) with respect to activities for the Joint Development
Territory for Development of Products for Co-Development Indications, shared,
paid, allocated and accounted by the Parties as set forth in Section 3.2 of the
Financial Exhibit and (ii) with respect to Development of Products for
Co-Development Indications in the ROW and Development of Products for Exclusive
Indications throughout the Territory, Astellas shall reimburse Maxygen as set
forth in Section 3.2 of the Financial Exhibit.
               (c) With respect to Bulk Drug Substance supplied by Maxygen
pursuant to this Section 6.1.3 for Commercialization purposes, Astellas shall
pay to Maxygen a transfer price of [****] percent ([****]%) of the Net Sales of
such Product (on a per-unit basis) in such country during the most recent
calendar quarter ending at least [****] prior to the delivery date of such
Product, provided, however, that if Maxygen’s actual Manufacturing Cost (on a
per-unit basis) for one or more Products supplied for sale in a given country in
any given calendar quarter exceeds [****] percent ([****]%) of the Net Sales of
such Product(s) (on a per-unit basis) in such country during the most recent
calendar quarter ending at least [****] prior to the delivery date of such
Product, then Astellas shall be required to pay Maxygen [****] percent ([****]%)
of Maxygen’s actual Manufacturing Cost for such Product(s), subject to
Section 6.1.6.
     For clarity, amounts payable pursuant to this Section 6.1.3(c) shall be in
addition to other amounts payable under the Financial Exhibit, including, if
applicable, royalties under Article 2 thereof.
          6.1.4 Coordination.
               (a) In fulfilling its respective rights and obligations with
respect to the Manufacture and supply of Bulk Drug Substance and Finished Drug
Product hereunder, each Party agrees to give due consideration to utilizing the
other Party, including for component production, fill and finish, as a second
source or otherwise. In addition, each Party agrees to coordinate and cooperate
with the other Party with regard to the Manufacture and supply of Bulk Drug
Substance and Finished Drug Product hereunder so as to minimize costs associated
therewith, including when approaching Third Parties regarding potentially acting
as a contract manufacturer for one or more Bulk Drug Substance or Finished Drug
Product.
               (b) The Parties acknowledge the overall goal of Manufacture and
supply of Bulk Drug Substance and Finished Drug Product hereunder at reasonable
cost commensurate with
 

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other biologics for the pharmaceutical industry taking into consideration all
applicable factors including overall quality of Manufacture, ensuring
availability and consistency of high-quality supply, and reputation and history
of any contractor.
          6.1.5 Transfer of Finished Drug Product Manufacturing Technology.
Maxygen shall timely transfer to Astellas or a Third Party manufacturer
designated by Astellas and approved in advance in writing by Maxygen, such
approval not to be unreasonably withheld (any contract manufacturer of Astellas
that is so approved referred to herein as an “Approved Astellas CMO”) all
Maxygen Know-How Controlled by Maxygen or its Affiliate(s) that is necessary or
reasonably useful for Astellas or such Approved Astellas CMO (as appropriate) to
be able to replicate the process employed by or on behalf of Maxygen to
manufacture Finished Drug Product from Bulk Drug Substance to ensure timely
transfer of responsibility for the Manufacture of Finished Drug Product from
Maxygen to Astellas in accordance with Section 6.1.2 and so that Astellas can
Manufacture sufficient quantities in a timely manner of Finished Drug Product to
be used for all Phase III Clinical Trials hereunder. Furthermore, as may be
reasonably requested by Astellas from time-to-time, Maxygen shall provide to
Astellas (or an Approved Astellas CMO) reasonably necessary manufacturing
information in advance of the technology transfer described in the preceding
sentence so that Astellas (or its Approved Astellas CMO) can be prepared to
Manufacture Finished Drug Products from Bulk Drug Substance on a timely basis in
accordance with Section 6.1.2. The foregoing transfers shall include transfer of
all Maxygen Know-How Controlled by Maxygen or its Affiliate(s) that is necessary
or reasonably useful for Astellas or such Approved Astellas CMO (as appropriate)
to be able to replicate the process (including, without limitation, complying
with all applicable regulatory requirements for transfer of manufacture of a
biologic) employed by or on behalf of Maxygen to manufacture Finished Drug
Products from Bulk Drug Substance for which Maxygen was responsible under the
Preclinical Development Plan, Co-Development Indication Plan and/or development
plans for Exclusive Indications and/or Co-Development Indications in the ROW,
and reasonable consultation and assistance as required to use and implement such
Maxygen Know-How. For the avoidance of doubt, nothing in this Section 6.1.5 with
respect to Maxygen’s obligation to transfer manufacturing know-how to Astellas
shall limit Maxygen’s right to use any manufacturing know-how in order to
fulfill Maxygen’s obligations in accordance with this Article 6. Maxygen shall
transfer such manufacturing know-how under this Section 6.1.5 to Astellas at no
additional cost to allow Astellas to manufacture Finished Drug Product from Bulk
Drug Substance, and shall transfer manufacturing know-how to an Approved
Astellas CMO under this Section 6.1.5 solely at [****]).
          6.1.6 Transfer of Bulk Drug Substance Manufacturing Technology.
               (a) Bulk Drug Substance for Clinical Supplies.
                    (i) Delay. In the event that Maxygen or its Approved Maxygen
CMO fails to Manufacture and supply Astellas’ Requirements for clinical supplies
of Products in a timely manner to permit supply to Astellas pursuant to
Section 6.1.1 in accordance with the delivery schedule set forth in the
applicable Supplies Requirement Plan, and such failure to supply results in a
 

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delay of more than [****] months in the conduct of any clinical trials for a
Product as set forth in the applicable Plan (and provided that such failure to
supply is not caused by or attributable to a No-Fault Cause, as defined below),
then the Parties, through the JSC, shall discuss whether or not to establish a
second contract manufacturer for the manufacture and supply of Bulk Drug
Substance for use in Development of Products. As used herein, “No-Fault Cause”
means (A) failure of the JPT (or JSC, as applicable) to agree upon or determine
the applicable specifications, protocols to be provided to such manufacturer,
the quantities to be supplied or delivery schedule in sufficient advance of such
delivery schedule to reasonably permit such supply or (B) any change requested
by Astellas, required or approved by and applicable Committee, or required by
applicable Regulatory Authority or applicable Law in applicable specifications,
protocols, quantities or delivery schedule, (C) delays in approval of the
applicable Approved Maxygen CMO under Section 6.1.1(a), or (D) Astellas’
disapproval of, or delay in approving, (x) a proposal by Maxygen to engage an
Approved Maxygen CMO, (y) a proposal to enter into (or make a material
modification to) a supply agreement with an Approved Maxygen CMO, or (z) a
proposal by Maxygen to include in the Budget (or Astellas’ disapproval or delay
in approving a Budget proposed by Maxygen containing) appropriate and timely
payments to an Approved Maxygen CMO for such Product (provided that the
foregoing items in (D) shall constitute a “No-Fault Cause” only if and to the
extent that (I) in connection with the proposals described in (x), (y) and
(z) above, Maxygen provided notice to the JSC (either within the Supplies
Requirement Plan or otherwise) as to when a delay or failure in the applicable
approval would likely lead to delays or an inability to supply Product as
required above, and (II) the delivery schedule in the Supplies Requirement Plan
is not adjusted to accommodate the applicable delay in approval, or disapproval,
by Astellas).
                    (ii) Approaches to Resolve. The Parties acknowledge that,
unless the Parties mutually agree otherwise, it is their intent to prioritize
their efforts subject to Section 6.1.6(c) to the extent reasonably practicable
toward working with the first contract manufacturer to resolve the issues
causing such failure to supply. If the Parties agree to establish another
Approved Maxygen CMO or Approved Astellas CMO for the supply of Bulk Drug
Substance for clinical supplies, then Maxygen shall transfer applicable
manufacturing technology and responsibility for manufacture of the applicable
Bulk Drug Substance for Development, as set forth in Section 6.1.6(c), to the
agreed-upon Approved Maxygen CMO or Approved Astellas CMO as applicable, and if
the Parties do not so agree but Astellas wishes to so establish another
manufacturer for such supply of Bulk Drug Substance and provides written notice
thereof to Maxygen, then Maxygen shall transfer applicable manufacturing
technology for manufacture of the applicable Bulk Drug Substance for
Development, as set forth in Section 6.1.6(c), to (as directed by Astellas)
Astellas, its Affiliates, or an approved Astellas CMO.
                    (iii) Costs. If the Parties agree to the establishment of
such second contract manufacturer for supply of Bulk Drug Substance for clinical
supplies, then the Costs associated with the transfer of manufacturing
technology pursuant to Section 6.1.6 and establishment of such additional
contract manufacturer shall be shared by the Parties in accordance with the
Financial Exhibit. If the Parties do not so agree but Astellas elects to
transfer manufacturing to Astellas, its Affiliates or an Approved Astellas CMO
(the “New Manufacturer”) for such supply of
 

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Bulk Drug Substance, then (A) the Costs associated with continued efforts to
work with the existing Approved Maxygen CMO (the “Existing Manufacturer”) shall
be borne initially by [****], (B) the Costs associated with the transfer of
manufacturing technology pursuant to Section 6.1.6 and establishment of the New
Manufacturer shall be borne initially by [****], (C) if the New Manufacturer is
established, prepared and has capability (and has committed to make available
sufficient capacity) to supply the projected required quantities of conforming
Bulk Drug Substance for clinical supplies and, in fact, supplies an initial
shipment of conforming Bulk Drug Substance, all before the Existing Manufacturer
meets the same goals (or if Maxygen elects upon written notice to Astellas to
discontinue efforts to work with the Existing Manufacturer to correct its
failure to supply), then responsibility for supply of the applicable Bulk Drug
Substance shall be transferred to the New Manufacturer in accordance with a
Responsibility Transfer Plan (as defined in Section 6.1.6(b)(i) below) and the
Parties shall use Diligent Efforts to comply with applicable timetables set
forth therein, and the Costs associated with the transfer of manufacturing
technology pursuant to Section 6.1.6 and establishment of the New Manufacturer
shall be [****], and Maxygen’s Costs associated with continued efforts to work
with the Existing Manufacturer shall [****], and (D) if the Existing
Manufacturer is established, prepared and has the capability (and has committed
to make available sufficient capacity) to supply the projected required
quantities of conforming Bulk Drug Substance for clinical supplies and, in fact,
supplies an initial shipment of conforming Bulk Drug Substance, all before the
New Manufacturer meets the same goals (or if Astellas elects upon written notice
to Maxygen to discontinue efforts to establish the New Manufacturer for such
supply), then the Costs associated with continued efforts to work with the
Existing Manufacturer shall be [****], and the Costs associated with the
transfer of manufacturing technology pursuant to Section 6.1.6 and efforts to
establish the New Manufacturer shall [****].
               (b) Bulk Drug Substance for Commercial Supplies.
                    (i) Failure to Supply; Transfer Costs. If (1) Maxygen fails
to supply, in [****], at least [****] percent ([****]%) of Astellas’
Requirements for Bulk Drug Substance ordered by Astellas in accordance with the
terms and conditions (including forecasting provisions) of an applicable supply
agreement between the Parties for commercial supply of Products as described in
Section 6.1.3(a), and (2) Astellas so requests in writing within [****] days
after the end of such [****], then Maxygen shall transfer applicable
manufacturing technology and (subject to a reasonable transition) responsibility
for manufacturing Commercial supplies of the applicable Bulk Drug Substance, as
set forth in Section 6.1.6(c), to another Approved Maxygen CMO or to Astellas or
its Affiliates or an Approved Astellas CMO, as requested by Astellas. In such
event, the Costs associated with the transfer of manufacturing technology
pursuant to Section 6.1.6 shall be shall be shared by the Parties on a [****]
basis. The Parties shall seek to effect the transfer of responsibility for
manufacture and supply of the applicable Bulk Drug Substance to the new
manufacturer in a smooth, orderly and timely manner. To aid in such transition,
the Parties shall agree upon a Responsibility Transfer Plan within [****] days
of Astellas’ request to transfer manufacturing in accordance with this
Section 6.1.6(b)(i) and the Parties shall use Diligent Efforts to achieve the
tasks and comply with applicable timetables set forth therein. As used herein, a
“Responsibility Transfer Plan” means a reasonable plan and timetable agreed by
the Parties for the
 

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transfer of manufacture and supply responsibilities with respect to a particular
Bulk Drug Substance, taking into account continued sale of existing conforming
Bulk Drug Substance and of in-process Bulk Drug Substance, wind-up of
manufacturing processes and (if applicable) agreements with Third Party contract
manufacturers, obtaining and submitting data necessary to support regulatory
filings related to, and applicable regulatory approval of, the new manufacturer,
in support of the new manufacturer, and capability and capacity of the new
manufacturer to supply conforming Bulk Drug Substance in the anticipated
required quantities.
                    (ii) Price Exceeding [****]% of Net Sales. If (1) Maxygen’s
actual Manufacturing Costs (on a per-unit basis) for Bulk Drug Substance
supplied for incorporation into Finished Product for Commercial sale (excluding
Bulk Substance produced prior to the date one year following commercial launch
in a Major Market Country), in any two consecutive calendar quarters, exceeds
[****] percent ([****]%) of the weighted average Net Sales of such Product (on a
per-unit basis) in all Major Market Countries during the most recent calendar
quarter ending at least [****] days prior to such period, and (2) Astellas
requests in writing within [****] days after the end of such period or any
successive period thereafter (unless Maxygen’s Manufacturing Costs fall below
the threshold described above for such successive period) that Maxygen transfer
applicable manufacturing technology to another Approved Maxygen CMO (subject to
agreement of Maxygen) or Approved Astellas CMO, or to Astellas or its
Affiliates, as requested by Astellas, and (3) provided that Astellas has (a) a
bona fide written price quote from the Approved Astellas CMO for the long-term
supply, over a period of at least [****] years of such Bulk Drug Substance, or
(b) demonstrated that Astellas or its Affiliate(s) will provide long term supply
of such Bulk Drug Substance, in each case in quantities to meet Astellas’
requirements, at a price less than [****] at the time of Astellas’ notice
pursuant to clause (2) of this Section 6.1.6(b)(ii), then: Maxygen shall
transfer applicable manufacturing technology and (subject to a reasonable
transition) responsibility for Commercial supply of such Bulk Drug Substance, as
set forth in Section 6.1.6(c), to an Approved Maxygen CMO (subject to agreement
of Maxygen), Approved Astellas CMO, or Astellas or its Affiliates, as requested
by Astellas. The Parties shall seek to effect the transfer of responsibility for
manufacture and supply of the applicable Bulk Drug Substance to the new
manufacturer in a smooth, orderly and timely manner. To aid in such transition,
the Parties shall agree upon a Responsibility Transfer Plan within [****] days
of Astellas’ request to transfer manufacturing in accordance with this
Section 6.1.6(b)(ii) and the Parties shall use Diligent Efforts to achieve the
tasks and comply with applicable timetables set forth therein. In such event,
the [****].
                    (iii) Establishment of Second Source. If requested in
writing by Astellas at any time after the date three (3) years following launch
of a Product in a Major Market Country (and provided that Maxygen has not
already established a second Approved Maxygen CMO for manufacture and supply of
the applicable Bulk Drug Substance), Maxygen shall engage a second Approved
Maxygen CMO for the purpose of supplying Bulk Drug Substance for such Product
and transfer applicable manufacturing technology, as set forth in
Section 6.1.6(c), to such Approved Maxygen CMO for the purpose of establishing a
second supply source for Bulk Drug Substance for such Product. In such event,
the Costs associated with the transfer of manufacturing technology pursuant to
Section 6.1.6 shall be shared by the Parties as set forth in the Financial
Exhibit.
 

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Notwithstanding Section 6.1.6(b)(ii), above, if Maxygen’s Manufacturing Costs
for commercial supply of Bulk Drug Substance from such second Approved Maxygen
CMO exceeds [****] percent ([****]%) of the [****] of such Product, the price of
such Bulk Drug Substance from such second Approved Maxygen CMO shall not be
taken into account for purposes of determining the applicability of
Section 6.1.6(b)(ii).
                    (iv) Establishment of a Validated Backup. If requested in
writing by Astellas at any time after the Commercial launch of a Product in a
Major Market Country, and provided that Maxygen has not already established a
second Approved Maxygen CMO with respect to such Product (and is not diligently
undertaking the establishment of such a second Maxygen Approved CMO following
request or consent therefor by Astellas), Astellas shall have the right to
engage an Approved Astellas CMO as a back-up manufacturer, or initiate
manufacture itself or through an Affiliate (such Third Party contract
manufacturer, Astellas, or its Affiliate, a “Backup Manufacturer”) for the
purpose of supplying Bulk Drug Substance for such Product in the event of
transfer of Commercial supply of such Bulk Drug Substance in accordance with
Sections 6.1.6(i) or 6.1.6(ii) and transfer applicable manufacturing technology,
as set forth in Section 6.1.6(c), to such Backup Manufacturer for the purpose of
establishing a backup supply source for Bulk Drug Substance for such Product. In
such event, the [****]. Upon validation of a Backup Manufacturer, Astellas shall
have the right to have the Backup Manufacturer manufacture and supply the
minimum amount of Bulk Drug Substance necessary to maintain the validation of
such Backup Manufacturer and shall have the right to include account for such
Bulk Drug Substance for sale in Co-Promotion Countries, if applicable, at a
price equal to Astellas’ Manufacturing Costs therefor.
               (c) Transfer. In the event that Maxygen shall transfer
manufacturing technology as set forth in Sections 6.1.6(a) or (b), above,
Maxygen shall timely transfer to the applicable manufacturer (which may be
Astellas or its Affiliate in the case of transfer pursuant to
Sections 6.1.6(a)(iii) or 6.1.6(b)(i), (ii) or (iv) above) all Maxygen Know-How
and reasonably necessary manufacturing information Controlled by Maxygen or its
Affiliate(s) that is necessary or reasonably useful for such manufacturer to be
able to replicate the process employed by or on behalf of Maxygen to manufacture
Bulk Drug Substance to enable such manufacturer to Manufacture Bulk Drug
Substance. The foregoing transfers shall include transfer of all Maxygen
Know-How Controlled by Maxygen or its Affiliate(s) that is necessary or
reasonably useful for Astellas or such Approved Astellas CMO (as appropriate) to
be able to replicate the process (including, without limitation, complying with
all applicable regulatory requirements for transfer of manufacture of a
biologic) employed by or on behalf of Maxygen to manufacture Bulk Drug Substance
for which Maxygen was responsible under the Preclinical Development Plan,
Co-Development Indication Plan and/or development plans for Exclusive
Indications and/or Co-Development Indications in the ROW. In the event of any
transfer of manufacturing technology as set forth in Sections 6.1.6(a) or (b),
above, Maxygen shall use Diligent Efforts to effect such a transfer and enable
such manufacturer to use and implement such Maxygen Know-How for such
Manufacture (and to provide reasonable consultation and assistance in connection
therewith). In the event that, as described in Section 6.1.3(a), the Parties do
not agree upon establishing a New Manufacturer, but Astellas elects to establish
a New Manufacturer, then Maxygen shall use Diligent Efforts to effect such
transfer,
 

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including provision of documentation for such transfer, and may in its
discretion allocate Maxygen personnel in a manner that prioritizes its efforts
to work with and obtain supply from the Existing Manufacturer for [****] after
written notice from Astellas indicating its desire to transfer manufacturing
responsibility, but will otherwise, during such [****] period, make such
personnel available for transfer to the New Manufacturer only as reasonably
available in second priority to the efforts of such personnel to work with and
obtain supply from the Existing Manufacturer (it being understood that after
such [****], it will no longer so prioritize and instead prioritize the transfer
to the New Manufacturer). For the avoidance of doubt, nothing in this
Section 6.1.6 with respect to Maxygen’s obligation to transfer manufacturing
know-how to Astellas shall limit Maxygen’s right to use any manufacturing
know-how in order to fulfill Maxygen’s obligations in accordance with this
Article 6. In the event that responsibility for supply of Bulk Drug Substance
for a given Compound is transferred as set forth in this Section 6.1.6 to
Astellas or its Affiliate or an Approved Astellas CMO, then Maxygen shall have
no further obligation hereunder to supply, and shall not be liable hereunder for
any subsequent failure to supply, such Bulk Drug Substance for the applicable
Compound.
          6.1.7 Use of Manufacturing Information. Astellas and/or its Affiliates
shall (and shall contractually obligate their Third Party contract manufacturers
hereunder to) use any information transferred pursuant to Sections 6.1.5 and
6.1.6 in accordance with the licenses granted in Section 9.1.2 and solely for
the purpose of Manufacturing Bulk Drug Substance or Finished Drug Products, as
applicable, for uses permitted under this Agreement, and for no other purpose
(provided, however, that, for the avoidance of doubt, such restriction shall not
apply to the extent of any applicable exclusions in Article 11).
     6.2 Regulatory Matters.
          6.2.1 Co-Development Indications.
               (a) Subject to the oversight of the Committees, as applicable,
Astellas shall own and be responsible for filing, obtaining and maintaining
approvals for Development, Manufacture and Commercialization of Products for
Co-Development Indications in the Field throughout the Territory, including any
IND, MAA, Marketing Approval and any approval for any product labeling or
promotional materials and unless otherwise agreed or required by applicable Law
for such Products, in each case as necessary or appropriate to meet the
requirements and timelines in the applicable Plans with respect to such
Products. Unless otherwise agreed or required by applicable Law, all such
Regulatory Filings and approvals shall be held in the name of Astellas or its
designee.
               (b) Costs incurred by Astellas associated with the regulatory
matters described in Section 6.2.1(a) shall be [****] as follows: (i) with
respect to Preclinical Development, [****] as set forth in Section 3.1 of the
Financial Exhibit, (ii) with respect to Development of Products and Manufacture
with respect thereto, [****] as set forth in Section 3.2 of the Financial
Exhibit, (iii) with respect to Commercialization of Co-Promotion Products in the
Co-Promotion
 

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Countries and Manufacture with respect thereto, [****] as set forth in
Section 3.3 of the Financial Exhibit, and (iv) with respect to Development and
Commercialization of Products for Exclusive Indications in the Territory and
Manufacture with respect thereto, [****] as set forth in Section 3.4 of the
Financial Exhibit.
          6.2.2 Exclusive Indications.
               (a) Astellas shall own and be responsible for filing, obtaining
and maintaining approvals for Development, Manufacture and Commercialization of
Products for Exclusive Indications in the Territory, including any IND, MAA,
Marketing Approval and any approval for any product labeling or promotional
materials and unless otherwise agreed or required by applicable Law for such
Products, in each case as necessary or appropriate to meet the requirements and
timelines in the applicable Plans with respect to such Products. Unless
otherwise agreed or required by applicable Law, all Regulatory Filings and
approvals to the extent solely related to an Exclusive Indication shall be held
in the name of Astellas or its designee. Astellas agrees to keep the JSC
reasonably informed with respect to its activities related to filing, obtaining
and maintaining approvals for Development, Manufacture and Commercialization of
Products for Exclusive Indications in the Major Market Countries (and,
regardless of whether it is a Major Market Country, in the first country in
which each such activity is conducted), including any IND, MAA, Marketing
Approval and any approval for any product labeling, and shall provide the JSC a
reasonable opportunity (subject to Section 2.16) to review and comment on all
such Regulatory Filings in the Major Market Countries prior to submission.
Astellas agrees to keep the JSC reasonably informed with respect to filing of
INDs and obtaining MAAs for Products for Exclusive Indications in other
countries in the Territory.
               (b) Costs incurred by Astellas associated with the regulatory
matters described in Section 6.2.2(a) shall be at the sole Cost of Astellas.
          6.2.3 Filings and Correspondence.
               (a) With respect to any filings and correspondence with respect
to Products for Co-Development Indications for the Joint Development Territory,
Astellas shall promptly provide Maxygen with (i) copies of all Regulatory
Filings including copies of all material correspondence with the relevant
Regulatory Authorities (including minutes of any meetings, telephone conferences
or discussions with relevant Regulatory Authorities to the extent prepared or
obtained for Astellas’ own use); (ii) reasonable advanced notice (to the extent
practicable) of meetings, scheduled or unscheduled, with relevant Regulatory
Authorities that pertain to such Product; and (iii) updates on regulatory
affairs strategies developed for the purposes of above from time-to-time.
Astellas shall afford representatives of Maxygen an opportunity to comment on
such Regulatory Filings, and shall consider such comments, and, to the extent
not prohibited by Law, shall afford representatives of Maxygen an opportunity to
attend and actively participate in all such meetings with relevant Regulatory
Authorities as observers (or as participants in the case of discussions
regarding any CMC component of a Regulatory Filing). Without limiting the
foregoing,
 

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Astellas shall have no obligation to obtain translations of any documents
provided pursuant to this Section 6.2.3(a), but shall provide translations of
such documents into English to the extent prepared or obtained for its own use.
Maxygen shall not be prohibited from obtaining translations of such for its own
purposes.
               (b) With respect to any filings and correspondence with respect
to Products for Co-Development Indications for the Joint Development Territory,
in addition to the consultation set forth in Section 6.2.3(a) with respect to
Regulatory Filings and meetings with Regulatory Authorities, the contents and
subject matter of, and strategy for, any MAA, all correspondence submitted to
Regulatory Authorities related to clinical trial design, all proposed Product
labeling and Product labeling decisions with any Regulatory Authorities, and all
post-Marketing Approval labeling decisions with Regulatory Authorities
(including the final approved labeling), and post-Marketing Approval labeling
changes or expansions, shall be subject to oversight by the Committees, as
appropriate.
          6.2.4 Clinical Safety Reporting; Pharmacovigilance. With respect to
any Adverse Drug Reaction, safety reports under any Regulatory Filing or similar
obligation to report to any Regulatory Authority relating to any Product safety
issue, the Parties shall establish operating procedures to report to the
appropriate Regulatory Authority(ies) all such matters in accordance with the
Laws. Such operating procedures shall include any measures necessary for each
Party to fully comply with such Laws. The Parties agree to implement prior to
the Initiation of the first clinical trial for a Product, a separate agreement
(with first draft to be provided by Astellas) setting forth (i) the
responsibilities and procedures for clinical safety information exchange and
reporting and (ii) the pharmacovigilance responsibilities and procedures for
safety information exchange and reporting. Such agreements shall be updated from
time to time as required by applicable Law or determined by the Parties and
shall include provisions requiring each Party promptly communicate to the other
Party any correspondence related to Product safety to or from any Regulatory
Authority. The strategy and content of all responses to any questions from any
such Regulatory Authority related to such matters received by either Party shall
be subject to review and comment by the Parties, depending on the stage of
Development or Commercialization of such Product (to the extent practical given
the time-frames involved). For purposes of this Section 6.2.4, “Adverse Drug
Reaction” has the meaning as defined in the then-current guidelines and
regulations promulgated by the ICH (International Conference on Harmonization of
Technical Requirements for Registration of Pharmaceuticals for Human Use) and
shall include any “Adverse Drug Experience” as defined in the then-current 21
CFR Sections 312.32 and 314.80.
          6.2.5 Cooperation. Without limiting the provisions of this
Section 6.2, each Party agrees to make its personnel and records reasonably
available, upon reasonable notice to the other Party, at their respective places
of employment for review by and to consult with the other Party on issues
arising related to the activities conducted in accordance with this Section 6.2
or otherwise relating to regulatory matter involving the Products including any
request from any Regulatory Authority, including regulatory, scientific,
technical and clinical testing issues, or otherwise, throughout the Term.
Without limiting the foregoing, Maxygen and Astellas each agrees to cooperate
with the other, at the other’s request, to comply with specific requests of a
Regulatory Authority (such as requests to inspect clinical trial sites), with
respect to Data supplied or to be supplied for filing with such Regulatory
Authority, or with respect to Product supplied by Maxygen.

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Each Party shall ensure that its (and its Affiliates’) contractors likewise
comply with this Section 6.2.5. In this regard, Maxygen agrees to provide to
Regulatory Authorities, or provide reference rights to Astellas as may be
reasonably required, Manufacturing data (including such information as is
required for the CMC section of an IND or MAA, or a drug master file) and/or to
prepare and provide such CMC sections or drug master files (for review and
approval by Astellas), as specifically requested by Astellas, which is
reasonably necessary for Astellas to obtain, proceed towards or maintain
Regulatory Approvals for the Products in the Territory. Any Costs incurred by
Maxygen pursuant to this Section 6.2.5 shall be deemed incurred pursuant to
Section 6.2.1(a) and shared accordingly.
     6.3 Transfer of Data, Technology and Regulatory Filings. From time to time,
or upon reasonable request, each Party shall promptly provide hard and
electronic copies or (with respect to large Regulatory Filings) access and
electronic copies to the other Party all previously undisclosed Data and
Regulatory Filings relating to the Products that are in its possession or
control. Without limiting the foregoing, each Party shall have the right to
access, use and reference the other Party’s Data and reference the other Party’s
Regulatory Filings relating to the Products, and access and use other
non-confidential portions thereof, for purposes of Development and
Commercialization of Products and Manufacture Bulk Drug Substance and Finished
Drug Product, in each case in accordance with this Agreement, including the
right to file such items with Regulatory Authorities. Each Party shall provide
the other Party with such assistance as the other Party reasonably requests from
time to time, to enable such other Party to fully understand and implement the
Data, Regulatory Filings, Alliance Technology and Licensed Technology
transferred under this Section 6.3. Notwithstanding anything herein to the
contrary, in all agreements with Third Parties or Affiliates involving Data,
Maxygen and Astellas, respectively, shall require that such Third Parties and
Affiliates provide the other Party access to all such Data, to the extent
reasonably necessary to fulfill its obligations or exercise the rights granted
to it hereunder. Without limiting the foregoing, with respect to proprietary
information that is not Alliance Technology or such Party’s Licensed Technology,
which proprietary information a Party includes in any Regulatory Filing, such
Party shall to the extent useful in connection with the filing for, prosecution
or maintenance of Regulatory Filings by the other Party make such information
available to the other Party.
     6.4 Insurance. Each Party shall obtain and maintain, during the Term and
for [****] thereafter, comprehensive general liability insurance, including
products liability insurance and coverage for clinical trials, with reputable
and financially secure insurance carriers, or self insurance in a form and at
levels as set forth on Exhibit 6.4. Such liability insurance or self-insurance
shall be maintained on a claim made basis to provide such protection after
expiration or termination of the policy itself or this Agreement. Each Party
shall furnish to the other Party on request certificates issued by the insurance
company setting forth the amount of the liability insurance (or evidence of self
insurance) and a provision that the other Party hereto shall receive with [****]
written notice prior to termination or material reduction to the level of
coverage.
 

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ARTICLE 7
EXCLUSIVITY
     7.1 Exclusivity of Efforts.
          7.1.1 General. In order to encourage the development of Products in
the Field and to help protect the Licensed Technology of each Party that will be
made available to the other Party in connection with the Alliance and the
licenses and rights conveyed hereunder, the Parties agree to the exclusivity
provisions of this Article 7. In partial consideration for the licenses and
rights conveyed herein, including such access to the other Party’s Licensed
Technology as is set forth in this Agreement, each Party covenants that during
the period beginning on the Effective Date and ending on the [****] anniversary
thereof or [****] anniversary of the expiration or termination of this
Agreement, whichever comes earlier (the “Exclusivity Period”), (except (A) for
the conduct of the Preclinical Development, Development, Manufacture and
Commercialization with respect to Compounds and Products pursuant to this
Agreement or, for clarity, by Maxygen and its Affiliates and Third Party
licensees following termination of this Agreement and reversion of rights to
Maxygen as set forth in Article 13, but solely within the scope of the reverted
rights and (B) in the event of termination of this Agreement in its entirety
pursuant to Section 13.2.1, 13.2.2 or 13.4.1, or by Astellas pursuant to
Section 13.3, the obligations of both Parties under this Section 7.1 shall
concurrently terminate on a prospective basis) on its own behalf and on behalf
of its Affiliates (i) not to conduct, participate in or sponsor, directly or
indirectly, any activities directed toward the discovery or research of CTLA-4
Variants or the development, manufacture, and commercialization of any
pharmaceutical product incorporating a CTLA-4 Variant (collectively, such
activities “Competing Activities”) or (ii) appoint, license or otherwise
authorize any Third Party, whether pursuant to such license, appointment, or
authorization or otherwise to perform any Competing Activities.
          7.1.2 Other Uses. Subject to the confidentiality obligations set forth
in Article 11 and notwithstanding Section 7.1.1, nothing herein shall prevent
either Party from using information generated in the Alliance, and information
relating thereto: (i) for general technology development purposes, including the
discovery, research and development of assay, informatics, and expression
technologies, in each case with general applicability and not directed
specifically to Competing Activities in the Field and (ii) in the development of
compounds and products in other programs outside of Competing Activities.
          7.1.3 Permitted Activities. Subject to the confidentiality obligations
set forth in Article 11 and notwithstanding Section 7.1.1, nothing herein shall
prevent Astellas or its Affiliates from [****] in any country of the Territory
(the “Permitted Activities”), provided that (i) Astellas or its Affiliates shall
remain obligated to use Diligent Efforts as and to the full extent stated in
this Agreement and to fulfill its respective Development obligations under this
Agreement, and (ii) neither Astellas nor its Affiliates shall perform any
research or manufacture with respect thereto during the Exclusivity Period.
 

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          7.1.4 Manufacture. In partial consideration for the licenses and
rights conveyed herein, including such access to the Astellas Technology as is
set forth in this Agreement, Maxygen covenants that, for so long as Astellas
retains the exclusive license set forth herein with respect to a given Compound
or Product, Maxygen shall not, and shall cause its Affiliates to not, (except
for the conduct of the Manufacture with respect to Bulk Drug Substance and
Finished Drug Products pursuant to this Agreement or, for clarity, by Maxygen
and its Affiliates and Third Party licensees following termination of this
Agreement and reversion of rights to Maxygen as set forth in Section 13.4, but
solely within the scope of the reverted rights and, in any event, not with
respect to termination by Astellas pursuant to Section 13.3) on its own behalf
and on behalf of its Affiliates (i) Manufacture such Compound or corresponding
Products for, or otherwise supply such Compound or corresponding Products to,
any Third Party, or (ii) otherwise license, appoint, authorize or enable any
Third Party to Manufacture Compounds or Product except to the extent provided in
Article 6 for the Manufacture of Bulk Drug Substance and Finished Drug Product
for use under the Agreement.
     7.2 Post-Effective Date Affiliated Parties. In the event a Party enters
into any transaction (a “Subject Transaction”) whereby a Third Party that is
engaged in Competing Activities becomes an Affiliate of such Party after the
Effective Date (such Affiliate, a “Post-Execution Affiliate”), then such Party
(the “Notifying Party”) shall provide notice to the other Party (for purposes of
this Section 7.2, the “Other Party”), within [****] of the closing of the
Subject Transaction, specifying the identity of the Post-Execution Affiliate and
describing in reasonable detail, to the extent permitted by Law and without
disclosing any proprietary information, the Competing Activities and their
focus. Such notice shall also state whether the Notifying Party elects to:
(i) include all or part the Competing Activities within the activities under the
Alliance on the terms and conditions herein; (ii) Divest all or any portion of
the Competing Activities not so included within the activities under the
Agreement; or (iii) keep separate all or any portion of the Competing Activities
not so included within the activities under this Agreement (a “Separate
Program”), provided that:
          7.2.1 Threshold. The Notifying Party shall not have the right to make
the election under clause (iii) above to maintain a Separate Program if [****]
percent ([****]%) or more of the Post-Execution Affiliate’s business consists of
the Competing Activities (as measured by percentage of research and development
spend or revenue generated with respect to the Competing Activities when
compared to the other assets of the Post-Execution Affiliate’s business
immediately prior to the Subject Transaction), and
          7.2.2 Certain Limitations. In the event the Notifying Party elects the
option described in clause (iii) above to maintain a Separate Program, then
(A) the Notifying Party shall not have the right to exercise any of its rights
or fulfill any of its obligations hereunder through such Post-Execution
Affiliate, (B) such Post-Execution Affiliate shall not receive any license or
other right under any Licensed Technology for such Separate Program, (C) the
Other Party shall not have any license under any Patents or Know-How controlled
by the Post-Execution Affiliate that was not licensed to the Other Party prior
to the Subject Transaction, (D) the Notifying Party shall maintain capacity and
resources at least equivalent to those that were applied by the Notifying Party
to activities under the Alliance or that are reasonably necessary for the
Notifying Party to fulfill its
 

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obligations under the Alliance, to the extent the Notifying Party was required
to maintain such capacity and resources had the Subject Transaction not
occurred, and (E) the Notifying Party shall put procedures and mechanisms in
place (including through contractual obligations between the Notifying Party and
the Post-Execution Affiliate) to separate its activities under Alliance and the
Separate Program including preventing any disclosure of the Confidential
Information of either Party relating to CTLA-4 Variants to the Post-Execution
Affiliate and to prevent receipt or use for activities under the Alliance of any
technology or proprietary information of the Post-Execution Affiliate.
          7.2.3 Divest. For purposes of this Section 7.2, “Divest” means, with
respect to any Competing Activities, (x) the sale, license (exclusive in the
Field) or other transfer of all of the right, title and interest in and to such
Competing Activities in the Field, including all technology, intellectual
property and other assets relating solely thereto, to an independent Third Party
(other than the Post-Execution Affiliate), without the retention or reservation
of any rights, license or interest (other than solely an economic interest)
within the Field by the Notifying Party or Post-Execution Affiliate in such
Competing Activities and (y) the complete shut down of the Competing Activities
such that no technology, intellectual property or other asset primarily relating
thereto is used by the Notifying Party or its Affiliates and delivery of written
confirmation from the Notifying Party to the Other Party that the Notifying
Party and its Affiliates covenant not to use any such technology, intellectual
property and assets solely relating to such Competing Activities during the
Exclusivity Period.
ARTICLE 8
PAYMENTS
     8.1 Certain Payments and Sharing.
          8.1.1 Technology Access Fee. Within [****] after invoice by Maxygen
sent on or after the Effective Date, Astellas shall pay to Maxygen a technology
access fee of Ten Million Dollars ($10,000,000). Such technology access fee
shall be non-refundable, and shall not be creditable against any other amount
due hereunder.
          8.1.2 Development Milestone Payments. Astellas shall pay to Maxygen
the payments based on the achievement of certain manufacturing and development
milestones as set forth in Article 1 of the Financial Exhibit. Such milestone
payments shall be non-refundable, and shall not be creditable against any other
amount due hereunder except as provided in Section 1.3.2 of the Financial
Exhibit.
          8.1.3 Sharing of Costs, Net Sales and Profits (Losses) from the
Alliance. Subject to the terms and conditions of this Agreement, the Parties
shall account for and share certain costs, revenues, profits (losses), as
applicable, associated with the Alliance as set forth in Financial Exhibit.
     8.2 Payments; Foreign Exchange. All payments under this Agreement shall be
made in Dollars by wire transfer to a bank and to an account designated by the
Party receiving such payment. In the event that an underlying transaction giving
rise to a payment hereunder is in currency other than Dollars, payments shall be
calculated based on the closing exchange rates reported in The Wall
 

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Street Journal (Internet U.S. Edition) for the last Business Day of the
applicable reporting period for the payment due.
     8.3 Late Payments. Any payments or portions thereof due hereunder which are
not paid when due shall accrue from the date payment is due until the date of
payment simple interest equal to the lesser of (i) the prime rate as reported in
The Wall Street Journal, Internet U.S. Edition, on the date such payment is due,
plus an additional [****] percent ([****]%), or (ii) the maximum rate permitted
by Law, calculated on the number of days such payment is delinquent. This
Section 8.3 shall in no way limit any other remedies available to either Party.
     8.4 Taxes; Astellas U.S. Affiliate to Pay Distributable Profit Amounts.
Each Party shall bear and, except as otherwise expressly provided in this
Section 8.4, pay any and all taxes, duties, levies, and other similar charges
(and any related interest and penalties), however designated, imposed on that
Party as a result of any payment to the other Party hereunder. Any federal or
state income or franchise tax deductions for payments made by either Party
pursuant to the Agreement shall be for the benefit of the payer. All payments
hereunder shall be made without deduction for such taxes except to the extent
required by applicable Law. If any withholding or similar tax is due with
respect to such a payment, such tax shall be deducted from amounts payable or
otherwise due hereunder by the paying Party and paid to the applicable taxing
authority. Upon request the paying Party shall furnish to the other Party
appropriate evidence of payment of any such tax required by applicable Law.
Furthermore, the Parties shall reasonably cooperate and assist each other in the
preparation and filing of such forms with the applicable taxing authorities as
may provide for relief from withholding and similar taxes with respect to
payments hereunder and in accordance with applicable Laws.
ARTICLE 9
LICENSE GRANTS
     9.1 Licenses To Astellas.
          9.1.1 To Perform Preclinical Development and Development. Subject to
the terms and conditions of this Agreement, Maxygen hereby grants to Astellas a
co-exclusive (i.e., the grantor shall have the right to exercise such license in
accordance with its rights and obligations hereunder with respect to
Co-Development Activities but not grant further licenses to Third Parties,
provided that the use of contractors shall not be deemed a grant of a license)
license in the Territory to use and otherwise exploit subject matter within the
Maxygen Technology (including the right to use and import Products and
Compounds) solely in the Field for the purpose of conducting Preclinical
Development and Development activities with respect to Products and Compounds.
The license granted under this Section 9.1.1 excludes the right to grant
sublicenses without the consent of Maxygen, which consent shall not be
unreasonably withheld, delayed or conditioned; provided, however, that Astellas
shall have the right to exercise such license through its Affiliates and
contractors, which exercise shall not be construed as a sublicense.
 

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          9.1.2 To Manufacture Products. Subject to the terms and conditions of
this Agreement, Maxygen hereby grants to Astellas; a co-exclusive license
(whereby Maxygen retains the right to Manufacture, including the right to make,
have made, and import, Bulk Drug Substance and Finished Drug Product solely for
supply to Astellas (or Astellas’ Affiliates or their designees) hereunder or for
use in Preclinical Development or Development activities as set forth and
permitted herein, but not to grant further licenses to Third Parties (except
limited licenses to contractors solely for the purpose of Manufacturing
Compounds or Products, including Bulk Drug Substance or Finished Drug Product,
solely for supply (directly or through Maxygen) to Astellas or Astellas’
Affiliates, or for supply to Maxygen with respect to activities to be conducted
by Maxygen hereunder pursuant to applicable Plans, or for supply to Maxygen, its
Affiliates or Third Party licensees following termination of this Agreement and
reversion of rights to Maxygen as set forth in Article 13 (but solely within the
scope of the reverted rights), and such license shall otherwise be exclusive to
Astellas) under the Maxygen Technology to Manufacture (including make, have
made, import and use in connection therewith) Compounds and Products in the
Field in the Territory. Astellas shall not exercise its rights to Manufacture
under this Section 9.1.2 other than in accordance with Sections 6.1.2 and 6.1.3
(including under any supply agreement entered into under 6.1.3) using Bulk Drug
Substance supplied by Maxygen (or from Bulk Drug Substance obtained from another
permitted source as expressly permitted under this Agreement or any supply
agreement entered into under 6.1.3) or in accordance with the Bulk Drug
Substance Manufacturing rights provided under Section 6.1.6. The license granted
under this Section 9.1.2 shall include the right to grant sublicenses solely in
connection with the grant of a sublicense to Commercialize such Product under
and in accordance with Section 9.1.3 and any attempt to otherwise grant or
authorize any sublicense shall be null and void; provided, however, that
Astellas shall have the right to exercise such license through its Affiliates
and contractors, which exercise shall not be construed as a sublicense.
          9.1.3 To Commercialize Products. Subject to the terms and conditions
of this Agreement, Maxygen hereby grants to Astellas, an exclusive (even as to
Maxygen except as provided in, and subject to, Section 5.2 with respect to
Co-Promotion Products and except for the sale of Compounds, Products, Bulk Drug
Substance and Finished Drug Product to Astellas or its Affiliates by Maxygen and
its Affiliates) license under the Maxygen Technology to Commercialize
(including, without limitation, sell, have sold, offer for sale and use in
connection therewith) Products and Compounds, in each case solely in the Field
in the Territory. Astellas shall have the right to exercise such license through
its Affiliates and contractors, which exercise shall not be construed as a
sublicense. For clarity, Astellas (or its Affiliates or permitted sublicensees)
shall not sell to Third Parties or otherwise Commercialize Compounds, other than
as finished pharmaceutical Products (other than sales between Astellas, its
Affiliates or permitted contractors or sublicensees for Manufacture of finished
pharmaceutical Products under this Agreement or for bona fide research, testing
or similar purposes in support of Development, Manufacturing and
Commercialization of Products under and in accordance with this Agreement).
               (a) The license granted under this Section 9.1.3 includes the
right to grant sublicenses outside of [****] (each, a “Direct Country”) except
with respect to such Direct
 

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Countries (i) as reasonably necessary to comply with Law or (ii) as mutually
agreed by the Parties hereto.
               (b) For clarity, it is understood and agreed that, except as
provided in Section 9.1.3(a), Astellas (itself or through its Affiliates) shall
be responsible for carrying out the Commercialization of the Products in each
Direct Country, provided that nothing herein shall prevent Astellas from
utilizing contractors in any such country provided that (A) Astellas (or its
Affiliate) books sales of Products in each such Direct Country and (B) marketing
and promotion of Products in each such Direct Country are primarily under Marks
controlled by Astellas except as provided in Section 5.2.7.
               (c) Without limiting Section 9.1.3(a), Astellas shall provide
Maxygen a copy of the final executed sublicense agreement, which may be redacted
for information, if any, that relates to products other than Products (and does
not also relate to Products) or other subject matter not related to this
Agreement, but shall otherwise be a true and complete copy.
               (d) It is understood and agreed that the licenses granted to
Astellas under the Maxygen Technology in Section 9.1.3 include rights with
respect to Combination Products which include one or more active pharmaceutical
ingredients other than Compounds. For the avoidance of doubt, the licenses
granted to Astellas under Section 9.1.3 do not include claims in Patents to the
extent that such claims are not infringed by the making, using, selling,
offering for sale or importing of Compounds and/or Products, but are infringed
by the making, using, selling, offering for sale or importing of such one or
more active pharmaceutical ingredients other than Compounds.
          9.1.4 To the Maxygen Mark. Subject to the terms and conditions of this
Agreement, Maxygen hereby grants to Astellas a non-exclusive license to use the
Maxygen Mark as required pursuant to Section 5.2.7. The license granted under
this Section 9.1.4 shall include the right to grant sublicenses solely in
connection with the grant of a sublicense to Commercialize such Product under
and in accordance with Section 9.1.3 and any attempt to otherwise grant or
authorize any sublicense shall be null and void; provided, however, that
Astellas shall have the right to exercise such license through its Affiliates
and contractors, which exercise shall not be construed as a sublicense.
               (a) The ownership and all goodwill accruing to the Maxygen Mark
arising directly from its use shall vest in and inure to the benefit of Maxygen.
Each Party hereby acknowledges the other Party’s ownership rights in their
respective corporate logo owned in the form existing as of the Effective Date,
and accordingly, agrees that at no time during the Term to challenge or assist
others to challenge such corporate logo owned in the form existing as of the
Effective Date, or the registration thereof or attempt to register any
trademarks, marks or trade names confusingly similar to such corporate logo
owned in the form existing as of the Effective Date.
               (b) In those countries where a trademark license must be
recorded, Maxygen will provide and record a separate trademark license for the
Maxygen Mark. Each Party shall cooperate with the other Party in the preparation
and execution of documents in connection with such recordation.

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          9.1.5 Existing Third Party Licenses. To the extent Astellas or its
Affiliates exercise any rights granted hereunder by Maxygen under Maxygen’s
rights granted under the Existing Third Party License, Astellas and its
Affiliates shall be bound by the field of use and the restrictions set forth in
the Existing Third Party License when exercising such rights.
     9.2 To Maxygen.
          9.2.1 To Perform Preclinical Development and Development. Subject to
the terms and conditions of this Agreement, Astellas hereby grants to Maxygen a
limited, co-exclusive (i.e., the grantor shall have the right to exercise such
license in accordance with its obligations hereunder and to grant further
licenses to Third Parties in connection therewith, but not otherwise grant
further licenses to Third Parties with respect to the Development of Compounds
or Products, provided that the use of contractors shall not be deemed a grant of
a license) license in the Territory to make, use and otherwise exploit subject
matter within the Astellas Technology (including the right to make, have made,
use and import Products and Compounds) solely in the Field and solely for the
purpose of conducting Preclinical Development and Development activities with
respect to Products and Compounds. The licenses granted under this Section 9.2.1
exclude the right to grant sublicenses without the consent of Astellas, which
consent shall not be unreasonably withheld, delayed or conditioned; provided,
however, that Maxygen shall have the right to exercise such license through its
Affiliates and contractors, which exercise shall not be construed as a
sublicense.
          9.2.2 To Manufacture Products. Subject to the terms and conditions of
this Agreement, Astellas hereby grants to Maxygen, a limited, co-exclusive
(i.e., the grantor shall have the right to exercise such license and to grant
further licenses to Third Parties in connection therewith, but not otherwise
grant further licenses to Third Parties with respect to the Development of
Compounds or Products, provided that the use of contractors shall not be deemed
a grant of a license) license under the Astellas Technology to Manufacture
(including, without limitation, make, have made, import and use in connection
therewith) Bulk Drug Substance and Finished Drug Products hereunder in the
Territory. Maxygen agrees to only exercise its right to Manufacture Finished
Drug Product in accordance with Section 6.1.1 and Bulk Drug Substance in
accordance with Section 6.1.3, in each case solely in the Field in the
Territory. The license granted under this Section 9.2.2 excludes the right to
grant sublicenses; provided, however, that Maxygen shall have the right to
exercise such license through its Affiliates and contractors, which exercise
shall not be construed as a sublicense.
     9.3 No Other Rights. Each Party acknowledges that the rights and licenses
granted under this Article 9 and elsewhere in this Agreement are limited to the
scope expressly granted. Accordingly, except for the rights expressly granted
under this Agreement, no right, title, or interest of any nature whatsoever is
granted whether by implication, estoppel, reliance, or otherwise, by either
Party to the other Party. All rights with respect to Know-How, Patents or other
intellectual property rights that are not specifically granted herein are
reserved to the owner thereof. For clarity, Maxygen grants no rights in any
Shuffling Technology hereunder.
     9.4 Licenses of “Intellectual Property”. The Parties acknowledge that the
licenses granted hereunder are intended to be licenses of “Intellectual
Property” as such term is used in Section 365(n) of the United States Bankruptcy
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ARTICLE 10
INTELLECTUAL PROPERTY
     10.1 Common Interest Disclosures. With regard to any information, opinions
or other materials disclosed pursuant to this Agreement by one Party to the
other Party regarding intellectual property or technology owned by Third
Parties, Maxygen and Astellas agree that they have a common legal interest in
determining whether, and to what extent, third party intellectual property
rights may affect the performance of the Preclinical Development or the
Development, Manufacture or Commercialization of Compounds and Products, and
have a further common legal interest in defending against any actual or
prospective Third Party claims based on allegations of misuse or infringement of
intellectual property rights relating to the performance of the Preclinical
Development or the Development, Manufacture or Commercialization of Compounds
and Products. Accordingly, Maxygen and Astellas agree that all such information,
opinions and other materials obtained by Maxygen and Astellas from each other
will be used solely for purposes of the Parties’ common legal interests with
respect to the conduct of this Agreement. All such information, opinions and
other materials shall be treated as protected by the attorney-client privilege,
the work product privilege, and any other privilege or immunity that may
otherwise be applicable. By sharing any such information, opinions and other
materials, neither Party intends to waive or limit any privilege or immunity
that may apply to the shared information, opinions and other materials. Neither
Party shall have the authority to waive any privilege or immunity on behalf of
the other Party with respect to such information, opinions and other materials
without such other Party’s prior written consent, nor shall the waiver of
privilege or immunity resulting from the conduct of one Party be deemed to apply
against the other Party.
     10.2 Ownership.
          10.2.1 Outside the Alliance. Each Party shall retain all of its
rights, title and interest in and to subject matter (including Know-How)
developed prior to the Effective Date or outside of its activities in
performance of the Alliance, including the right to transfer or license such
intellectual property to others for any purpose, subject only to its obligations
under this Agreement, including the exclusivity obligations set forth in
Article 7 and the licenses granted in Article 9. Any such transfer or license
will be made expressly subject to the rights granted herein and the obligations
provided for herein with respect thereto.
          10.2.2 Alliance Technology.
               (a) As between the Parties, title to all inventions and other
subject matter conceived, generated or otherwise made in connection with the
performance of the Alliance (together with all intellectual property rights
therein, including Patents) (i) solely by or under authority of Astellas shall
be owned by Astellas (“Astellas Independent Inventions”), (ii) solely by or
under authority of Maxygen shall be owned by Maxygen (“Maxygen Independent
Inventions”) and (iii) made jointly by or under authority of Astellas and
Maxygen shall be jointly owned by Astellas and Maxygen (“Joint Inventions”).
Except as expressly provided in this Agreement (including being subject to the
licenses herein), it is understood that neither Party shall have an obligation
to account to the other for profits, or to obtain any approval of the other
Party to license, assign or otherwise exploit such jointly owned inventions or
intellectual property, by reason of joint ownership thereof. Astellas
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and in each case any and all intellectual property rights thereto shall be
included in the Astellas Technology and Maxygen Independent Inventions and
Maxygen’s interest in and to Joint Inventions and in each case any and all
intellectual property rights thereto shall be included in the Maxygen
Technology.
               (b) Notwithstanding Section 10.2.2(a), as between the Parties,
title to all Shuffling Improvements developed or otherwise made by or under
authority of either Party, whether alone or jointly with others, in connection
with the performance of the Alliance, shall be owned by, and are hereby assigned
to, Maxygen. Accordingly, Astellas agrees to promptly disclose to Maxygen all
Shuffling Improvements made by or under authority of Astellas during the Term.
As used herein, “Shuffling Improvement” means any invention or other subject
matter comprising compositions or methods for Shuffling. For the avoidance of
doubt, a Patent that does not specifically recite Shuffling in a claim is not a
Shuffling Improvement.
               (c) The inventorship of any subject matter developed or otherwise
made in performing the Alliance shall be determined in accordance with U.S.
patent laws for the purpose of determining ownership under Section 10.2.2(a).
               (d) The Parties recognize and agree that this Agreement is a
“joint research agreement” under 35 U.S.C. 103(c)(3). The Parties further agree
to cooperate to avail themselves and each other of the provisions of said
section 35 U.S.C. 103(c) as amended through the CREATE Act on December 10, 2004.
          For purposes of this Section 10.2.2 unless otherwise expressly agreed,
neither Party nor its Affiliates or subcontractors shall be deemed to be “acting
under authority of” the other Party by virtue of this Agreement.
     10.3 Patent Matters.
          10.3.1 Prosecution and Maintenance of Maxygen Patents. Subject to
Section 10.3.3, Maxygen shall have the sole right to control the Prosecution and
Maintenance of Maxygen Patents and Patents claiming Maxygen Independent
Inventions, in its discretion in the ordinary course; provided, however, that:
               (a) during the term of Astellas’ exclusive license hereunder with
respect to the applicable Maxygen Patents or Patent claiming Maxygen Independent
Inventions, Maxygen shall diligently Prosecute and Maintain any such Patents
which contain one or more Valid Claims (or, in the case of patent applications,
one or more claims which, if issued, would be Valid Claims) (1) in the countries
identified in Exhibit 10.3.1 (the “Core Countries”), if any, and [****] and
(2) in such other countries as Astellas may request in writing, and [****];
further provided, however, that either Party may elect, upon [thirty (30)] days
prior written notice the other Party, to [****], on a Patent-by-Patent and
country-by-country basis, in which event (A) if Astellas gives such notice,
(i) all licenses granted to Astellas hereunder with respect to the applicable
Patent in the applicable
 

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country shall terminate, (ii) Astellas shall no longer have any right to enforce
such Patent (after issue), and (iii) Maxygen shall thereafter control the
Prosecution and Maintenance of such Patent (including may thereafter elect
whether to continue Prosecution and Maintenance thereof) in such country in its
sole discretion, and (B) if Maxygen gives such notice, (i) Astellas shall retain
its licenses hereunder with respect to the applicable Patent in the applicable
country, (ii) Astellas shall thereafter control the Prosecution and Maintenance
of such Patent (including may thereafter elect whether to continue or cease
Prosecution and Maintenance thereof) in such country in its sole discretion at
Astellas’ expense, and (iii) the claims of the applicable Patent in such country
shall not be “Valid Claims” for purposes of determining royalties payable to
Maxygen hereunder for Net Sales of Products in such country. For clarity, if
Maxygen elects to Prosecute and Maintain any Maxygen Patents or Patent claiming
Maxygen Independent Inventions which contain one or more Valid Claims (or, in
the case of patent applications, one or more claims which, if issued, would be
Valid Claims) in a country outside of the Core Countries that Astellas has not
requested in writing pursuant to (2) above, Maxygen shall be free to Prosecute
and Maintain such Patent in such country at its sole expense and Astellas shall
not have any right to comment upon such Prosecution and Maintenance in such
country in accordance with Section 10.3.3 nor the right to Prosecute and
Maintain such Patent in such country in the event that Maxygen later elects to
abandon or otherwise no longer maintain such Patent in its sole discretion; and
               (b) with respect to all Maxygen Patents and Patents claiming
Maxygen Independent Inventions that are not addressed in Section 10.3.1(a)
above, Maxygen agrees to Prosecute and Maintain any such Patent in any countries
in its discretion, and Maxygen agrees to Prosecute and Maintain such Patents
(1) in countries where [****], (2) in such other countries as [****], and (3) in
such other countries as [****]; further provided, however, that either Party may
elect, upon [****] days prior written notice the other Party, to [****] as set
forth in this Section 10.3.1(b), on a Patent-by-Patent and country-by-country
basis, in which event (A) if Astellas gives such notice, (i) all licenses
granted to Astellas hereunder with respect to the applicable Patent in the
applicable country shall thereafter be non-exclusive, (ii) Astellas shall no
longer have any right to enforce such Patent (after issue), and (iii) Maxygen
shall thereafter control the Prosecution and Maintenance of such Patent
(including whether to continue Prosecution and Maintenance thereof) in such
country in its sole discretion, and (B) if Maxygen gives such notice,
(i) Astellas shall retain its licenses hereunder with respect to the applicable
Patent in the applicable country, and (ii) Astellas shall thereafter control the
Prosecution and Maintenance of such Patent (including may thereafter elect
whether to continue or cease Prosecution and Maintenance thereof) in such
country in its sole discretion at Astellas’ expense.
          10.3.2 Prosecution and Maintenance of Joint Patents. With respect to
any potentially patentable Joint Invention, Maxygen shall have the first right
to control the Prosecution and Maintenance of Patents covering such Joint
Invention (“Joint Patent”) in each country in the Territory; provided however,
that Astellas shall have the first right to control Prosecution and Maintenance,
in each country in the Territory, of any Joint Patent specifically directed to
the formulation of a Product which does not also contain a Valid Claim (or, in
the case of patent
 

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applications, one or more claims which, if issued, would be Valid Claims).
[****] the Costs of Prosecution and Maintenance of such Patents; provided,
however, that upon [****] days written notice, [****] the Costs of Prosecution
and Maintenance of any such Joint Patent in any country, in which event the
[****] the Prosecution and Maintenance of such Joint Patent in such country [at
its own expense]; provided, however, that (i) in the event that [****], and
(ii) in the event that [****].
          10.3.3 Cooperation. With respect to Maxygen Patents (and Patents
claiming Maxygen Independent Inventions) and Joint Patents, the Party
controlling Prosecution and Maintenance of such Patent as provided in
Section 10.3.1 or 10.3.2 above (the “Controlling Party”) shall provide the other
an opportunity to review and comment upon the text of patent applications within
such Patents filed after the Effective Date at least [****] before filing with
any patent office. The Controlling Party shall provide the other Party with an
electronic copy of each patent application within such Patents as filed,
together with notice of its filing date and serial number. For so long as the
other Party is sharing the costs of Prosecution and Maintenance of any such
Patent in a given country, the Controlling Party shall keep the other Party
advised of the status of all material communications to and from applicable
patent offices in such country, actual and prospective filings or submissions
regarding such Patent in such country, and shall give the other Party an
opportunity to review and comment in advance on any such communications, filing
and submissions proposed to be sent to any patent office in such country and
shall reasonably consider and incorporate comments from the other Party in any
such filings or submissions. Each Party agrees to provide the other Party with
all information necessary or desirable to enable the other Party to comply with
the duty of candor/duty of disclosure requirements of any patent authority. If a
Controlling Party determines in its sole discretion to abandon, cease
prosecution or not maintain or prepare and file (including filing of a priority
patent application, filing of a patent application in any jurisdiction in the
Core Countries claiming priority to a priority application, national phase
filings of a PCT application, and national phase entry of granted a EPC patent)
any Patent controlled by it in any country in the Territory for which the other
Party is sharing costs of Prosecution and Maintenance, then the Controlling
Party shall provide the other Party written notice of such determination at
least [****] days before any deadline for taking action to avoid abandonment (or
other loss of rights) and shall provide the other Party with the opportunity to
Prosecute and Maintain such Patent as the Controlling Party as set forth in
Section 10.3.1 or 10.3.2 above, as applicable.
          10.3.4 Prosecution and Maintenance of Astellas Patents. Astellas shall
have the sole right to control the Prosecution and Maintenance of Astellas
Patents and Patents claiming Astellas Independent Inventions, in its discretion
in the ordinary course, at Astellas’ sole expense. Astellas shall provide
Maxygen an opportunity to review and comment upon the text of the applications
within the Astellas Patents filed after the Effective Date at least [****]
before filing with any patent office. Astellas shall provide Maxygen with an
electronic copy of each patent application within the Astellas Patents as filed,
together with notice of its filing date and serial number. For clarity, Astellas
may determine, in its sole discretion, to abandon, cease prosecution or not
maintain or prepare and file (including filing of a priority patent application
and filing of a patent
 

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application in any jurisdiction in the Territory claiming priority to a priority
application) any Astellas Patent anywhere in the Territory. [****].
          10.3.5 Prosecution and Maintenance. For purposes of this Agreement,
“Prosecution and Maintenance” means, with regard to a Patent, the preparing,
filing, prosecuting and maintenance of such Patent, as well as re-examinations,
reissues, requests for Patent term extensions and the like with respect to such
Patent, together with the conduct of interferences and the defense of
oppositions and other similar proceedings with respect to the particular Patent.
          10.3.6 Patent Term Extensions. Astellas shall have the right to seek
patent term extensions, supplemental protection certificates, and the like for
any Product with respect to any Maxygen Patent claiming specifically the
composition of matter or formulation of the Clinical Candidate incorporated into
such Product. Without limiting the other provisions of this Section 10.3,
Maxygen shall provide, at Astellas’ request and expense, reasonable assistance,
including permitting Astellas, if (and to the extent) so required, to proceed
with applications for such in the name of Maxygen or its Affiliate(s), as
applicable. With respect to patent term extensions, the Parties shall cooperate
in determining, if applicable, which of such Maxygen Patents should be extended.
     10.4 Third Party Technologies.
          10.4.1 Third Party Technology Use. Neither Party shall use in the
course of performing the Alliance or incorporate into any Product any subject
matter which it should reasonably know would require either Party to pay any
amounts to a Third Party in a manner that would increase the funding or payment
obligation of the other Party under this Agreement (unless such Party agrees to
[****]) or otherwise restrict the Development, Manufacture or Commercialization
of the Product without first going through the procedures of Section 10.4.2
below. Notwithstanding the previous sentence each Party may use or incorporate
subject matter licensed by such Party in accordance with an applicable Budget
pursuant to a standard non-exclusive end-user license arrangement (e.g., general
use software, reagents or the like) without such prior procedures, provided that
such arrangements do not vest any rights under the Alliance to any Third Party
or increase any funding or payment obligation of the other Party hereunder
(beyond amounts already provided in the applicable Budgets). Notwithstanding
anything herein to the contrary, neither Party shall use any subject matter or
utilize any Patent in the performance of the Preclinical Development,
Development, Manufacture or Commercialization of a Product that would burden
(i.e., impose a running royalty or any similar payments, excluding the royalties
and similar payments to Maxygen hereunder) the Commercialization of such Product
without the prior agreement of both Parties’ representatives to the JSC without
first going through the procedures described in Section 10.4.2 below.
Notwithstanding anything to the contrary herein, each Party shall be responsible
for paying [****]) of any amounts owed to Third Parties with respect to licenses
and sublicenses to such Party under any agreement between such Party and any
Third Party entered into prior to the Effective Date.
 

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          10.4.2 Third Party Technology Procedures for the Alliance. If either
Party believes that a license to or acquisition of rights under Third Party
subject matter or intellectual property rights is reasonably necessary to
perform Preclinical Development or to Develop, Manufacture or Commercialize any
Product, then it shall notify the other Party thereof and may propose entering
into a license or other acquisition agreement with such Third Party regarding
such subject matter or intellectual property rights (a “Third Party License”)
for discussion by the JSC, which proposal shall include the results of any due
diligence it may have conducted (subject to reasonable privilege considerations
including Section 10.1). If, following discussion by the JSC, the Parties agree
as to how to proceed with respect to such Third Party License (including with
respect to negotiation strategy, budgets and the like), the parties shall do so.
If the Parties do not so agree, Astellas shall have the first right, in its sole
discretion, to negotiate and enter into an agreement for such Third Party
License (unless the subject matter thereof relates primarily to the Preclinical
Development Program, in which case, Maxygen shall have the first right, in its
sole discretion, to negotiate and enter into such an agreement, or the
Manufacture of Compounds or Product, in which case the Parties’ representatives
on the JSC shall agree as to which Party should have the first right); provided,
however, that either Party shall be free to negotiation of a non-exclusive
license to technology that is made generally available for licensing to multiple
licensees by the applicable Third Party licensor without going through the
procedures in this Section 10.4.2. Each Party shall provide the other Party with
agreement drafts for any Third Party License during negotiations (including any
proposed execution version) for review and comment. Notwithstanding anything to
the contrary in this Section 10.4.2, either Party may obtain a license to or
other acquisition of rights under Third Party subject matter or intellectual
property rights that such Party believes in good faith is reasonably necessary
to perform Preclinical Development or to Develop, Manufacture or Commercialize
any Product; provided, however, that such Party first affords the Party with
first negotiation rights above (if not the same Party) a reasonable opportunity
to elect to negotiate such Third Party License for the Alliance. Unless the
Parties agree or a determination is made that such Third Party License is
reasonably necessary to perform Preclinical Development or to Develop,
Manufacture or Commercialize any Product in accordance with then-current Plans
(or plans for Exclusive Indications or ROW), in accordance with the procedure
below, the Party entering into such Third Party License shall be solely
responsible (without sharing or reimbursement hereunder) for all payments owing
to any Third Party under such Third Party License. If the Parties do not agree
as to such reasonable necessity, the Party entering into such Third Party
License may seek cost sharing therefor pursuant to the Financial Exhibit by
submitting the matter to a final, binding determination by an independent
intellectual property attorney with relevant experience reasonably acceptable to
the other Party. Such attorney shall make a determination as to whether or not
the Third Party License in question is reasonably necessary to perform
Preclinical Development or to Develop, Manufacture or Commercialize any Product
in accordance with then-current Plans (or plans for Exclusive Indications or
ROW). The costs of the independent attorney shall be borne by the Party entering
into the Third Party License unless the independent attorney determines such
Third Party License to be reasonably necessary in which case the other Party
shall bear all such costs. Any disputes as to the selection of such attorney or
the making of the foregoing determination (and the process therefor) shall be
solely and exclusively resolved by arbitration under the provisions of JAMS’
Streamlined Arbitration Rules and Procedures in effect at the time of filing of
the demand for arbitration. Any payments owing to any Third Party under any
Third Party License that is reasonably necessary to perform Preclinical
Development or to Develop, Manufacture or Commercialize any Product (as the
Parties agree or as determined under the foregoing procedures)

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shall be shared by the Parties pursuant to the Financial Exhibit. The foregoing
procedures shall not prevent either Party from entering into any agreement
outside of the Alliance for a license under Third Party intellectual property
for use with respect to its activities for products other than Compounds or
Products; provided, however, that if such Third Party intellectual property is
reasonably necessary for the Preclinical Development, Development, Manufacture
or Commercialization of any Compound or Product, such Party shall not enter into
an exclusive license with respect to the practice of such intellectual property
for Compounds and Products in the Field in a manner which precludes (by virtue
of the exclusivity of such license) the availability of such intellectual
property for use in the Alliance, unless such Party first complies with the
processes set forth above in this Section 10.4.2.
     10.5 Defense and Settlement of Third Party Claims. If a Third Party asserts
that a Patent or other right owned by it is infringed by the manufacture, use,
sale, offer for sale or importation of any Product, Astellas shall have the
primary right, but not the obligation, to defend against any such assertions. In
the event Astellas elects to defend against any such Third Party claims in
accordance with this Section 10.5, Astellas shall have the sole right to control
the defense of any such Third Party claims and to elect to settle such claims,
provided that it shall consult with and keep Maxygen reasonably informed with
respect thereto. Maxygen may join any defense brought by Astellas pursuant to
this Section 10.5, with its own counsel at its own expense, or in the event that
Astellas elects not to exercise its right to defend against any such Third Party
claims, Maxygen shall have the right, but not the obligation, to defend against
such Third Party claims with its own counsel at its own expense. In any event,
each Party shall assist the other Party and cooperate in any such litigation at
the other Party’s request without expense to the requesting Party. Neither Party
shall settle or consent to the entry of any judgment in any such case that would
adversely affect the other Party’s rights hereunder without the other Party’s
prior written consent, not to be unreasonably withheld, conditioned or delayed.
Astellas may include Damages under this Section 10.5 as Third Party Payments
under Section 5.16 of the Financial Exhibit, provided however that such Damages
are only included as Third Party Payments under Section 2.1.3(a) of the
Financial Exhibit to the extent such Damages are attributable to patent
infringement excluding any increase due to willful patent infringement. For
purposes of this Agreement, “Damages” shall mean damages and other liabilities
that are required to be paid to such Third Party, in restitution of or payment
for the infringement, as part of any final judgment awarded against such Party
and any amounts paid by such Party (with the other Party’s prior written
consent) in a settlement of the assertion (if additional claims have been
asserted by such Third Party, then to the extent allocable to settlement of the
applicable infringement claims).
     10.6 Enforcement. Each Party shall promptly notify the other Party in
writing if it reasonably believes that any Joint Patent or a Patent within a
Party’s Licensed Technology is infringed by a Third Party with respect to the
manufacture, sale, offer for sale, use or importation of a pharmaceutical
product incorporating any CTLA-4 Variant (collectively, “Competing Infringing
Activities”). As between the Parties, the right to enforce such Patent with
respect to such infringement, or to defend any declaratory judgment action with
respect thereto, in each case to the extent the same pertains to Competing
Infringing Activities (each, an “Enforcement Action”) shall be as set forth in
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          10.6.1 Rights to Bring and Control Enforcement Action. Subject to
Section 10.6.2 and this Section 10.6.1, Astellas shall have the primary right,
but not the obligation, to bring and control Enforcement Actions with respect to
the Maxygen Patents, Astellas Patents, and Joint Patents, at its sole expense.
Maxygen shall reasonably cooperate, as reasonably requested by Astellas, with
respect to such Enforcement Actions including, without limitation, by agreeing
to be named as a party. Astellas shall keep Maxygen informed of the progress of
any such Enforcement Action. Without limiting the foregoing, Astellas shall keep
Maxygen advised of all communications, actual and prospective filings or
submissions regarding such Enforcement Action, and shall provide Maxygen an
opportunity to review and comment on any such communications, filing and
submissions. Astellas shall not settle, or consent to any judgment, in any
action or proceeding to enforce such Maxygen Patents, Astellas Patents, and
Joint Patents without Maxygen’s prior written consent, not to be unreasonably
withheld, conditioned or delayed. Maxygen shall have the right, upon written
notice to Astellas, to join in such Enforcement Action as a party plaintiff and
give reasonable assistance thereto, at its sole expense (subject to
Section 10.6.2). If Astellas fails to institute a suit or take action within
[****] days after a request by Maxygen to do so, then Maxygen shall have the
right upon written notice to Astellas to bring and control such Enforcement
Action in the name of either or both Parties, at its sole expense (subject to
Section 10.6.2) and Astellas shall provide Maxygen all reasonably requested
assistance including being named as a party to such suit.
          10.6.2 Allocation of Recoveries. Except as otherwise provided herein,
all cash amounts (plus the fair market value of all non-cash consideration)
received by a Party from a Third Party in connection with the final judgment,
award or settlement of any Enforcement Action with respect to any Patent within
the Maxygen Patents, Astellas Patents or Joint Patents to the extent
attributable to Competing Infringing Activities (“Recoveries”) shall first be
applied to reimbursement of the unreimbursed legal fees and expenses incurred by
the Parties in such litigation (on a pro rata basis if insufficient to fully
cover such fees and expenses), and any remainder shall be shared between the
Parties with the Party bringing or controlling the Enforcement Action receiving
(and/or retaining, as applicable) [****] percent ([****]%) of any Recoveries and
the other Party receiving the remaining [****] percent ([****]%) of any
Recoveries.
          10.6.3 Costs. Subject to allocation of Recoveries (if any) as set
forth in Section 10.6.2 above, the Party bringing or controlling an Enforcement
Action shall be responsible for any costs incurred under this Section 10.6.
     10.7 Trademarks. Astellas shall be responsible for the selection,
registration, maintenance and defense of all trademarks for use in connection
with the sale or marketing of Products in the Field in the Territory (the
“Marks”), as well as all expenses associated therewith. All uses of the Marks
shall comply with all applicable laws and regulations (including, without
limitation, those laws and regulations particularly applying to the proper use
and designation of trademarks in the applicable countries). Neither Party shall,
without the other Party’s prior written consent, use any trademarks of the other
Party confusingly similar thereto, in connection with such Party’s
Commercialization of Products under this Agreement, except as may be expressly
authorized in the
 

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Co-Promotion Agreement and except to the extent required to comply with
applicable laws and regulations. Astellas shall own all Marks.
ARTICLE 11
CONFIDENTIALITY
     11.1 Confidentiality; Exceptions. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing, the Parties agree that the
receiving Party shall keep confidential and shall not publish or otherwise
disclose or use for any purpose other than for the purpose of exercising its
retained rights or rights under licenses granted hereunder, or performing
obligations hereunder, or as otherwise provided for in this Agreement, any
confidential and proprietary information and materials furnished to it by the
other Party pursuant to this Agreement (collectively, “Confidential
Information”). Astellas Technology shall be deemed the Confidential Information
of Astellas, and Maxygen Technology, Shuffling Technology and Shuffling
Improvements shall be deemed the Confidential Information of Maxygen.
Notwithstanding the foregoing, Confidential Information shall not include any
information to the extent that it can be established by written documentation by
the receiving Party that such information:
          11.1.1 was already known to the receiving Party, other than under an
obligation of confidentiality (except to the extent such obligation has expired
or an exception is applicable under the relevant agreement pursuant to which
such obligation established), at the time of disclosure;
          11.1.2 was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
          11.1.3 became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
          11.1.4 was independently discovered or developed by the receiving
Party without reference to or use of Confidential Information of the disclosing
Party as demonstrated by documented evidence; or
          11.1.5 was disclosed to the receiving Party, other than under an
obligation of confidentiality (except to the extent such obligation has expired
or an exception is applicable under the relevant agreement pursuant to which
such obligation established), by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others.
     The obligations set forth in this Section 11.1 shall remain in effect
during the term of this Agreement and for [****] years thereafter; provided,
however, that with respect to information and materials obtained by Maxygen
under an Existing Third Party License and disclosed or provided to Astellas or
its Affiliate hereunder, such obligations of Astellas shall survive for the
longer of [****] years after the term of this Agreement or the term specified
(as of the Effective Date) under such
 

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Existing Third Party Agreement, and Astellas shall be bound by the restrictions
regarding the use of such materials under the Existing Third Party License.
     11.2 Authorized Disclosure. Except as expressly provided otherwise in this
Agreement, each Party may use and disclose Confidential Information of the other
Party as follows: (i) under appropriate confidentiality provisions substantially
equivalent to those in this Agreement (except that the term of confidentiality
may be shorter than the term of confidentiality herein, but in no event less
than [****] years after the termination of the agreement with the disclosee
containing such confidentiality provisions): (A) in connection with the
performance of its obligations or as reasonably necessary or useful in the
exercise of its rights under this Agreement, including the right to grant
licenses or sublicenses or extension of the licenses and sublicenses to
Affiliates and subcontractors as permitted hereunder, (B) to the extent such
disclosure is reasonably necessary or useful in conducting activities under the
Plans (including the plans for Exclusive Indications in the Territory and the
plans for Co-Development indications in the ROW for Development and in the
Territory outside the Co-Promotion Countries for Commercialization) (C) in
complying with the terms of agreements with Third Parties existing as of the
Effective Date, or thereafter pursuant to which such Party first obtains rights
to such Party’s Licensed Technology which is (sub)licensed to the other Party
hereunder (provided that, Exhibit 11.2 sets forth the Third Party and
corresponding agreement pursuant to which any disclosure of the other Party’s
Confidential Information is required that is in effect as of the Effective
Date); (ii) to the extent such disclosure is reasonably necessary in Prosecuting
or Maintaining any Patent or other intellectual property right in accordance
with this Agreement, prosecuting or defending litigation related to this
Agreement, complying with applicable governmental regulations with respect to
performance under this Agreement (including to comply with the applicable rules
of any public stock exchange upon which the stock of such Party or its Affiliate
is listed), making any Regulatory Filings, otherwise obtaining Marketing
Approvals or fulfilling post-Marketing Approval obligations for Products, or
otherwise required by Law, provided, however, that if a Party is required by Law
or court order to make any such disclosure of the other Party’s Confidential
Information it will, except where impracticable for necessary disclosures (for
example, in the event of medical emergency), give reasonable advance notice to
the other Party of such disclosure requirement and, in each of the foregoing,
(but not to the extent inappropriate in the case of Prosecution and Maintenance
of Patents), will use its reasonable efforts to seek confidential treatment of
such Confidential Information required to be disclosed; (iii) in communication
with advisors (including financial advisors, lawyers and accountants) or actual
or bona fide potential investors or acquirers, or actual or bona fide potential
licensees or sublicensees related to Products, or approved or permitted
contractors, service providers, vendors and the like used (or to be used) in
connection with activities hereunder, each on a need to know basis, and in each
case under standard confidentiality obligations (subject to the allowances for
term of confidentiality provided in subsection (i) above, except with respect to
disclosures to actual or bona fide potential investors and acquirers receiving
any technical data related to Compounds or Products that is Confidential
Information of the other Party shall be subject to obligations of
confidentiality for a period of at least [****] years after such disclosure,
provided that if, at the time of disclosure to a potential acquirer, such
potential acquirer has active programs (“Walled-Off Programs”) that would be
“Competing Activities” as defined in Section 7.1 if they were conducted by the
Party potentially to be acquired
 

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(the “Target”), then the Target shall contractually obligate such potential
acquirer to keep all technical data related to Compounds or Products that is
Confidential Information of the non-Target Party separate from Walled-Off
Programs to prevent receipt or use thereof in the Walled-Off Programs for the
longer of (x) [****] years after permanent cessation of discussions regarding
such acquisition, or (y) the term of this Agreement in the event the Target is
acquired by or merged with the potential acquirer), or (iv) to the extent
mutually agreed to by the Parties. In addition to the foregoing, with respect to
complying with the disclosure requirements of the SEC or similar regulatory
bodies or the rules of an applicable public stock exchange, in connection with
any required disclosure of material information related to this Agreement, the
Parties shall consult with one another concerning the information to be
disclosed where practicable.
     11.3 Prior CDA. This Agreement supersedes the Confidentiality Agreement
signed between Astellas and Maxygen effective [****] between the Parties (the
“Prior CDA”) with respect to information disclosed thereunder. All information
exchanged between the Parties under the Prior CDA shall be deemed Confidential
Information of the disclosing Party and shall be subject to the terms of this
Article 11.
     11.4 Publications.
          11.4.1 General. Any publication or presentation of Alliance
Technology, including preclinical or clinical studies carried out by a Party
under this Agreement, shall be subject to the guidelines for publication set out
herein. The Parties shall establish promptly after the Effective Date guidelines
that (i) allow for each Party’s timely review of all publications or
presentations of Alliance Technology, (ii) provide for protection of
Confidential Information and ensure the possibility of filing appropriate patent
applications prior to any disclosure of patentable subject matter, and
(iii) ensure that all such publications and presentations are consistent with
good scientific practice and accurately reflect work done and the contributions
of the Parties. Unless otherwise mutually agreed upon by the Parties, (A) the
Party desiring to publish or present any Data arising from its performance of
the Alliance or Alliance Technology (the “Publishing Party”) shall transmit to
the other Party (the “Reviewing Party”) for review and comment a copy of the
proposed publication or presentation, at least [****] days prior to the
submission of the proposed publication or presentation to a Third Party; (B) the
Publishing Party shall postpone the publication or presentation for up to an
additional [****] days upon request by the Reviewing Party in order to allow the
Reviewing Party to consider appropriate patent applications or other protection
to be filed on information contained in the publication or presentation;
(C) upon request of the Reviewing Party, the Publishing Party shall remove all
Confidential Information of the Reviewing Party (from the information intended
to be published or presented except to the extent disclosure of such
Confidential Information is required by Law); and (D) the Publishing Party shall
consider all reasonable comments made by the Reviewing Party and attempt to
address any significant commercial concern to the proposed publication or
presentation. For clarity, this Section 11.4 shall be applicable to Maxygen or
Astellas with regard to publishing (after the Effective Date) any information or
data generated or obtained prior to the Effective Date.
 

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          11.4.2 Without limiting the provisions of Section 11.4.1, the JPT
shall establish a publication strategy with respect to each Clinical Candidate
and corresponding Product(s) upon the filing of an IND for such Clinical
Candidate the goal of which shall be to provide for publication of material
advancements under the Alliance with respect to such Clinical Candidate and
corresponding Product in order to maximize the commercial potential thereof.
     11.5 Publicity
          11.5.1 Confidential Terms. Each of the Parties agrees not to disclose
to any Third Party the terms and conditions of this Agreement without the prior
approval of the other Party, except: (i) to advisors (including financial
advisors, attorneys and accountants), approved or permitted contractors, actual
or bona fide potential investors or acquirers, or actual or bona fide potential
licensees or sublicensees or others on a need to know basis, in each case under
circumstances that reasonably ensure the confidentiality thereof; or (ii) under
circumstances that reasonably ensure the confidentiality of the information, to
the extent necessary to comply with the terms of agreements with Third Parties
existing as of the Effective Date pursuant to which such Party first obtains
rights to such Party’s Licensed Technology, which is (sub)licensed to the other
Party hereunder (provided that, Exhibit 11.2 sets forth the Third Party and
corresponding agreement pursuant to which disclosure of the identity of Astellas
as a sublicensee thereunder is required, but not the terms and conditions of
this Agreement) or (iii) to the extent previously made publicly available
pursuant to this Section 11.5, or (iv) to the extent required by applicable Law
or the applicable rules of any public stock exchange upon which the stock of
such Party or its Affiliate is listed; provided, however, that if a Party is
required by Law or the applicable rules of any public stock exchange to make any
such disclosure of the terms or conditions of this Agreement, it will give
reasonable advance notice to the other Party of such disclosure requirement and
will use its reasonable efforts to seek confidential treatment of such terms and
conditions. In addition to the foregoing, with respect to complying with the
disclosure requirements of the Securities and Exchange Commission (“SEC”) or
similar regulatory bodies or the rules of an applicable public stock exchange,
in connection with any required filing of this Agreement, the Parties shall
consult with one another concerning which terms of this Agreement shall be
requested to be redacted in any public disclosure of the Agreement (including by
allowing the other Party an opportunity to review and comment upon the proposed
filing of this Agreement). Notwithstanding the foregoing, the Parties shall
agree upon and release a mutual press release to announce the execution of this
Agreement in the form attached hereto as Exhibit 11.5 together with a
corresponding question & answer outline for use in responding to inquiries about
the Agreement; thereafter, Maxygen and Astellas may each disclose to Third
Parties the information contained in such press release and question & answer
outline without the need for further approval by the other.
          11.5.2 Publicity Review. Each Party may disclose results and
significant developments regarding Products and other activities in connection
with this Agreement from time to time with the approval of the other Party,
which approval shall not be unreasonably withheld, conditioned or delayed,
provided that such approval shall not be required if such disclosure is required
by Law or the applicable rules of any public stock exchange. Such disclosures
may include achievement of significant events, including achievement of
milestone events and receipt of milestone payments (but shall not include the
amount thereof unless required by Law or the applicable rules of any public
stock exchange, or approved in advance by the other Party) in the

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Preclinical Development, Development (including regulatory process), Manufacture
or Commercialization of Products hereunder. When a Party (the “Requesting
Party”) elects to make any such public disclosure under this Section 11.5.2
(other than the disclosures referenced above that do not require approval of the
other Party), it will give the other Party (the “Cooperating Party”) through its
JPT representatives (or such other representatives as the JSC may designate), a
draft version of any such statement, including any press releases, question &
answer outlines and corresponding call scripts (and, to the extent they contain
additional or materially different disclosures, all other press materials, key
messages, talking points and slide presentations), at least [****] prior to
public disclosure thereof for review and comment by the Cooperating Party
(unless earlier disclosure is required by Law or the applicable rules of a
public stock exchange, in which event as much in advance of disclosure as
reasonably practicable under the circumstances), it being understood that if the
Cooperating Party does not notify the Requesting Party in writing within such
[****] period (or shorter period, if required by Law or applicable rule of a
public stock exchange) of any objections, such disclosure shall be deemed
approved, and in any event the Cooperating Party shall work diligently and
reasonably to agree on the text of any proposed disclosure in an expeditious
manner. Except with respect to press releases (for which the final version shall
be submitted for approval), it is understood and agreed that materials so
submitted for review and comment may be modified or revised by the disclosing
Party during such review period without submission to the other Party for
further review, provided that (and to the extent that) such modified or revised
disclosure does not contain materially different or additional disclosures as
compared to the materials submitted to the other Party for review. The
principles to be observed in such disclosures shall be accuracy, compliance with
applicable Law and regulatory guidance documents, and reasonable sensitivity to
potential negative reactions of the FDA (and its foreign counterparts). The
Parties agree that each Party may individually, or in a joint press with the
other Party, if the other Party so chooses, make press releases announcing the
achievement of each of the events described in Exhibit 11.5.2 after providing
reasonable opportunity under the circumstances for review and approval of such
press releases by the other Party in accordance with this Section 11.5.2. With
respect to public disclosure of any publications, abstracts, websites and press
releases regarding the Alliance prior to the commercial launch of the Product to
which it pertains, if any, which are not covered by Section 11.4 or otherwise
covered by this Section 11.5.2, the JPT shall endeavor to develop guidelines
regarding review of public disclosures which shall include, among other things,
a process intended to ensure submission of all such communications and
disclosures by the Parties to the JPT reasonably in advance of disclosure to
allow sufficient time for review.
          11.5.3 Coordination Regarding Required Disclosures. In the event
either Party proposes to make a disclosure pursuant to Section 11.2 or 11.5
because such Party believes that such disclosure is required by Law or
applicable stock exchange rule, and the other Party requests the opportunity to
discuss whether or not such Party is required to make such disclosure, the
Parties will use reasonable efforts to refer the matter, if time permits, to
their respective in-house or outside counsel for discussion. If time does not
permit such discussion, or if after such discussion between counsel, the Party
desiring to make the disclosure still believes such Party is required by Law or
applicable stock exchange rule to make such disclosure, it may do so, upon
written notice to the
 

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other Party. For clarity, nothing in this Article 11 shall prevent either Party
from making disclosures in compliance with Law.
     11.6 Subsequent Disclosures. Once a publication or other disclosure has
been made in accordance with Section 11.4 or 11.5 above, either Party may make
subsequent disclosures of information contained therein without approval or
prior review of the other Party; provided, however, that the requirements of
Section 11.4 or 11.5 shall, to the extent applicable, apply with respect to new
or additional information in any such subsequent disclosure.
ARTICLE 12
REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
     12.1 Mutual Representations, Warranties and Covenants. Each Party (the
“Representing Party”) hereby represents, warrants and covenants to the other
Party, as a material inducement for such other Party’s entry into this
Agreement, as follows:
          12.1.1 The Representing Party is duly organized and validly existing
under the laws of its jurisdiction of incorporation and it has full corporate
power and authority and has taken all corporate action necessary to enter into
and perform this Agreement;
          12.1.2 This Agreement is a legal and valid obligation binding upon the
Representing Party and enforceable against it in accordance with its terms,
assuming due execution and delivery of the Agreement by the Parties, and subject
to applicable laws regarding insolvency, bankruptcy, reorganization, moratorium
and other Laws affecting creditors’ rights generally as from time to time in
effect;
          12.1.3 The execution, delivery and performance of the Agreement by the
Representing Party does not conflict with any agreement, instrument or
understanding, oral or written, by which it is bound, nor to its knowledge,
violate any Law;
          12.1.4 To its knowledge as of the Effective Date, other than Marketing
Approvals for the Products, no government authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any applicable laws, rules or regulations currently in effect, is
or will be necessary for, or in connection with, the transaction contemplated by
this Agreement or any other agreement or instrument executed in connection
herewith, or for the performance by the Representing Party of its obligations
under this Agreement and such other agreements;
          12.1.5 The Representing Party has not granted as of the Effective
Date, and during the Term will not grant, any right to any Third Party relating
to its respective Licensed Technology which conflicts with the rights granted to
the other Party hereunder; and without limiting the foregoing, the Representing
Party will not, during the Term, encumber the subject matter (including Patents
and Know-How) within its respective Licensed Technology, as applicable, with
liens, mortgages, security interests or another similar interest that would give
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convert the interest into ownership of such subject matter, unless the
encumbrance is expressly subject to the licenses and rights granted to the other
Party herein; and
          12.1.6 The Representing Party has not been debarred or the subject of
debarment proceedings by any Regulatory Authority and will not knowingly use in
connection with the Preclinical Development, Development, Manufacture or
Commercialization hereunder any employee, consultant or investigator that has
been debarred or the subject of debarment proceedings by any Regulatory
Authority.
     12.2 Representations, Warranties and Covenants by Maxygen. Maxygen hereby
represents and warrants and covenants to Astellas, as a material inducement for
Astellas’ entry into this Agreement, as follows:
          12.2.1 It has sufficient legal and/or beneficial title, ownership or
license, free and clear from any mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or claims of
any kind, of the Maxygen Technology to grant the licenses to Astellas as
purported to be granted pursuant to this Agreement;
          12.2.2 As of the Effective Date, it does not own and has not
in-licensed any intellectual property that in each case would otherwise qualify
as Maxygen Technology hereunder (with respect to the Compounds as manufactured
and used by Maxygen as of the Effective Date, or as such Compounds are
reasonably anticipated by Maxygen, as of the Effective Date, to be manufactured
or used hereunder) but for the fact that such intellectual property is not
licensable to Astellas hereunder and therefore not Controlled by Maxygen (and,
due solely to such lack of Control despite owning or holding a license thereto,
does not meet the definition of Maxygen Technology);
          12.2.3 As of the Effective Date it has not granted and, during the
term of this Agreement, it shall not grant, any assignment, license, covenant
not to sue, or other similar interest or benefit, exclusive or otherwise, to any
Third Party relating to any patent, know-how or other proprietary right that
conflicts with or limits the licenses granted to Astellas hereunder;
          12.2.4 As of the Effective Date, it does not have knowledge of any
issued United States patent owned or controlled by a Third Party which contains
claims to the composition of any Existing Compound that Maxygen believes would
be infringed by the use or sale of such Existing Compound;
          12.2.5 As of the Effective Date, Maxygen is not a party to any
actions, suits or proceedings involving the Maxygen Technology, Compounds or
Products;
          12.2.6 Up to and including the Effective Date, Maxygen has made
available to Astellas all material scientific and technical data and
information, and patent applications owned by Maxygen (other than Patents
claiming Shuffling), in its possession and Control relating to Compounds and/or
the Product(s) (including all pre-clinical data);
          12.2.7 The agreements listed on Exhibit 12.2.7 are the only agreements
under which Maxygen has in-licensed, as of the Effective Date, Patents and/or
Know-How from a Third Party which are part of the Maxygen Technology (“Existing
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licenses (including all amendments) that Maxygen has disclosed to Astellas on or
before the Effective Date are true and accurate copies of such agreements as of
the Effective Date (except for any permitted redactions that do not affect the
rights and obligations of Astellas hereunder); Maxygen has obtained all
necessary consents thereunder, if any, that are required to grant Astellas the
rights with respect to such Patents and Know-How to be conveyed hereunder; as of
the Effective Date: (i) all such in-license agreements are in full force and
effect, (ii) Maxygen is not in breach of any such agreement, and (iii) Maxygen
has not received any notice of breach thereof which has not been expressly
rescinded in writing; and Maxygen shall not, during the term of this Agreement
and the applicable Existing Third Party License, without the consent of Astellas
modify, amend, terminate or permit to be terminated (including by virtue of
failure to cure material breach thereof, but excluding expiration in accordance
with its terms) any Existing Third Party License in a manner that adversely
affects the rights and licenses to Astellas hereunder ; and
          12.2.8 The Patents listed on Exhibit 1.50.2 constitute all Patents
Controlled by Maxygen or its Affiliates as of the Effective Date, other than
Patents claiming Shuffling, which claim or cover (specifically or generically)
(i) compositions of matter of any Compound or Product (or any formulation of
either reasonably anticipated by Maxygen as of the Effective Date), (ii) methods
or processes reasonably anticipated by Maxygen, as of the Effective Date, to be
utilized in the manufacture or synthesis hereunder of any Compound or Product
(or any formulation of either reasonably anticipated by Maxygen, as of the
Effective Date) or (iii) methods of use or administration of any Compound or
Product (or any formulation of either reasonably anticipated by Maxygen, as of
the Effective Date).
     12.3 Representations, Warranties and Covenants by Astellas. Astellas hereby
represents and warrants and covenants to Maxygen, as a material inducement for
Maxygen’s entry into this Agreement, as follows:
          12.3.1 It has sufficient legal and/or beneficial title, ownership or
license, free and clear from any mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or claims of
any kind, of the Astellas Technology to grant the licenses to Maxygen as
required to be granted pursuant to this Agreement; and
          12.3.2 During the term of this Agreement, it shall not grant any
assignment, license, covenant not to sue, or other similar interest or benefit,
exclusive or otherwise, to any Third Party relating to any patent, know-how or
other proprietary right that conflicts with the licenses required to be granted
to Maxygen hereunder.
     12.4 Disclaimer of Warranties. EXCEPT EXPRESSLY AS SET FORTH IN THIS
AGREEMENT, MAXYGEN AND ASTELLAS EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE ALLIANCE, THE
MAXYGEN TECHNOLOGY, ASTELLAS TECHNOLOGY OR ALLIANCE TECHNOLOGY, OR ANY OTHER
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT.

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     12.5 Indemnification.
          12.5.1 Fault-Based.
               (a) Subject to Sections 12.6 and 12.7, Maxygen shall defend,
indemnify, and hold Astellas, its Affiliates, sublicensees, and their respective
directors, officers, employees and agents (collectively, “Astellas Indemnitees”)
harmless, at Maxygen’s cost and expense, from and against any and all
liabilities, losses, costs, damages, fees or expenses (including reasonable
legal expenses and attorneys’ fees incurred by any Astellas Indemnitees until
such time as Maxygen has acknowledged and assumed its indemnification obligation
hereunder with respect to a claim) payable to a Third Party (collectively,
“Losses”) arising out of any claim, action, lawsuit, or other proceeding
(collectively, “Claims”) brought against any Astellas Indemnitee by such Third
Party resulting directly or indirectly from the use by such Third Party of a
Product to the extent such Losses result from (i) the gross negligence or
willful misconduct of Maxygen or its Affiliates, (ii) a breach by Maxygen of its
representations or warranties set forth in Section 12.1 or Section 12.2, or
(iii) violation of Law by or under authority of Maxygen or its Affiliates, in
performing its activities under the Alliance, but only the Law of the country in
or for which Maxygen or its Affiliates, as applicable, is performing such
activities (each of (i), (ii) or (iii), a “Fault” of Maxygen for purposes of
this Section 12.5); but excluding such Losses to the extent they arise from the
Fault of Astellas.
               (b) Subject to Sections 12.6 and 12.7, Astellas shall defend,
indemnify, and hold Maxygen, its Affiliates, and their respective directors,
officers, employees and agents (collectively, “Maxygen Indemnitees”) harmless,
at Astellas’ cost and expense, from and against any and all Losses (including
reasonable legal expenses and attorneys’ fees incurred by any Maxygen
Indemnitees until such time as Astellas has acknowledged and assumed its
indemnification obligation hereunder with respect to a claim) arising out of any
Claim brought against any Maxygen Indemnitee by such Third Party resulting
directly or indirectly from the use by such Third Party of a Product to the
extent such Losses result from (i) the gross negligence or willful misconduct of
Astellas, or its Affiliates or sublicensees hereunder, (ii) a breach by Astellas
of its representations or warranties set forth in Section 12.1 or 12.3, or
(iii) violation of Law by or under authority of Astellas, or its Affiliates or
sublicensees, in performing its activities under the Alliance, but only the Law
of the country in or for which Astellas, or its Affiliates or sublicensees, as
applicable, is performing such activities (each of (i), (ii) or (iii), a “Fault”
of Astellas for purposes of this Section 12.5); but excluding such Losses to the
extent they arise from the Fault of Maxygen.
          12.5.2 No Fault. Any Losses by either Party arising out of any product
liability Claims brought against either Party’s Indemnitees by a Third Party
directly or indirectly from the use by a Third Party of a Product, including any
no-Fault claim, to the extent such Losses cannot be allocated to a Party
pursuant to Section 12.5.1, shall be shared as Other Operating Income/Expense in
accordance with the Financial Exhibit.
          12.5.3 Apportionment of Fault. If any Losses occur by reason of or
result from the joint Fault of Astellas and Maxygen, absent the applicability of
Section 12.5.2, liability for such Losses under Section 12.5.1(a) and
Section 12.5.1(b) shall be apportioned between Astellas and Maxygen according to
the percentage of Fault of Astellas and Maxygen. This Section 12.5.3 shall apply
even under circumstances where a Third Party bears a percentage of the fault.

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     12.6 Claim for Indemnification. Whenever any claim shall arise for
indemnification under Section 12.5, the Maxygen Indemnitees or Astellas
Indemnitees entitled to indemnification (the “Indemnified Party”) shall promptly
notify the other Party (the “Indemnifying Party”) of the claim and, when known,
the facts constituting the basis for the claim. The Indemnifying Party shall
promptly assume, and have the right to control, the defense and settlement
thereof at its own expense. The Indemnified Party shall not settle or compromise
any claim by a Third Party for which it is entitled to indemnification without
the prior written consent of the Indemnifying Party, unless the Indemnifying
Party is in breach of its obligation to defend hereunder. In no event shall
either the Indemnified Party or Indemnifying Party settle any claim without the
prior written consent of the Indemnified Party if such settlement does not
include a release from liability on such claim or if such settlement would
involve undertaking an obligation other than the payment of money by the
settling Party that would bind or impair the non-settling Party, or result in
any Licensed Technology, Patent or trademark of the other Party being rendered
invalid or unenforceable. The provisions of this Article 12 shall be subject to
the dispute resolution procedures of Article 14. For the avoidance of doubt,
except as set forth in Section 12.5.2, any Losses covered by the provisions of
this Article 12 shall be the sole responsibility of the Indemnifying Party and
shall not be shared by the Parties pursuant to this Agreement, including the
Financial Exhibit.
     12.7 Reduction of Indemnity Payments. Notwithstanding anything in this
Article 12 to the contrary, an indemnity payment owed by one Party to the other
Party pursuant to this Agreement shall be reduced by all amounts actually
received by the Indemnified Party under insurance policies purchased and
maintained by the Indemnifying Party in connection with the claim for which the
indemnification related (less all deductibles, costs of collection, and other
expenses incurred in connection therewith).
ARTICLE 13
TERM AND TERMINATION
     13.1 Term. This Agreement will commence upon the Effective Date and, except
to the extent earlier terminated in whole, or as to a particular Product or
region, pursuant to this Article 13, or as otherwise may be agreed by the
Parties in writing, shall continue in full force and effect until the cessation
(excluding, for the avoidance of doubt, non-permanent suspensions pending review
and analysis of relevant circumstances) of all Preclinical Development,
Development and Commercialization of Products in the Territory (the “Term”).
     13.2 Termination by Astellas.
          13.2.1 For Convenience. Astellas shall have the right to terminate
this Agreement in its entirety, or as to a particular Product, upon [****]
months’ prior notice to Maxygen referencing this Section 13.2.1.
          13.2.2 For Adverse Safety/Tox Results. Astellas shall have the right
to terminate this Agreement in its entirety, or as to a particular Product, due
to Adverse Safety/Tox Results, with
 

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[****] days notice to Maxygen at any time referencing this Section 13.2.2 and
providing Maxygen with all Data supporting such termination together with a
detailed written explanation of why Astellas believes that the Adverse
Safety/Tox Results justify discontinuing all Development and Commercialization
hereunder. For purposes of the foregoing, “Adverse Safety/Tox Results” means,
with respect to a particular Product, results from activities hereunder that
provide a reasonable basis for the discontinuance by Astellas of all further
Development or Commercialization of such Compounds and Products for use in the
Field because the risk profile of such Product makes it unlikely that Regulatory
Approval within the Field can be obtained or maintained for such Compound or
Product in the Major Markets. In the event that Maxygen disputes Astellas’ right
to terminate in accordance with this Section 13.2.2, the Parties shall promptly
refer such dispute for resolution pursuant to Article 14 and if as a result
thereof it is determined that Astellas did not have the right to terminate
pursuant to this Section 13.2.2, then such termination shall not be effective
unless Astellas provides notice within [****] days of such determination that it
desires termination to be effectuated, in which case it shall be deemed to be a
termination under Section 13.2.1, effective [****] months following such notice.
Notwithstanding the foregoing, if Astellas indicates in its original notice of
termination referencing this Section 13.2.2 that it is committing to the
termination of this Agreement, then (A) if Maxygen disputes Astellas’ right to
terminate in accordance with this Section 13.2.2 and as a result thereof it is
determined that Astellas did not have the right to terminate pursuant to this
Section 13.2.2, then this Agreement shall terminate effective upon the later of
[****] days after such determination or [****] months from the date of Astellas’
original notice of termination referencing this Section 13.2.2, and such
termination shall be deemed to be a termination under Section 13.2.1, and
(B) Astellas shall have the right, if Maxygen disputes Astellas’ right to
terminate in accordance with this Section 13.2.2 at any time after [****] months
after the original notice of termination described in the first sentence of this
Section 13.2.2 was first given, to provide notice of its desire to terminate for
convenience, in which case it shall be deemed to be a termination under
Section 13.2.1, effective [****] days following such notice and the dispute
shall be terminated upon Maxygen’s receipt of such notice. For the avoidance of
doubt, Astellas shall have the right to terminate this Agreement for convenience
under Section 13.2.1 in accordance with its terms (including [****] prior
notice) at any time notwithstanding having submitted any notice of termination
described in the first sentence of this Section 13.2.2, and if Astellas provides
such notice under Section 13.2.1 after a notice under this Section 13.2.2 has
been given but prior to the effective date of termination pursuant to such
notice, then the notice under Section 13.2.1 shall control, and the notice of
termination under this Section 13.2.2 shall be of no further effect.
     13.3 Termination for Breach. Either Party may terminate this Agreement in
the event the other Party materially breaches this Agreement, and such breach
shall have continued for [****] days after notice thereof was provided to the
breaching Party by the non-breaching Party. Any such termination shall become
effective at the end of such [****] day period unless the breaching Party has
cured any such breach prior to the expiration of the [****] day period.
Notwithstanding the foregoing, in the event the alleged breach in question is
not reasonably capable of cure within the foregoing [****]day period, but is
otherwise capable of being cured, the breaching Party may submit a reasonable
cure plan prior to the end of such initial [****] day cure period, in which
case, the other Party shall not have the right to terminate under this
Section 13.3 with respect to such alleged breach
 

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for so long as the breaching Party is diligently implementing such cure plan. If
the alleged breaching Party disputes in good faith the existence or materiality
of a breach specified in a notice provided by the other Party in accordance with
this Section 13.3, and such alleged breaching Party provides the other Party
notice of such dispute within such [****] day period, then the non-breaching
Party shall not have the right to terminate this Agreement under this
Section 13.3 unless and until an arbitrator, in accordance with Article 14, has
determined that the alleged breaching Party has materially breached the
Agreement and that such Party fails to cure such breach within [****] days
following such arbitrator’s decision. It is understood and agreed that during
the pendency of such dispute, all of the terms and conditions of this Agreement
shall remain in effect and the Parties shall continue to perform all of their
respective obligations hereunder. Notwithstanding anything to the contrary in
this Section 13.3, the Parties acknowledge that termination of this Agreement
shall be a remedy of last resort and the breaching Party shall have the right to
assert in the event of a dispute for resolution under Article 14, that some
other remedy besides termination shall be adequate and appropriate in lieu of
termination for the breach in question. If the breaching Party raises such issue
for resolution under Article 14, the arbitrator shall reasonably consider
non-termination remedies and, provided such material breach is confirmed, look
first to impose any such non-termination remedies in lieu of allowing
termination of this Agreement so long as such non-termination remedies are
adequate, appropriate, and effectively make the non-breaching Party whole in
light of all damages incurred including consequential damages (and no
termination shall occur pending resolution of any such dispute and in the event
such arbitrator finds such non-termination remedies adequate, appropriate, and
effective in making the non-breaching Party whole).
     13.4 Cessation of Development and Commercialization.
          13.4.1 Termination by Region for Permanent Cessation of all
Development and Commercialization.
               (a) Decision or Cessation in Fact; Notice. If Astellas makes a
decision to permanently discontinue, or in fact permanently discontinues, all
Preclinical Development, Development and Commercialization of all Products for
all Indications (regardless of whether or not such decision is consistent with
Astellas’ obligation to use Diligent Efforts hereunder) for (with respect to
Development) and in (with respect to Commercialization) (i) the United States,
(ii) all of the Major Market Countries in Europe, or (iii) Japan, Astellas shall
promptly notify Maxygen in writing of such decision or discontinuation.
               (b) Partial Termination. Upon such decision or discontinuation,
Maxygen shall have the right to terminate this Agreement effective upon written
notice to Astellas solely with regard to (a) North America in the event of such
decision or discontinuation for the United States, (b) Europe in the event of
such decision or discontinuation is for all of the Major Market Countries in
Europe, or (c) Asia in the event of such decision or discontinuation is for
Japan. If at any time this Agreement has been terminated as set forth in this
Section 13.4.1 with respect to each of North America, Europe and Asia, then this
Agreement shall concurrently terminate in its entirety. For the avoidance of
doubt, Maxygen shall only have the right to terminate the Agreement
 

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with regard to North America, Europe or Asia under this Section 13.4.1 where
such decision or discontinuation by Astellas represents a voluntary decision by
Astellas to permanently cease all Preclinical Development, Development and
Commercialization of all Products for all Indications (i.e., not under
circumstances where Astellas is required to cease or is unable to practicably
pursue such activities) and, therefore, Maxygen shall not have the right to
terminate under this Section 13.4.1 where, for example, Development or
Commercialization is halted due to a clinical hold, withdrawal or recall order
or other adverse event that forces the Parties to reevaluate the current
strategy to advance Products through Development or Commercialization under this
Agreement unless and until such time as Astellas elects to permanently cease all
Preclinical Development, Development and Commercialization of all Products for
all Indications.
               (c) Effect of Termination as to a Particular Region. In the event
Maxygen terminates this Agreement pursuant to this Section 13.4.1 only with
respect to a particular region (i.e., North America, Europe, and/or Asia),
(i) the provisions of Section 13.6 shall apply only to the terminated region and
not to any other regions (thus, for example, the obligation to transition trials
in Section 13.6.1 shall apply only to trials for the terminated region and the
license granted in Section 13.6.4 shall apply only in the terminated region),
(ii) the transfer and assignment of Regulatory Filings, Marketing Approvals, and
Marks under Sections 13.6.3 and 13.6.5, respectively, shall not apply except to
the extent any of the foregoing are in the terminated region, and (iii) all
rights and obligations of Astellas with respect to such region shall terminate
but this Agreement shall otherwise remain in full force and effect (including
with respect to the rest of the Territory not so terminated). For clarity, in
the event of termination of this Agreement in its entirety pursuant to this
Section 13.4.1, then the provisions of Section 13.6 shall apply as set forth
therein.
          13.4.2 Partial Termination by Region for Permanent Cessation Regarding
Co-Development Indications.
               (a) Decision or Cessation in Fact; Notice. If Astellas makes a
decision to permanently discontinue, or in fact permanently discontinues, all
Preclinical Development, Development and Commercialization of all Products for
all Co-Development Indications (regardless of whether or not such decision is
consistent with Astellas’ obligation to use Diligent Efforts hereunder) — but
has not made such a decision or in fact discontinued with respect to Exclusive
Indications — for (with respect to Development) and in (with respect to
Commercialization) (i) the United States, (ii) all of the Major Market Countries
in Europe, or (iii) Japan, Astellas shall promptly give Maxygen written notice
(a “CDI Cessation Notice”) of such decision or discontinuation with respect to
Co-Development Indications. In such CDI Cessation Notice, Astellas shall
(i) identify the applicable Major Market Country(ies) for which Astellas has
made such decision (or discontinued) with respect to Co-Development Indications
and (ii) confirm that Astellas has not made a decision to discontinue, or in
fact discontinued, Preclinical Development, Development and Commercialization of
Products for Exclusive Indications in such Major Market Country(ies). In
addition, unless (A) Astellas elects to return Maxygen’s Co-Development
Indication Costs as provided in Section 13.4.2(c) below or (B) Maxygen does not
have the right to terminate Astellas’ license hereunder with respect to
Co-Development Indications in North America, Europe and/or Asia, as applicable,
for the reason described in Section 13.4.2(b), then the CDI Cessation Notice
shall be subsequently supplemented after the period when it becomes clear that
neither (A) nor (B) applies, to also identify those Clinical Candidates, if any,
which are then in clinical trials or being

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Commercialized for Exclusive Indications. For clarity, if Astellas makes a
decision to permanently discontinue, or in fact permanently discontinues, all
Preclinical Development, Development and Commercialization of all Products for
all Co-Development Indications and also for Exclusive Indications, for (with
respect to Development) and in (with respect to Commercialization) (i) the
United States, (ii) all of the Major Market Countries in Europe, or (iii) Japan,
then Section 13.4.1, and not this Section 13.4.2, shall apply with respect to
the applicable geographical area.
               (b) Additional Screening for Compounds; Additional Shuffling.
Notwithstanding Section 13.4.2(c), below, if the bona fide reason for Astellas’
decision to permanently discontinue, or Astellas’ permanent discontinuation of,
Preclinical Development, Development and Commercialization of all Products for
all Co-Development Indications is based on a determination that none of the
Existing Compounds (and other Compounds meeting the Clinical Candidate Criteria
and identified by the Parties in Preclinical Development prior to the effective
date of the applicable CDI Cessation Notice) are appropriate Clinical Candidates
for Co-Development Indications, and (i) Astellas reasonably believes that
additional screening of then-existing libraries of CTLA-4 Variants is reasonably
likely to result in the identification of new or additional Compounds (other
than existing Compounds) which are contained in such then-existing libraries for
potential Development and Commercialization for Co-Development Indications and
has requested through the JSC that Maxygen conduct such additional screening as
part of Preclinical Development pursuant to an applicable Plan and Budget
hereunder, or (ii) Astellas reasonably believes that additional Shuffling to
create new libraries of CTLA-4 Variants is reasonably likely to result in the
generation of satisfactory new Compounds for potential Development and
Commercialization for Co-Development Indications and has requested through the
JSC that Maxygen conduct such Shuffling as part of Preclinical Development
pursuant to an applicable Plan and Budget hereunder, then Maxygen shall not have
the right to receive a repayment of Maxygen’s Co-Development Indication Costs as
set forth in Section 13.4.2(c) below, or to terminate Astellas’ rights with
respect to Co-Development Indications as set forth in Section 13.4.2(d), below,
unless and until either (A) Astellas withdraws its request for (or Astellas
representatives on the JSC do not agree to) Maxygen’s conduct of such additional
screening of existing libraries, or Shuffling to create new libraries of CTLA-4
Variants, as applicable, in each case as part of Preclinical Development under
this Agreement, or (B) in the case of clause (i) above, Maxygen has conducted
such additional screening of then-existing libraries as part of Preclinical
Development hereunder and disclosed to Astellas all material results thereof,
including in any event all results obtained that would be necessary for
determining whether the applicable CTLA-4 Variants so screened meet the Compound
Criteria (and Astellas has not subsequently provided notice of its intent to
move forward as provided below in which case no such repayment or termination
shall occur), or (C) in the case of clause (ii) above, Maxygen has conducted
additional Shuffling for a period of up to [****] as part of Preclinical
Development hereunder and fully disclosed the results thereof to Astellas (and
Astellas has not subsequently provided notice of its intent to move forward as
provided below in which case no such repayment or termination shall occur). In
the event that Maxygen conducts the additional screening and/or additional
Shuffling as described in the preceding sentence, Astellas shall notify Maxygen
in writing, within [****] days after the disclosure of the results thereof as
described above following completion of such screening and/or Shuffling, whether
Astellas intends thereafter to move forward
 
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with Development and Commercialization of Compounds for Co-Development
Indications or has decided to maintain its decision to permanently discontinue,
or its permanent discontinuation of, Preclinical Development, Development and
Commercialization of all Products for all Co-Development Indications (in which
event the provisions of this Section 13.4.2(b), other than the last sentence,
shall thereafter no longer apply). During such [****] day period, Maxygen shall
be available (promptly, and in any event within [****] days following the
applicable request) for consultation as reasonably requested by Astellas
regarding the results provided to Astellas. The Costs of additional screening of
existing libraries, or of Shuffling to create new libraries of CTLA-4 Variants,
as described in this Section 13.4.2(b) shall be [****] in accordance with the
applicable provisions of the Financial Exhibit unless and until [****], in which
event the [****].
               (c) Repayment of Maxygen Co-Development Costs. In the event that
Astellas provides Maxygen a CDI Cessation Notice (and provided that Astellas has
not, in such CDI Cessation Notice, taken together with any previous CDI
Cessation Notices and notices under Section 13.4.1, made a decision to
permanently discontinue, or in fact permanently discontinued, all Preclinical
Development, Development and Commercialization of all Products for all
Co-Development Indications for (with respect to Development) and in (with
respect to Commercialization) each of the United States, all of the Major Market
Countries in Europe, and Japan), Astellas may in its discretion elect to retain
its license hereunder for the applicable geographical area(s) (i.e., North
America, Europe or Asia, as applicable) with respect to Co-Development
Indications, in which event (i) all Preclinical Development Costs, Development
Costs and Operating Expenses for the applicable geographical area (if any) after
such CDI Cessation Notice shall be shared in accordance with relevant Sections
in the Financial Exhibit as if such costs for the applicable geographic area
were costs for ROW (e.g., the cost of a Development activity that is both for
the applicable geographic area and for a Co-Development Indication within the
Joint Development Territory that is not the applicable geographic area shall
still be shared by the Parties in accordance with Section 3.2.1(a) of the
Financial Exhibit, and costs of a Development activity that is solely for the
applicable geographic area and not for the Joint Development Territory (other
than countries, if any, within the Joint Development Territory that are within
the applicable terminated geographical area), shall be borne by Astellas subject
to Section 3.4 of the Financial Exhibit) and (ii) if the applicable geographical
area(s) affected by the CDI Cessation Notice include North America and/or
Europe, Astellas shall (except to the extent otherwise provided in
Section 13.4.2(b) above) pay to Maxygen an amount equal to Maxygen’s
Co-Development Indication Costs for the applicable geographic area(s), plus
accrued interest on such amounts from the date(s) incurred by Maxygen (or shared
by Maxygen pursuant to Section 4.5 of the Financial Exhibit) prior to such CDI
Cessation Notice until such amounts are paid hereunder, calculated at the [****]
rate effective as of the last Business Day of the calendar quarter immediately
preceding the date of the CDI Cessation Notice, as published by The Wall Street
Journal, Internet Edition (or comparable publication if not available), on such
date (or, if unavailable on such date, the first date thereafter on which such
rate is available), or, if lower, the maximum rate permitted by applicable Law.
Astellas may make such election to retain its license by express statement of
such election in the applicable CDI Cessation Notice (or, if later, by written
notice within [****] days after the first date when conditions are such that
termination by Astellas is not precluded by the terms and conditions of
Section 13.4.2(b)) , and
 
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otherwise shall be deemed to have waived its right to elect to retain its
license under this Section 13.4.2(c) for the applicable geographical area(s)
(i.e., North America, Europe or Asia, as applicable) with respect to
Co-Development Indications. As used herein, “Maxygen’s Co-Development Indication
Costs” means either (A) if the applicable geographical areas covered by the CDI
Development Notice include both Europe and North America, the entire share borne
by Maxygen (taking into account prior reconciliations pursuant to Section 4.5 of
the Financial Exhibit) of all Preclinical Development Costs, Development Costs
and Operating Expenses with respect to Products or (B) if the applicable
geographical areas affected by the CDI Development Notice include either Europe
or North America, [****].
               (d) Partial Termination. If Astellas makes a decision to
permanently discontinue, or in fact permanently discontinues, all Preclinical
Development, Development and Commercialization of all Products for all
Co-Development Indications (regardless of whether or not such decision is
consistent with Astellas’ obligation to use Diligent Efforts hereunder) — but
has not made such a decision or in fact discontinued with respect to Exclusive
Indications — for (with respect to Development) and in (with respect to
Commercialization) (i) the United States, (ii) all of the Major Market Countries
in Europe, or (iii) Japan, and Astellas does not elect to retain its license and
repay Maxygen’s Co-Development Indication Costs as set forth in
Section 13.4.2(c), then (except as provided in Section 13.4.2(b), above) Maxygen
shall have the right to terminate this Agreement effective upon written notice
to Astellas solely with regard to Co-Development Indications for (a) North
America in the event of such decision or discontinuation for the United States,
(b) Europe in the event of such decision or discontinuation is for all of the
Major Market Countries in Europe, or (c) Asia in the event of such decision or
discontinuation is for Japan. If at any time this Agreement has been terminated
with respect to Co-Development Indications as set forth in this
Section 13.4.2(d) (and/or has been terminated as set forth in Section 13.4.1)
with respect to each of North America, Europe and Asia, then this Agreement
shall concurrently terminate with respect to Co-Development Indications
worldwide. For the avoidance of doubt, Maxygen shall only have the right to
terminate the Agreement with regard to Co-Development Indications for North
America, Europe or Asia under this Section 13.4.2 where such decision or
discontinuation by Astellas represents a voluntary decision by Astellas to
permanently cease all Preclinical Development, Development and Commercialization
of all Products for all Co-Development Indications (i.e., not under
circumstances where Astellas is required to cease or is unable to practicably
pursue such activities) and, therefore, Maxygen shall not have the right to
terminate under this Section 13.4.2 where, for example, Development or
Commercialization is halted due to a clinical hold, withdrawal or recall order
or other adverse event that forces the Parties to reevaluate the current
strategy to advance Products through Development or Commercialization under this
Agreement unless and until such time as Astellas elects to permanently cease all
Preclinical Development, Development and Commercialization of all Products for
all Co-Development Indications.
 
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               (e) Effects of Partial Termination. In the event of any
termination of this Agreement with regard to Co-Development Indications pursuant
to Section 13.4.2(d), the following shall apply:
                    (i) Astellas’ licenses hereunder shall terminate for all
Compounds and Products with respect to the Co-Development Indications only with
respect to the terminated area, i.e. North America, Europe or Asia, as
applicable (the “Affected Area”);
                    (ii) Maxygen shall thereafter have the sole right, alone or
with Third Parties, to Develop for the Affected Area, and Commercialize in the
Affected Area, all Reverted Compounds (as defined below) for Co-Development
Indications, subject to the provisions of this Section 13.4.2(e);
                    (iii) As used herein, “Reverted Compounds” means (A) all
Compounds known as of the effective date of the applicable CDI Cessation Notice
and all other molecules within the libraries of CTLA-4 Variants existing on the
effective date of the applicable CDI Cessation Notice (provided, however, that
all Clinical Candidates which are, as of the effective date of the applicable
CDI Cessation Notice, in clinical trials or being Commercialized for Exclusive
Indications, shall be excluded from the definition of “Reverted Compounds” for
so long as Astellas retains its exclusive license hereunder with respect to such
Clinical Candidates for the Exclusive Indications (such Clinical Candidates
being the “Excluded Compounds”)), and (B) molecules (other than any Excluded
Compounds) in new CLTA-4 Variant libraries created through Shuffling after the
effective date of the applicable CDI Cessation Notice (provided, however, that
Astellas-Selected New Compounds, as defined below, shall not be “Reverted
Compounds” for so long as Astellas retains its exclusive license hereunder with
respect to such Clinical Candidates for the Exclusive Indications);
                    (iv) For so long as Astellas retains its exclusive license
hereunder with respect to Clinical Candidates for the Exclusive Indications,
Maxygen shall not Develop or Commercialize for Co-Development Indications (or
license Third Parties to Develop or Commercialize for Co-Development
Indications) any Excluded Compounds or any Astellas-Selected New Compound (as
defined below);
                    (v) In the event that following partial termination of this
Agreement pursuant to this Section 13.4.2 Maxygen creates one or more new CLTA-4
Variant libraries using Shuffling during the period while Astellas retains its
exclusive license hereunder with respect to Products for Exclusive Indications
(“New Libraries”), then Maxygen shall provide Astellas all material technical
and scientific information and data obtained or reviewed by Maxygen and material
to Maxygen’s selection as set forth below, and Astellas may select from such
CTLA-4 Variants two (2) “Astellas-Selected New Compounds,” and Maxygen may
select two (2) “Maxygen-Selected New Compounds,” as follows: (A) within [****]
days after receipt of the information described above in this
Section 13.4.2(e)(v) regarding the CTLA-4 Variants in the New Libraries,
Astellas may select in its discretion, by written notice to Maxygen, one CTLA-4
Variant
 
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from the New Libraries which shall thereafter be a “Astellas-Selected New
Compound”; (B) within [****] days after such selection by Astellas (or after
expiration of the [****] period in clause (A) above if Astellas does not make a
selection within such period) Maxygen may select in its discretion, by written
notice to Astellas, two (2) CTLA-4 Variants from the New Libraries, which shall
thereafter be “Maxygen-Selected New Compounds” (provided, however, that Maxygen
shall not so select a CTLA-4 Variant previously selected by Astellas as a
Astellas-Selected New Compound pursuant to clause (A) above); and (C) within
[****] days after such selection by Maxygen (or after expiration of the [****]
period in clause (B) above if Maxygen does not make a selection within such
period) Astellas may select in its discretion, by written notice to Maxygen,
one (1) additional CTLA-4 Variant, which shall thereafter be a
“Astellas-Selected New Compound” (provided, however, that Astellas shall not so
select a CTLA-4 Variant previously selected by Maxygen as a Maxygen-Selected New
Compound pursuant to clause (B) above);
                    (vi) Astellas shall not Develop or Commercialize for
Exclusive Indications or for Co-Development Indications in the event Astellas
retains its license hereunder for Co-Development Indications in any country (or
license Third Parties to Develop or Commercialize for Exclusive Indications or
for Co-Development indications) any Maxygen-Selected New Compounds;
                    (vii) With respect to Preclinical Development, Development
and Commercialization (and corresponding Manufacture) of Reverted Compounds for
Co-Development Indications by Maxygen and its Affiliates (but not to the extent
conducted by or on behalf of any Third Party licensee of Maxygen or its
Affiliates) (collectively, “Maxygen Reverted Compound Activities”): (1) such
Maxygen Reverted Compound Activities shall be subject to the review and
monitoring of the JSC in the same manner and to the same degree that Development
and Commercialization by Astellas of Products for Exclusive Indications is
subject to review and monitoring of the JSC (including Maxygen having a
corresponding deciding vote, as applicable), and subject to a limitation on the
JSC’s role with regard to Maxygen Reverted Compound Activities corresponding to
the limitation set forth in Section 2.16 on the JSC’s role with regard to
Development and Commercialization by Astellas of Products for Exclusive
Indications; (2) if Astellas reasonably believes that any proposed Maxygen
Reverted Compound Activities would be detrimental to Development and
Commercialization activities by or on behalf of Astellas, pursuant to its
license hereunder, of Products for Exclusive Indications, Astellas may refer
such matter to the JSC for discussion and decision by the JSC (and subject to
Maxygen’s deciding vote with respect to those matters specified in this
Section 13.4.2(e)(vii)); (3) for so long as Astellas retains any license to
Develop and Commercialize Products hereunder, Maxygen and its Affiliates, on the
one hand, and Astellas and its Affiliates on the other hand, shall establish and
comply with mutually agreed procedures (and, if appropriate, enter into a
modified pharmacovigilance agreement) regarding sharing of safety data; and
(4) in the event that Astellas retains its license hereunder with respect to
Co-Development Indications in any country within the Territory, Maxygen and
Astellas and their Affiliates shall provide to the other Party for review of
efficacy data obtained with respect to Products for Co-Development Indications
and (X) with respect to clinical trials for Co-Development Indications conducted
as part of the Development Program hereunder (in the event that Astellas
 
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retains any license hereunder for North America or Europe with respect to
Co-Development Indications), each Party shall have a complete right of access
and right of reference with respect to safety and efficacy data generated in
connection with such clinical trials and (Y) with respect to other clinical
trials for Co-Development Indications, neither Party shall have the right to
reference, or submit in its regulatory filings, efficacy data of the other Party
generated in such clinical trials without the prior express written consent of
the other Party;
                    (viii) In the event that, following any termination of the
Agreement with regard to Co-Development Indications in any one or more Affected
Areas pursuant to Section 13.4.6(d), Maxygen or its Affiliate grants any Third
Party a license to research, develop, manufacture, use or sell any Reverted
Compound (or a product containing a Reverted Compound) for any Co-Development
Indication, then with respect to Preclinical Development, Development and
Commercialization (and corresponding Manufacture) of Reverted Compounds for
Co-Development Indications conducted by or on behalf of any such Third Party
licensee (including with respect to such activities by Maxygen or its Affiliates
on behalf of such licensee) (collectively, “Third Party Reverted Compound
Activities”): (1) such Third Party Reverted Compound Activities shall not be
subject to review, oversight, management or control by the JSC (and, for
clarity, the JSC’s review and monitoring of Maxygen Reverted Compound Activities
pursuant to Section 13.4.2(e)(vii) shall not extend to Third Party Reverted
Compound Activities); (2) Maxygen shall no longer have the right pursuant to
Section 4.2.2 or 4.2.4 to refer to the JSC for resolution concerns regarding the
detrimental impact of proposed activities of Astellas, and Astellas shall no
longer have the right pursuant to Section 13.4.2(e)(vii) to refer to the JSC for
resolution concerns regarding the detrimental impact of proposed activities of
Maxygen; (3) for so long as Astellas retains any license to Develop and
Commercialize Products hereunder, Maxygen shall contractually require its
licensee(s) to (and Astellas and its Affiliates likewise agree to) establish and
comply with reasonable, mutually agreed procedures (and, if appropriate, enter
into a reasonable, mutually agreed pharmacovigilance agreement) regarding
sharing of safety data; and (4) Astellas and Maxygen and their Affiliates, and
sublicensees or licenses, shall not be required (except and to the extent such
Persons may otherwise agree in writing) to provide any right of access or
review, or right of reference or right to include in regulatory filings,
efficacy data with respect to Products for Co-Development Indications that is
obtained after the date Maxygen grants such license for Co-Development Products
to such Third Party;
                    (ix) In the event of termination of this Agreement with
regard to Co-Development Indications worldwide pursuant to Section 13.4.2(d),
then (i) the provisions of Section 13.6 shall apply only with respect to, and to
the extent applicable to, Co-Development Indications and not Exclusive
Indications (i.e., Section 13.6.1 shall apply with respect to clinical trials
for any Co-Development Indication (but not clinical trials applicable to both
Co-Development Indications and Exclusive Indications); Section 13.6.2 shall
apply with respect to Products approved for Co-Development Indications and not
Exclusive Indications; the transfer and assignment of Regulatory Filings,
Marketing Approvals, and Marks under Sections 13.6.3 and 13.6.5, respectively,
shall not apply except to the extent any of the foregoing are applicable to
Products for Co-Development Indications and not Exclusive Indications; and
Sections 13.6.4, 13.6.7, 13.6.8, and 13.6.9 shall apply with respect to Products
for Co-Development Indications, but not for Exclusive Indications, and (ii) all
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Indications shall terminate (except those rights expressly set forth in this
Section 13.4.2(e)), but this Agreement shall otherwise remain in full force and
effect; and
                    (x) In the event Maxygen terminates this Agreement with
regard to Co-Development Indications pursuant to Section 13.4.2(d) only with
respect to a particular Affected Area (i.e., North America, Europe, and/or Asia)
and not worldwide, then (i) the provisions of Section 13.6 shall apply only with
respect to Co-Development Indications, and only with respect to the Affected
Area and not to any other regions (i.e., Section 13.6.1 shall apply with respect
to clinical trials for any Co-Development Indication “for” the Affected Area (as
“for” is interpreted pursuant to Section 1.74) but not to clinical trials “for”
territories for which Astellas retains its license with respect to
Co-Development Indications or Phase I Trials applicable to both Co-Development
Indications and Exclusive Indications; Section 13.6.2 shall apply with respect
to Products approved for Co-Development Indications (and not Exclusive
Indications) in the Affected Area; the transfer and assignment of Regulatory
Filings, Marketing Approvals, and Marks under Sections 13.6.3 and 13.6.5,
respectively, shall not apply except to the extent any of the foregoing are
applicable to Products for Co-Development Indications for the Affected Area (and
shall not apply with respect to Marks for Products for Exclusive Indications);
and Sections 13.6.4, 13.6.7, 13.6.8, and 13.6.9 shall apply with respect to
Products for Co-Development Indications, but not for Exclusive Indications, for
the Affected Area, and (ii) all rights and obligations of Astellas with respect
to such Co-Development Indications for such Affected Area shall terminate
(except those rights expressly set forth in this Section 13.4.2(e)), but this
Agreement shall otherwise remain in full force and effect.
     13.5 General Effects of Expiration or Termination.
          13.5.1 Accrued Obligations. Expiration or termination of this
Agreement for any reason shall not release either Party from any obligation or
liability which, at the time of such expiration or termination, has already
accrued to the other Party or which is attributable to a period prior to such
expiration or termination.
          13.5.2 Non-Exclusive Remedy. Notwithstanding anything herein to the
contrary, expiration or termination of this Agreement by a Party shall be
without prejudice to other remedies such Party may have at law or equity.
          13.5.3 General Survival. The following provisions of this Agreement
(and of the Financial Exhibit) shall survive expiration or termination of this
Agreement for any reason (but solely for the time periods provided in such
Articles and Sections, if applicable): Articles 11 (other than Section 11.5.2),
14 and 15 of the Agreement; Sections [****] of the Agreement; Sections 10.5 and
10.6 of the Agreement with respect to litigation, if any, under the applicable
section that was initiated prior to the effective date of termination; Article 6
of the Financial Exhibit, and the various notice, reporting and reconciliation
obligations set forth in the Financial Exhibit until such time as the notice,
reporting and reconciliation obligations applicable to the time period up to and
including the effective date of such termination have been fulfilled. Except as
otherwise provided in this
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Article 13, all rights and obligations of the Parties under this Agreement,
including any licenses granted hereunder, shall terminate upon expiration or
termination of this Agreement in its entirety for any reason. In the event
Astellas terminates this Agreement only with respect to a particular Product,
all rights and obligations of Astellas with respect to such Product shall
terminate but the Agreement shall otherwise remain in full force and effect
(including with respect to all Products not so terminated); provided, however,
that if Astellas terminates with respect to a particular Product under
Section 13.2.2, neither Party shall conduct, participate in or sponsor, directly
or indirectly, any activities directed toward clinical development, manufacture,
and commercialization of such Product nor appoint, license or otherwise
authorize any Third Party to conduct such activities. In the event Maxygen
terminates this Agreement only with respect to a particular region (i.e., North
America, Europe, and/or Asia), all rights and obligations of Astellas with
respect to such region shall terminate but the Agreement shall otherwise remain
in full force and effect (including with respect to countries in the Territory
not so terminated).
          13.5.4 Indemnification. Maxygen shall defend, indemnify, and hold the
Astellas Indemnitees harmless, at Maxygen’s cost and expense, from and against
any and all Losses payable to a Third Party arising out of any Claims brought
against any Astellas Indemnitee by such Third Party resulting directly or
indirectly from the research, development, manufacture, sale or other
exploitation by or for Maxygen (or any of its Affiliates, contractors or
licensees) of any CTLA-4 Variant, Compound, or Product outside this Agreement
(other than pursuant to Section 13.6) arising after the effective date of
termination (whether this Agreement is terminated as a whole or with respect to
a particular Product or jurisdiction) except to the extent attributable to the
gross negligence or willful misconduct of a Astellas Indemnitee.
     13.6 Effects of Certain Terminations. If this Agreement is terminated, in
its entirety or as to a particular Product or region, by Astellas pursuant to
Section 13.2.1 or 13.2.2, or by Maxygen pursuant to Section 13.3, 13.4.1 or
13.4.2, then the provisions of this Section 13.6 shall apply (subject to
Section 13.4.1(c) with respect to terminations pursuant to Section 13.4.1, and
subject to Section 13.4.2(e)(ix) or (x), as applicable, with respect to
terminations pursuant to Section 13.4.2), provided that in case of termination
only as to a particular Product or region, Section 13.6 shall apply only to such
Product or region (i.e., North America, Europe, and/or Asia), and further
provided that this Section 13.6 shall not apply to expiration of this Agreement
(nor to termination by Astellas under Section 13.3). Notwithstanding the
foregoing, in the event of termination by Astellas pursuant to Section 13.2.2,
Sections 13.6.1 and 13.6.2 shall not apply with respect to the Compound(s) and
corresponding Product(s) for which Adverse Safety/Tox Results were obtained.
          13.6.1 Ongoing Trials. If there are any ongoing clinical trials with
respect to Products being conducted by or under authority of Astellas (or its
Affiliate) at the time of notice of termination, Astellas agrees to (i) promptly
transition to Maxygen or its designee some or all of such clinical trials and
the activities related to or supporting such trials, (ii) continue to conduct
such clinical trials for a period requested by Maxygen up to [****] after the
effective date of such termination, or (iii) terminate such clinical trials in a
manner consistent with applicable Laws; in
 
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each case as requested by Maxygen. Astellas shall be responsible for the costs
of such transition under this Section 13.6.1.
          13.6.2 Commercialization. If requested by Maxygen, Astellas and its
Affiliates and sublicensees shall continue to distribute and sell Products
already commercially launched as of the effective date of termination in each
country within the Territory for which Marketing Approval therefor has been
obtained, in accordance with the terms and conditions of this Agreement, for a
period requested by Maxygen not to exceed [****] from the effective date of such
expiration or termination (the “Agreement Wind-Down Period”), provided that
Maxygen may terminate this Agreement Wind-Down Period upon [****] days’ notice
to Astellas. Notwithstanding any other provision of this Agreement, during this
Agreement Wind-Down Period, Astellas’, its Affiliates’ and its sublicensees’
rights with respect to Products (including the licenses granted under
Section 9.1) shall be non-exclusive, Maxygen’s obligations under Article 7 shall
terminate, and Maxygen shall have the right to engage one or more other
partner(s) or distributor(s) of Products in all or part of the Territory. Any
Products sold or disposed by Astellas or its Affiliates or sublicensees during
this Agreement Wind-Down Period shall be subject to the applicable payments
under the Financial Exhibit. After the Agreement Wind-Down Period, Astellas and
its Affiliates and sublicensees shall no longer have a right to sell Products
hereunder or make any representation regarding their status as a licensee of or
distributor for Maxygen for any Product.
          13.6.3 Regulatory Filings. Astellas shall promptly assign and transfer
to Maxygen all Regulatory Filings and Marketing Approvals for Products that are
held or controlled by or under authority of Astellas or its Affiliates or
sublicensees as of the effective date of termination, and shall take such
actions and execute such other instruments, assignments and documents as may be
necessary to effect the transfer of rights under such Regulatory Filings and
Marketing Approvals to Maxygen. Astellas shall cause each of its sublicensees to
transfer any such Regulatory Filings and Marketing Approvals to Maxygen if this
Agreement terminates. If applicable Law prevents or delays the transfer of
ownership of any Regulatory Filing or Marketing Approvals to Maxygen, Astellas
shall grant, and does hereby grant, to Maxygen an exclusive and irrevocable
right of access and reference to such Regulatory Filing and Marketing Approvals
for Products, and shall cooperate fully to make the benefits of such Regulatory
Filings and Marketing Approvals available to Maxygen or its designee(s). Within
[****] days after, as applicable, notice of termination under Section 13.2.1 or
13.2.2, or the effective date of termination by Maxygen under Section 13.3,
13.4.1 or 13.4.2, Astellas shall provide to Maxygen copies of all such
Regulatory Filings and Marketing Approvals, and of all Data and other Know-How
in document form in its possession and Control pertaining to any Candidate
Compounds or Product, or the manufacture or use thereof. Maxygen shall be free
to use and disclose such Regulatory Filings, Marketing Approvals and Data and
Know-How solely in connection with the exercise of its rights and licenses under
this Section 13.6.
          13.6.4 Technology Licenses. Astellas hereby grants Maxygen, effective
upon, as applicable, the notice of termination under Section 13.2.1 or 13.2.2,
or the effective date of termination by Maxygen under Section 13.3, 13.4.1 or
13.4.2, a non-exclusive, worldwide, irrevocable, fully paid-up license, with the
right to sublicense, under (i) any Patent Controlled by
 
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Astellas or its Affiliates during the term of this Agreement covering Products
(including any use or manufacture thereof) that were Developed or Commercialized
under the Alliance as of the effective date of termination; provided, however if
any such Patent Controlled by Astellas is subject to payment obligations to a
Third Party, Astellas shall promptly disclose such obligations to Maxygen in
writing and such Patents shall be deemed to be Controlled by Astellas only if
Maxygen agrees in writing to reimburse all amounts owed to such Third Party as a
result of the grant of a license to Maxygen or Maxygen’s exercise of such
license, and (ii) any Know-How disclosed to Maxygen under this Agreement or
developed or utilized by Astellas in connection with the Alliance; in each case
to make, have made, use, sell, offer for sale and import Clinical Candidates,
Compounds and Products. Notwithstanding the foregoing, no license shall be
granted under this Section 13.6.4 if the Agreement is terminated solely with
respect to a Product under Section 13.2 and not with respect to the Agreement in
its entirety.
          13.6.5 Marks. Upon the effective date of termination, Astellas hereby
assigns and shall cause to be assigned to Maxygen all worldwide rights in and to
any Marks specific to one or more Products that Astellas used with Product(s) at
Astellas’ costs. It is understood that such assignment shall not include the
Astellas name, logo, service mark, or trademark for the Astellas company itself
or any Affiliate.
          13.6.6 Sublicensees. Astellas’ sublicensees of Products shall, at the
request of Maxygen, be assigned to Maxygen to the furthest extent possible
subject to such sublicensee’s prior written consent. In the event Maxygen does
not request assignment of such sublicensees or any of such sublicensees does not
consent thereto, then the rights of such sublicensees with respect to Products
shall terminate upon termination of Astellas’ rights with respect to Products.
          13.6.7 Governance. Any activities undertaken by Maxygen or a Third
Party designee with respect to the Products during this Agreement Wind-Down
Period or thereafter shall not be subject to the authority of the JSC or any of
the provisions of Articles [****] above.
          13.6.8 Transition Assistance. Astellas agrees to reasonably cooperate
with Maxygen and its designee(s) to facilitate a smooth, orderly and prompt
transition of the Alliance including any ongoing Preclinical Development,
Development, Manufacturing and Commercialization of Compounds and Products to
Maxygen or its designee(s), during this Agreement Wind-Down Period. Without
limiting the foregoing, Astellas shall promptly provide Maxygen copies of
customer lists, customer data and other customer information for the Products,
which Maxygen shall have the right to use and disclose solely for the purpose of
commercializing Products being Commercialized under the Alliance as of the
effective date of termination during this Agreement Wind-Down Period and
thereafter. Upon request by Maxygen, Astellas shall transfer to Maxygen some or
all quantities of Products in its or its Affiliates’ possession (as requested by
Maxygen) to the extent not committed to Third Parties, within [****] days after
the end of this Agreement Wind-Down Period; provided, however, that Maxygen
shall reimburse Astellas for [****] percent ([****]%) of the [****] costs that
Astellas actually incurred to manufacture or otherwise acquire the quantities so
provided to Maxygen. If any Product was manufactured by any Third Party for
Astellas, or Astellas had
 
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contracts with vendors which contracts relate solely to Products and are
necessary or useful for Maxygen to take over responsibility for the Products in
the Territory, then Astellas shall to the extent possible and requested in
writing by Maxygen, assign all of such Third-Party contracts to Maxygen, and in
any case, Astellas agrees to reasonably cooperate with Maxygen to facilitate
uninterrupted supply of Products. If Astellas or its Affiliate manufactured any
Product at the time of termination, then Astellas (or its Affiliate) shall
continue to provide for manufacturing of such Product for Maxygen, at [****]
percent ([****]%) of the [****] cost therefor, from the date of notice of such
termination until such time as Maxygen is able, using diligent efforts to do so
but in any event no longer than the expiration of the Agreement Wind-Down
Period, to secure an acceptable alternative commercial manufacturing source from
which sufficient quantities of Product may be procured and legally sold in the
Territory
          13.6.9 Return of Materials. Within [****] days after the end of the
Agreement Wind-Down Period, Astellas shall destroy all tangible items
comprising, bearing or containing any Confidential Information of Maxygen that
are in Astellas’ or its Affiliates’ possession or control, and provide written
certification of such destruction, or prepare such tangible items of
Confidential Information for shipment to Maxygen, as Maxygen may direct, at
Maxygen’s expense, provided that Astellas may retain one (1) copy of such
Confidential Information for its legal archives.
          13.6.10 Termination as to a Particular Product. In the event Astellas
terminates this Agreement pursuant to Section 13.2.1 or 13.2.2 only with respect
to a particular Product, (i) the provisions of this Section 13.6 shall apply
only to the terminated Product and not to any other Products (thus, for example,
the obligation to transition trials in Section 13.6.1 shall apply only to trials
for the terminated Product, and the license granted in Section 13.6.4 shall not
apply), (ii) the transfer and assignment of Regulatory Filings, Marketing
Approvals, and Marks under Sections 13.6.3 and 13.6.5, respectively, shall not
apply to the extent any of the foregoing cover both terminated Products and
non-terminated Products (in which case Astellas shall provide licenses, access
or other arrangements, to the extent reasonably practicable, to provide Maxygen
similar benefits of such provisions with respect to the terminated Product at no
cost to Maxygen), and (iii) all rights and obligations of Astellas with respect
to such Product shall terminate but this Agreement shall otherwise remain in
full force and effect (including with respect to all Products not so
terminated).
     13.7 Effects of Terminations for Maxygen’s Breach. In the event that
Astellas terminates this Agreement pursuant to Section 13.3, then all licenses
granted by Maxygen to Astellas under this Agreement and all rights and
obligations of Astellas with respect to this Agreement shall terminate
immediately on the effective date of termination and the following provision
shall apply: Section 13.6.1 (provided that, notwithstanding anything to the
contrary therein, Maxygen shall be responsible for all the costs of such
transition and ongoing trials under Section 13.6.1) and the terms and conditions
of Article 7 shall not apply to Astellas after the effective date of termination
notwithstanding anything to the contrary in Article 7. For clarity, each Party
acknowledges that Astellas shall not be required to terminate this Agreement
pursuant to Section 13.3 upon breach by
 
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Maxygen, and may elect to retain its license hereunder, subject to the terms and
conditions of this Agreement and without limiting any other rights or remedies
of Astellas with respect to such breach.
     13.8 Certain Payments upon Termination.
          13.8.1 Termination by Astellas Under Section 13.2.1. Within [****]
days of the effective date of a termination by Astellas of this Agreement in its
entirety pursuant to Section 13.2.1, Astellas shall pay Maxygen the amount
specified below:
          (a) If the Agreement is so terminated prior to [****], Astellas shall
pay to Maxygen an amount equal to [****] as set forth on the Preclinical
Development Plan and Budget in effect immediately prior to such termination,
[****] pursuant to the Financial Exhibit.
          (b) If Astellas so terminates this Agreement after [****], Astellas
shall pay to Maxygen [****] Dollars ($[****]).
          (c) If Astellas so terminates this Agreement after [****].
     13.9 Termination Press Releases. In the event of termination of this
Agreement for any reason, the Parties shall cooperate in good faith to
coordinate public disclosure of such termination and the reasons therefor, and
shall not, except to the extent required by applicable Law or the rules of a
recognized stock exchange disclose such information without the prior approval
of the other Party, such approval not to be unreasonably withheld, conditioned
or delayed. To the extent possible under the situation, the terminating Party
shall provide the non-terminating Party with a draft of any such public
disclosure it intends to issue [****] in advance and with the opportunity to
review and comment on such statement, it being understood that if the
non-terminating Party does not notify the terminating Party in writing within
such [****] period (or such shorter period if required by applicable Law or and
the rules of a recognized stock exchange and, in each case as notified to the
non-terminating Party in writing) of any reasonable objections, such disclosure
shall be deemed approved, and in any event the Parties shall work diligently and
reasonably to agree on the text of any such proposed disclosure in an
expeditious manner. The principles to be observed in such disclosures shall be
accuracy, compliance with applicable Law and regulatory guidance documents,
reasonable sensitivity to potential negative reactions to such news and the need
to keep investors and others informed regarding the Parties’ business and other
activities. Accordingly in such situation, the non-terminating Party shall not
withhold, condition or delay its approval of a proposed disclosure that complies
with such principles.
ARTICLE 14
DISPUTE RESOLUTION
     14.1 Disputes.
          14.1.1 JSC. Except as otherwise provided herein, any disputes relating
to the Alliance or arising out of or in connection with this Agreement shall be
first submitted to the JSC for
 
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resolution. The JSC will hear the disputed matter and attempt to reach a
decision with respect to such disputed matter in as timely a manner as possible,
and in all cases within [****] after the submission by either Party of the
disputed matter to the JSC. If the JSC is unable to resolve any dispute within
such [****] period, such matter shall be subject to resolution under
Section 14.1.2.
          14.1.2 CEOs. If the JSC is unable to resolve any dispute relating to
the Alliance or arising out of or in connection with this Agreement, either
Party may, by written notice to the other, have such dispute referred to the
CEOs (or an executive officer designated by the CEO) of the Parties for
attempted resolution by good faith negotiations within [****]. In such event,
each Party shall cause its CEO or the CEO’s designated executive officer to meet
and be available to attempt to resolve such issue. If the Parties should resolve
such dispute or claim, a memorandum setting forth their agreement will be
prepared and signed by both Parties if requested by either Party. The Parties
shall cooperate in an effort to limit the issues for consideration in such
manner as narrowly as reasonably practicable in order to resolve the dispute. If
the CEOs (or designated executive officer) of the Parties are unable to resolve
such dispute for which a Party has the right under Section 2.7 to cast a
deciding vote, such matter shall be resolved by such Party casting its deciding
vote in accordance with Section 2.7.
     14.2 Arbitration. Except with respect to disputes involving the
intellectual property rights of a Party (subject to Section 14.3) and any matter
for which a Party has the right under Section 2.7 to cast a deciding vote, the
Parties agree that any dispute or controversy relating to the Alliance or
arising out of or in connection with this Agreement, or the validity,
enforceability, construction, performance or breach hereof, which is not
resolved under Section 14.1, shall be finally settled by binding arbitration
under this Section 14.2 under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed in
accordance with the rules thereof and the decisions of the arbitrator shall be
final and binding on the parties hereto. The place of the arbitration proceeding
shall be in San Francisco, California. The Parties agree that the decision shall
be the sole, exclusive and binding remedy between them regarding determination
of the matters presented to the arbitrator. The costs of such arbitration,
including administrative and arbitrator’s fees, shall be shared equally by the
Parties, and each Party shall bear its own expenses and attorney’s fees incurred
in connection with the arbitration. The parties shall use good faith efforts to
complete arbitration under this Section 14.2 within [****] following the
initiation of such arbitration. The arbitrator shall establish reasonable
additional procedures to facilitate and complete such arbitration within such
[****] period.
     14.3 Intellectual Property Disputes. Any disputes related to intellectual
property rights of the Parties which are not resolved under Section 14.1 shall
be brought to a court of competent jurisdiction in the country in which such
intellectual property rights were granted.
     14.4 Provisional Remedies. Nothing in this Agreement shall limit the right
of either Party to seek to obtain in any court of competent jurisdiction any
equitable or interim relief or provisional remedy, including injunctive relief,
pending resolution under Section 14.1, 14.2 or 14.3 as applicable, that may be
necessary to protect the rights or property of that Party. Seeking or obtaining
such
 
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equitable or interim relief or provisional remedy in a court shall not be deemed
a waiver of the agreement to arbitrate. For clarity, any such equitable remedies
shall be cumulative and not exclusive and are in addition to any other remedies
that either Party may have under this Agreement or applicable Law.
ARTICLE 15
MISCELLANEOUS
     15.1 Governing Law. This Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with the substantive Laws of the State of New York, without reference
to conflicts of Laws principles. Notwithstanding the above, any dispute
regarding validity or enforceability of any patent shall be governed by the
patent laws of the jurisdiction in which such patent was issued solely for the
purpose of resolution of the dispute as to validity and enforceability.
     15.2 Assignment. This Agreement shall not be assignable or otherwise
transferred, in whole or in part, by either Party to any Third Party without the
written consent of the other Party and any such attempted assignment shall be
void. Notwithstanding the foregoing, either Party may assign this Agreement,
without the written consent of the other Party, to an entity that acquires all
or substantially all of the business or assets of such Party to which this
Agreement pertains (whether by merger, reorganization, acquisition, sale or
otherwise), and agrees in writing to be bound by the terms and conditions of
this Agreement. No assignment or transfer of this Agreement shall be valid and
effective unless and until the assignee/transferee agrees in writing to be bound
by the provisions of this Agreement. The terms and conditions of this Agreement
shall be binding on and inure to the benefit of the permitted successors and
assigns of the Parties. Except as expressly provided in this Section 15.2, any
attempted assignment or transfer of this Agreement shall be null and void.
     15.3 Limitation on Liability. EXCEPT FOR BREACH OF SECTION 11.1, IN NO
EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY
LOSS OF PROFITS, LOSS OF BUSINESS OR INTERRUPTION OF BUSINESS, OR FOR ANY OTHER
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES.
IN NO CASE SHALL EITHER PARTY BE LIABLE FOR ANY REPRESENTATION OR WARRANTY MADE
BY THE OTHER PARTY TO ANY THIRD PARTY. NOTHING IN THIS SECTION 15.3 IS INTENDED
TO LIMIT EITHER PARTY’S OBLIGATIONS UNDER SECTIONS 12.5 AND 12.6 IN RELATION TO
AMOUNTS PAID TO A THIRD PARTY.
     15.4 Notices. Any notice, request, delivery, approval or consent required
or permitted to be given under this Agreement shall be in English language, in
writing, shall specifically refer to this Agreement and shall be deemed to have
been sufficiently given if delivered in person, transmitted by facsimile
(receipt verified) or by express courier service (signature required) or [****]
after it was sent by registered letter, return receipt requested (or its
equivalent), provided that no postal strike or
 
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other disruption is then in effect or comes into effect within [****] after such
mailing, to the Party to which it is directed at its address or facsimile number
shown below or such other address or facsimile number as such Party will have
last given by notice to the other Party.
     If to Maxygen,

         
 
  addressed to:   Maxygen, Inc.
 
      515 Galveston Drive
 
      Redwood City, California 94063
 
      USA
 
      Attention: Chief Business Officer
 
      Telephone: (650) 298-5300
 
      Telecopy: (650) 298-5869
 
       
 
  with copy to:   Maxygen, Inc.
 
      515 Galveston Drive
 
      Redwood City, California 94063
 
      USA
 
      Attention: General Counsel
 
      Telephone: (650) 298-5300
 
      Telecopy: (650) 298-5803
 
       
 
  and a copy to:   Wilson Sonsini Goodrich & Rosati
 
      Professional Corporation
 
      650 Page Mill Road
 
      Palo Alto, CA 94304-1050
 
      USA
 
      Attention: David W. Stevens
 
      Telephone: (650) 493-9300
 
      Telecopy: (650) 493-6811      If to Astellas,    
 
       
 
  addressed to:   Astellas Pharma Inc.
 
      3-11, Nihonbashi-Honcho 2-chome
 
      Chuo-ku, Tokyo 103-8411
 
      Japan
 
      Attention: Vice President, Business Development
 
      Telephone: (813) 3244-2500
 
      Telecopy: (813) 5203-7164
 
       
 
  with a copy to:   Astellas Pharma Inc.
 
      3-11, Nihonbashi-Honcho 2-chome

 
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      Chuo-ku, Tokyo 103-8411
 
      Japan
 
      Attention: Vice President, Legal
 
      Telephone: (813) 3244-3231
 
      Telecopy: (813) 3244-5811

     15.5 Waiver. Neither Party may waive or release any of its rights or
interests in this Agreement except in writing. The failure of either Party to
assert a right hereunder or to insist upon compliance with any term or condition
of this Agreement shall not constitute a waiver of that right or excuse a
similar subsequent failure to perform any such term or condition. No waiver by
either Party of any condition or term in any one or more instances shall be
construed as a continuing waiver of such condition or term or of another
condition or term.
     15.6 Severability. If any provision hereof is held invalid, illegal or
unenforceable by any court of competent jurisdiction from which no appeal can be
or is taken, the Parties shall negotiate in good faith a valid, legal and
enforceable substitute provision that most nearly reflects the original intent
of the Parties and all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible. Such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction.
     15.7 Entire Agreement/Modification. This Agreement, including its Exhibits,
sets forth all the covenants, promises, agreements, warranties, representations,
conditions and understandings between the Parties with respect to the subject
matter hereof, and supersedes and terminates all prior agreements and
understandings between the Parties including the Prior CDA and the existing
Material Transfer Agreement by and between the Parties dated June 24, 2008 with
respect to such subject matter. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon the Parties unless reduced to
writing and signed by the respective authorized officers of each of the Parties.
     15.8 Non-Solicitation. For a period of two (2) years after the Effective
Date, neither Party shall, either directly or indirectly, solicit any employee
of the other Party primarily dedicated to the Preclinical Development Program,
or to Development, Manufacturing, Commercialization or other activities under
the Alliance, to terminate his or her employment with such other Party and
become employed by such other Party, whether or not such employee is a full-time
employee of such other Party, and whether or not such employment is pursuant to
a written agreement or is at-will. Nothing herein shall be construed to prohibit
either Party from hiring any employees that: (i) first make contact with such
Party on their own initiative regarding employment; (ii) are identified to such
party as a result of a non-directed third party executive search; or
(iii) respond to advertisements for employment that are aimed at the public at
large in any newspaper, trade magazine, or other periodical or media in general
circulation.
     15.9 Relationship of the Parties. The Parties agree that the relationship
of Maxygen and Astellas established by this Agreement is that of independent
contractors. Furthermore, the Parties agree that this Agreement does not, is not
intended to, and shall not be construed to, establish an employment, agency,
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specifically provided herein, neither Party shall have any right, power or
authority, nor shall they represent themselves as having any authority to
assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other Party, or otherwise act as an agent for the
other Party for any purpose.
     15.10 Force Majeure. Except with respect to payment of money, neither Party
shall be liable or responsible to the other Party nor be deemed to have
defaulted under or breached this Agreement for failure or delay in fulfillment
or the performance of any of its obligations under this Agreement for the time
and to the extent such failure or delay is caused by or results from fire,
earthquake, tornado, embargo, prohibition or intervention, riot, civil
commotion, war, act of war (whether war be declared or not), insurrection,
terrorist act, strike, flood, governmental act or restriction (beyond the
reasonably control of the respective Party), act of God, or other cause that is
beyond the reasonable control and not caused by the negligence or misconduct of
the affected Party. The Party affected by such force majeure will provide the
other Party with full particulars thereof as soon as it becomes aware of the
same (including its best estimate of the likely extent and duration of the
interference with its activities), and will use commercially reasonable efforts
to overcome the difficulties created thereby and to resume performance of its
obligations as soon as practicable. If the performance of any such obligation
under this Agreement is delayed owing to such a force majeure for any continuous
period of more than [****], the Parties hereto will consult with respect to an
equitable solution, including the possibility of the mutual termination of this
Agreement.
     15.11 Third Party Beneficiaries. Except for the rights to indemnification
provided for a Party’s Indemnitees pursuant to Section 12.5, all rights,
benefits and remedies under this Agreement are solely intended for the benefit
of Maxygen and Astellas, and except for such rights to indemnification expressly
provided pursuant to Section 12.5, no Third Party shall have any rights
whatsoever to (i) enforce any obligation contained in this Agreement (ii) seek a
benefit or remedy for any breach of this Agreement, or (iii) take any other
action relating to this Agreement under any legal theory, including but not
limited to, actions in contract, tort (including but not limited to negligence,
gross negligence and strict liability), or as a defense, setoff or counterclaim
to any action or claim brought or made by the Parties.
     15.12 Advice of Counsel. Astellas and Maxygen have each consulted counsel
of their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one Party or another
and will be construed accordingly.
     15.13 Other Obligations. Except as expressly provided in this Agreement or
as separately agreed upon in writing between Astellas and Maxygen, each Party
shall bear its own costs incurred in connection with the implementation of the
obligations under this Agreement.
     15.14 Further Assurances. At any time or from time-to-time on and after the
Effective Date, either Party shall at the request of the other Party (i) deliver
to the requesting Party such records, data or other documents consistent with
the provisions of this Agreement, (ii) execute, and deliver or cause to be
delivered, all such consents, documents or further instruments of assignment,
 
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transfer or license consistent with the provisions of this Agreement, and
(iii) take or cause to be taken all such actions, as the requesting Party may
reasonably deem necessary or desirable in order for the requesting Party to
obtain the full benefits of this Agreement and the transactions contemplated
hereby.
     15.15 Compliance with Laws/Other.  Notwithstanding anything to the contrary
contained herein, each Party shall comply with, all applicable Laws in
connection with its performance under this Agreement, including obtaining all
necessary approvals required by the applicable agencies of the governments of
the United States, Japan and other applicable jurisdictions. In addition, each
Party shall conduct its activities under the Alliance in accordance with good
scientific and business practices.
     15.16 Governmental Matters.
          15.16.1 Governmental Filings. Subject to Section 11.5.1, to the
extent, if any, that a Party concludes in good faith that it is required to file
or register this Agreement or a notification thereof with any governmental
authority, including without limitation the U.S. Securities and Exchange
Commission and the Competition Directorate of the Commission of the European
Communities, in accordance with applicable laws and regulations, such Party may
do so, and the other Party shall cooperate in such filing or notification and
shall execute all documents reasonable required in connection therewith, at the
expense of the requesting Party. The Parties shall promptly notify each other as
to the activities or inquires of any such governmental authority relating to
this Agreement, and shall cooperate, to respond to any request for further
information therefrom at the expense of the requesting Party.
          15.16.2 License Registrations. Astellas may, at its expense, register
the exclusive license granted under this Agreement in any country of, or
community or association of countries in, the Territory. Maxygen shall
reasonably cooperate in such registration at Astellas’ expense. Upon request by
Astellas, Maxygen agrees promptly to execute any “short form” licenses developed
in a form reasonably acceptable to both Astellas and Maxygen and reasonably
submitted to it by Astellas from time to time in order to effect the foregoing
registration in such country. No such “short form” license shall be deemed to
amend or be used to interpret this Agreement. If there is any conflict between
such a license or other recordation document and this Agreement, this Agreement
shall control.
     15.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together, shall constitute one and the same instrument.
[The remainder of this page intentionally left blank intentionally; the
signature page follows.]

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     IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized representatives as of the Effective Date.

                     
 
                    MAXYGEN, INC.       ASTELLAS PHARMA, INC.    
 
                   
By:
  /s/ Grant Yonehiro
 
      By:   /s/ Masafumi Nogimori
 
   
 
                   
Name:
  Grant Yonehiro       Name:   Masafumi Nogimori    
 
                   
Title:
  CBO & SVP Development Programs       Title:   President & CEO    

List of Exhibits:

  •   Exhibit 1.5—Asia     •   Exhibit 1.16—Existing Compounds     •  
Exhibit 1.17—Compound Criteria     •   Exhibit 1.33—Financial Exhibit     •  
Exhibit 1.38—Autoimmune Diseases and Conditions     •   Exhibit 1.46—Major
Market Countries     •   Exhibit 1.50.2—Maxygen Patents     •  
Exhibit 2.5—Initial Committee Membership     •   Exhibit 3.2—Initial Preclinical
Development Plan     •   Exhibit 3.3—Clinical Candidate Criteria     •  
Exhibit 6.1.3(a) —Commercial Supply Terms and Conditions     •  
Exhibit 6.4—Insurance Requirements     •   Exhibit 10.3.1—Core Countries     •  
Exhibit 11.2—Existing Agreements     •   Exhibit 11.5—Form Mutual Press Release
    •   Exhibit 11.5.2—Press Release Events     •   Exhibit 12.2.7—Existing
Third Party Licenses

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EXHIBIT 1.5
ASIA
“Asia” shall mean the following countries, and their territories and
possessions:
[****].
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.16
EXISTING COMPOUNDS
     The following is a list of Existing Compounds as of the Effective Date:
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.17
COMPOUND CRITERIA
         A CTLA-4 Variant must meet each of the following three criteria to be
classified as a Compound:

  1.   [****] greater than or equal to [****], measured under the same
conditions using a [****]     2.   Greater than or equal to [****]:

a. [****]
b. [****]
c. [****]
d. [****]

  3.   Less than or equal to [****]

 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.33
FINANCIAL EXHIBIT
     This Exhibit (“Financial Exhibit”) to the Co-Development and
Commercialization Agreement between Maxygen and Astellas effective as of
September 18, 2008 (“Agreement”) sets forth the financial terms of the Alliance
between Maxygen and Astellas under the Agreement, including the running
royalties, and financial definitions, allocations and related financial
reconciliation procedures to be followed in calculating Preclinical Development
Costs and Development Costs, and, in the event that Maxygen exercises its
Co-Promotion Option in the Joint Commercialization Territory, Distributable
Profits in the Joint Commercialization Territory, and any required
reconciliation between the Parties with respect thereto.
     For clarity, the Alliance is not intended to be, and is not, a legal entity
and, as used in this Financial Exhibit, references to the Alliance are used for
identification purposes only.
     All record keeping and accounting for costs and revenues under the Alliance
shall be conducted by each Party in accordance with Accounting Standards.
     The contents of this Financial Exhibit are hereby incorporated into the
Agreement and are governed by the terms and conditions of the Agreement,
including, without limitation, the confidentiality provisions set forth in
Article 11 of the Agreement. In the event of any conflict between this Financial
Exhibit and any provision in the main body of the Agreement, the provision in
the main body of the Agreement shall govern and control. All capitalized terms
used herein not otherwise expressly defined herein shall have the meanings
ascribed thereto in the Agreement.
ARTICLE 1
MILESTONE PAYMENTS
     1.1 Milestones.
          1.1.1 Milestone Payments. Subject to Sections 1.2, 1.3, and 1.4 below,
Astellas shall pay to Maxygen the milestone payments set out below following the
first achievement under the Alliance of the corresponding milestone event below
(each, a “Milestone”) with respect to each Compound to achieve such Milestone
(for the first corresponding Product containing such Compound to achieve such
Milestone) for each of the Indications specified below:

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                      Milestone   Milestone         Payment for   Payment for  
      [****]   [****] No.   Milestone Event   Indication:   Indication: 1.  
[****]   $[5,000,000]
    2.  
[****]
  $[****]   $[****]     3.  
[****]
  $[****]   $[****]     4.  
[****]
  $[****]   $[****]     5.  
[****]
  [****]   $[****]     6.  
[****]
  $[****]   $[****]     7.  
[****]
  [****]   $[****]     8.  
[****]
  $[****]   $[****]

          1.1.2 Certain Terms. For the purposes of the milestone payments due
under Section 1.1.1:

  (a)   “[****]” shall be deemed to occur upon [****].     (b)   “[****]” shall
be deemed to occur on [****].     (c)   “[****]” of a [****] shall be deemed to
occur upon the [****].

          1.1.3 [****]. In the event Milestone 3 ([****]) is achieved by [****]
(as defined below) with respect to a Product containing such Compound (and
Milestone 4 has not yet been achieved for such Compound), then Astellas shall
pay to Maxygen, together with the amount due for achievement of Milestone 3, an
amount equal to [****] percent ([****]%) of the milestone payment that would be
due for achievement of Milestone 4 ([****]) with respect to such Compound for
the same Indication, and if such amount has been paid prior to subsequent
achievement (if any) of such Milestone 4 with respect to such Compound for such
Indication, then the payment for such achievement of Milestone 4 for such
Indication shall be reduced by [****] percent ([****]%). As used herein,
“[****]” means a [****] of a Product, where such [****] is designed to obtain
data intended (assuming applicable endpoints are met) to [****].
 
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the Securities and Exchange Commission. Confidential treatment has been
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     1.2 Additional Compounds/Products. Any Milestone payable by Astellas
pursuant to Section 1.1.1 above shall be made no more than once with respect to
the achievement of each Milestone by a particular Compound for a Co-Development
Indication and for an Exclusive Indication (which payment, in each case, shall
be made for the first corresponding Product containing such Compound to achieve
the applicable Milestone), provided that, Milestone 1 in the table in
Section 1.1.1 shall be payable by Astellas only once upon the achievement of
such Milestone by a Compound for any Indication. For the avoidance of doubt, for
the purposes of the foregoing (i) a Compound (and corresponding Products
containing such Compound) shall be deemed as different from another Compound
(and corresponding Products containing such Compound) so long as such Compounds
have different generic names and not due to difference in formulation or other
small differences, and (ii) different Products containing the same Compound
shall be deemed the same Product (regardless of the difference or duplication in
Indication). Except as provided in Section 1.4, if any new Compound such as a
Next Generation Compound (or the first corresponding Product containing such new
Compound) is developed under the Alliance for either an Exclusive Indication or
a Co-Development Indication in respect of which Co-Development Indication or
Exclusive Indication one (1) or more Milestones set out in Section 1.1.1 have
already been achieved (and the corresponding payments made by Astellas in
accordance with this Article 1) for a previous Compound or Product, and provided
that Section 1.4 below does not apply (i.e., Section 1.4 shall apply if the new
Compound is acting as a replacement Product or a Backup Compound rather than a
new Compound or a Next Generation Compound), then, in lieu of the amounts
specified in Section 1.1.1 above, Astellas shall pay [****] percent ([****]%) of
the amounts set forth in Section 1.1.1 upon the achievement of the particular
Milestone by any such new Compound (or the first corresponding Product
containing such new Compound) with respect to an Exclusive Indication or a
Co-Development Indication, as applicable, which Milestone was previously
achieved by a different Compound or Product (and the corresponding payments made
by Astellas in accordance with this Article 1). For clarity, if any Next
Generation Compound (or corresponding Product) achieves a particular Milestone
which has not previously been achieved with respect to a different Compound or
Product (and the corresponding payments made by Astellas in accordance with this
Article 1), then the full milestone payment set forth in Section 1.1.1 shall be
due and payable for achievement of such Milestone by such Next Generation
Compound.
     1.3 Timing.
          1.3.1 If a subsequent Milestone is achieved with respect to a
particular Compound (or the first corresponding Product containing such
Compound) for either an Exclusive Indication or a Co-Development Indication
before a prior Milestone for such Indication (“prior” and “subsequent referring
to a lower or higher, respectively, number corresponding to such Milestone in
the table in Section 1.1.1 above; e.g. Milestone 3 being “prior” to
Milestone 5), then all such prior Milestones for the applicable Indication
(i.e., the relevant Exclusive Indication or Co-Development Indication) shall be
deemed achieved upon achievement of the subsequent Milestone for such Indication
and
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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shall become payable (if not previously paid) in accordance with this Article 1,
provided that, nothing in this Section 1.3 shall be interpreted to require
Astellas to pay the milestone payment corresponding to Milestone 1 in the table
in Section 1.1.1 more than once with respect to a particular Compound (or the
corresponding Products containing such Compound).
          1.3.2 If Milestone 2 set out in the table in Section 1.1.1 above (for
[****]) is achieved by a Compound (for the first corresponding Product
containing such Compound to achieve Milestone 2), and (a) such Compound has been
designated as a Clinical Candidate for Co-Development Indications by the JSC but
Astellas has not determined whether or not such Compound is to be Developed for
an Exclusive Indication, (b) such Compound has not been designated by the JSC
specifically for a Co-Development Indications and Astellas has not determined
whether or not such Compound is to be Developed for an Exclusive Indication, or
(c) such Compound has been designated as a Clinical Candidate for a
Co-Development Indication and Astellas has determined such Compound is to be
Developed for an Exclusive Indication, then the Milestone 2 shall be deemed
achieved by such Compound (for the first corresponding Product containing such
Compound to achieve such Milestone 2) with respect to both a Co-Development
Indication and an Exclusive Indication, and Astellas shall pay to Maxygen the
milestone payment corresponding to such Milestone in the table in Section 1.1.1
with respect to both a Co-Development Indication and an Exclusive Indication. If
Milestone 2 is achieved with respect to a Compound (for the first corresponding
Product containing such Compound to achieve such Milestone 2) that has been
designated by the JSC for Development and Commercialization for a Co-Development
Indication, and Milestone 2 has not previously been achieved (and the
corresponding payments made by Astellas in accordance with this Article 1) by a
Compound (for the first corresponding Product containing such Compound to
achieve such Milestone 2) for an Exclusive Indication, then, if Astellas does
not achieve Milestone 2 with respect to a Compound for Exclusive Indications
prior to the Congruency Payment Date (as defined below), Astellas shall pay to
Maxygen on the Congruency Payment Date an amount equal to [****]
percent ([****]%) of the milestone payment that would be due upon achievement of
Milestone 2 for such Compound with respect to an Exclusive Indication, which
amount shall be creditable against the payment due upon the next subsequent
achievement (if any) of Milestone 2 with respect to a Compound for an Exclusive
Indication. As used herein, “Congruency Payment Date” means the date which
follows the date upon which Milestone 2 is achieved with respect to a Compound
(for the first corresponding Product containing such Compound to achieve such
Milestone 2) that has been designated by the JSC for development for a
Co-Development Indication (“Compound A”) by a period equal to [****] percent
([****]%) of the period that it took for Compound A to achieve Milestone 2 from
the time when Compound A was at the same stage of preclinical development as the
most advanced Compound which Astellas has determined to Develop and
Commercialize for an Exclusive Indication at the time Milestone 2 was achieved
by Compound A.
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     1.4 Discontinued Compounds/Products. The milestone payments due under
Sections 1.1 and 1.2 shall be made with respect to each Compound (for the first
corresponding Product containing such Compound to achieve the applicable
Milestone) as described above, provided however that, if all development of a
particular Compound (and all corresponding Product(s) containing such Compound)
under the Alliance ceases (“Discontinued Compound/Product”) after Astellas has
made any payment with respect to such Discontinued Compound/Product under
Section 1.1, 1.2, or 1.3 above in respect of the achievement of any Milestone by
such Discontinued Compound/Product, then there shall be no payment due upon the
accomplishment of the same Milestone(s) (i.e., the Milestones for which payments
were made) with respect to the next or any subsequent Compound such as a Backup
Compound (or corresponding Product containing such Compound) for the same
Indication (Indication being an Exclusive Indication or Co-Development
Indication) for which such Discontinued Compound/Product was being Developed.
When Milestones set out in Section 1.1.1 are achieved with respect to such
Compound (or the first corresponding Product containing such Compound)
corresponding to milestone payments that were not previously paid with respect
to the Discontinued Compound/Product, then any such milestone payments that were
not previously paid shall be payable pursuant to Section 1.1, 1.2, and 1.3, as
applicable. For the avoidance of doubt, this Section 1.4 shall apply whether
such Discontinued Compound/Product was the first Compound or a new Compound
(such as a Next Generation Compound) as provided under Section 1.2.
     1.5 Reports and Payments. Each Party shall notify the other Party in
writing within [****] days following its achievement of any of the milestones in
the table in Section 1.1.1 above (each such notice, a “Milestone Achievement
Notice”), and Maxygen shall include an invoice with such Milestone Achievement
Notice or shall send an invoice to Astellas upon receipt of such Milestone
Achievement Notice, as appropriate. Payment of the amount corresponding to such
Milestone shall be due within [****] days after the date of such invoice. For
the avoidance of doubt and subject to Sections 1.2 and 1.4, the milestone
payments set forth in this Article 1 shall neither be refundable nor creditable
against any future milestone payments (except as provided in Section 1.3.2),
royalties or other payments by Astellas to Maxygen under the Agreement
(including, any reimbursement of Maxygen’s Costs pursuant to Section 4.1.4(b) of
the Agreement and Section 3.2.2(a) of this Financial Exhibit in the event
Maxygen exercises the Maxygen Opt-Out Right), nor shall such milestone payments
be taken into account in calculating the Parties’ sharing of Preclinical
Development Costs and/or Development Costs and/or, to the extent applicable,
Distributable Profits under Articles 3 and 4 below.
ARTICLE 2
ROYALTIES
     2.1 Royalty Payments. Subject to the terms and conditions of the Agreement
and this Financial Exhibit (including this Article 2), Astellas shall pay to
Maxygen running royalties at the rates set out in this Section 2.1 on Net Sales
by Astellas, its Affiliates and sublicensees granted
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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sublicenses under Section 9.1.3(a) of the Agreement (“Sublicensees”) in the
Royalty Bearing Territory of: (a) Products for an Exclusive Indication; and
(b) Products for a Co-Development Indication. For clarity, with respect to
Products described in clause (a) above, the “Royalty Bearing Territory” is all
jurisdictions throughout the Territory, as defined in clause (i) of Section 1.65
of the Agreement; and with respect to Products described in clause (b) above,
the “Royalty Bearing Territory” is all jurisdictions throughout the Territory,
excluding the Co-Promotion Countries with respect to a Product for which Maxygen
has exercised its Co-Promotion Option in accordance with Section 5.2 of the
Agreement, as defined in clause (ii) of Section 1.65 of the Agreement. In
addition, as described further in Section 2.1.1 below, the applicable royalty
rate(s) for the purposes of calculating the royalties payable by Astellas shall
be determined based upon the aggregate Net Sales of all Products sold in a
particular Fiscal Year, without regard to the Indication(s) for which any
Product is sold, but excluding Net Sales of Co-Promotion Products in applicable
Co-Promotion Countries.
          2.1.1 Base Royalty Rate. The following table sets out the base royalty
rates (“Base Royalty Rates”) applicable to the calculation of the running
royalties payable by Astellas on Net Sales by Astellas, its Affiliates and
Sublicensees:

          Aggregate Annual Net Sales of All Products   Base Royalty Rate
Portion of Aggregate Annual Net Sales less than [****] Dollars ($[****])
    [****] %    
Portion of Aggregate Annual Net Sales equal to or exceeding [****] Dollars
($[****]) up to and including [****] Dollars ($[****])
    [****] %    
Portion of Aggregate Annual Net Sales in excess of [****] Dollars ($[****])
    [****] %

     As used in this Financial Exhibit, “Aggregate Annual Net Sales” shall mean
the [****]. For the avoidance of doubt, [****].
     EXAMPLE: For clarity, an example of the calculation of base royalties
payable by Astellas to Maxygen using the Base Royalty Rate set out in this
Section 2.1.1 follows.
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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          2.1.2 Certain Additions to Royalties. Notwithstanding Section 2.1.1
above, the running royalties payable by Astellas to Maxygen on Net Sales by
Astellas, its Affiliates and Sublicensees shall be adjusted as set out in this
Section 2.1.2 on a Product-by-Product basis in the circumstances described in
this Section:
               (a) If Maxygen does not exercise the Maxygen Opt-Out Right in
accordance with Section 4.1.4(b) of the Agreement with respect to a particular
Product for Co-Development Indication, Astellas shall pay to Maxygen an
additional royalty of [****] percent ([****]%) of aggregate Net Sales of such
Product for Co-Development Indications sold by Astellas, its Affiliates and
Sublicensees within the then-current countries in Europe; and
               (b) If (i) Maxygen has not exercised the Maxygen Opt-Out Right in
accordance with Section 4.1.4(b) of the Agreement with respect to a particular
Product for Co-Development Indication, and (ii) there are any countries within
the Joint Commercialization Territory which are not Co-Promotion Countries for
the applicable Product; then, Astellas shall pay to Maxygen additional royalty
of [****] percent ([****]%) of aggregate Net Sales of such Product for
Co-Development Indications sold by Astellas, its Affiliates and Sublicensees in
such country(ies) (which are not Co-Promotion Countries for such Product) within
the Joint Commercialization Territory. For the avoidance of doubt, upon
Maxygen’s exercise of its co-promotion termination rights under Section 5.2.9 of
the Agreement, the royalties in this Section 2.1.2(b) shall apply, and the
sharing of Distributable Products in accordance with Section 3.3 shall not
apply, with respect to the country(ies) and applicable Product for which Maxygen
exercised its termination rights.
               (c) It is understood that the additional royalties for a
particular Product pursuant to Section 2.1.2(a) and/or Section 2.1.2(b) above
shall not affect the royalty rates applicable to the calculation of running
royalties payable by Astellas pursuant to this Section 2.1 on: (i) Net Sales of
the same Product in jurisdictions outside Europe and/or the Joint
Commercialization Territory, as applicable; nor (ii) Net Sales of any Products
other than such Product. Further, for the avoidance of doubt, if Maxygen
exercises the Maxygen Opt-Out Right with respect to a particular Product for a
Co-Development Indication, the royalties payable by Astellas pursuant to this
Section 2.1 on Net Sales of such Product by Astellas, its Affiliates and
Sublicensees throughout the Royalty Bearing Territory shall be calculated using
the Base Royalty Rates set out in Section 2.1.1 above.
               (d) If Maxygen does exercise the Co-Promotion Option for a
Co-Promotion Product in accordance with Section 5.2 of the Agreement; then, no
royalty shall be due to Maxygen hereunder with respect to Net Sales of such
Product for which Maxygen will receive a share of Distributable Profits in
accordance with Article 3 of this Financial Exhibit.
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
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     ADDITIONAL EXAMPLES: For clarity, additional examples of the calculation of
royalties payable by Astellas to Maxygen pursuant to Sections 2.1.1 and 2.1.2
follows.
     [****]
     [****]
          2.1.3 Royalty Offsets and Reductions; Floor. The running royalties
payable by Astellas to Maxygen on Net Sales by Astellas, its Affiliates and
Sublicensees under Section 2.1.1 shall be adjusted as set out in this
Section 2.1.3 on a Product-by-Product basis in the circumstances described in
this Section:
               (a) Third Party Payments. Subject to the maximum reduction of
royalties owed to Maxygen with respect to Net Sales of a Product specified in
Section 2.1.4 below, Astellas may deduct up to [****] percent ([****]%) of the
royalties owing to any Third Party (“Third Party Payments”) under a Third Party
License entered into in accordance with Section 10.4 of the Agreement (and
agreed or determined to be reasonably necessary thereunder) as a result of the
grant of the license to Astellas, the grant of a sublicense to Maxygen in
accordance with Section 9.2 of the Agreement or the conduct by or under the
authority of either Party of activities under and in accordance with the
Agreement including Preclinical Development, Development, Manufacture and/or
Commercialization of any Product, from the royalties owed to Maxygen pursuant to
Section 2.1 of this Financial Exhibit with respect to Net Sales of such Product
(and Astellas shall not deduct amounts owing under any Third Party License from
any other payments by Astellas to Maxygen under the Agreement), provided that,
in no event shall any deduction under this Section 2.1.3(a) cause the royalties
paid to Maxygen pursuant to Section 2.1 of this Financial Exhibit in any
particular calendar quarter to be reduced to less than [****] percent ([****]%)
of the royalties that would otherwise be payable with respect to such Product.
Any amounts paid by Astellas and included in this Section 2.1.3(a) pursuant to
Section 10.5 of the Agreement not deducted in a Fiscal Year may be credited in
following Fiscal Years subject to the [****] percent ([****]%) limit for each
such Fiscal Year.
               (b) Generic Competition. In the event there is Generic
Competition (as defined below) for a Product in any country in which such
Product is sold, the royalties owed to Maxygen pursuant to Section 2.1.1 of this
Financial Exhibit for such Product shall thereafter be reduced as set forth in
this Section 2.1.3(b), subject to the maximum reduction of royalties due to
Maxygen specified in Section 2.1.4 below, with respect to Net Sales of such
Products sold in such country (unless and until such Generic Competition ceases
as described below). The reduced royalties for sales of such Product in such
country shall be calculated by reducing (only for purposes of determining
applicable Base Royalty Rates and calculating royalty amounts owed) the Net
Sales of such Products in such country by [****] percent ([****]%).
 
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the Securities and Exchange Commission. Confidential treatment has been
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                    (i) As used herein, “Generic Competition” means that sales
of Generic Product in such country equal or exceed, on a unit volume basis,
[****] percent ([****]%) of the total market share of all Products and Generic
Products combined in any calendar quarter. Generic Competition shall be deemed
to have ceased for purposes of this Section 2.1.3(b) when sales of Generic
Products in such country, on a unit volume basis, fall below [****] percent
([****]%) of the total market share of all Product and Generic Products combined
in any calendar quarter, and in the event Generic Competition so ceases, the
reduction on royalties for Net Sales of the applicable Product in such country
set forth in this Section 2.1.3(b) shall thereafter no longer apply unless and
until such time as there is again Generic Competition in such country.
                    (ii) As used herein, a “Generic Product” with respect to a
Product shall mean any product, other than a Product sold by or for Astellas or
its Affiliates or its or their sublicensees (but, for the avoidance of doubt,
including a Product if sold by a Third Party not sublicensed for such Product by
Astellas), that is sold under a marketing authorization granted by a Regulatory
Authority to a Third Party for the same or an overlapping indication or
indications as the relevant Product, where such marketing approval was obtained
based upon submission of an abbreviated regulatory data package rather than
submission of the full preclinical and clinical safety and efficacy data that
would be required for a new molecule by virtue of its similarity to a Product
(excluding, for the avoidance of doubt, approval based upon a grant by Astellas
or its Affiliate or any Sublicensee of a right of reference to data related to
any Product), either (1) through a formalized regulatory process for approval of
“biosimilar” or “generic” versions of biological pharmaceutical products in the
applicable country, or (2) if no such formalized regulatory process for approval
of “biosimilar” or “generic” versions of biological pharmaceutical products
exists in such country, because such product contains as an active
pharmaceutical ingredient a CTLA-4 variant molecule that has the same amino acid
sequence as the Compound that is the active pharmaceutical ingredient in the
applicable Product (or such CTLA-4 variant is so substantially similar to the
Compound that it is treated as the same molecule, for regulatory purposes, as
the applicable Compound in the relevant Product). Notwithstanding the foregoing,
the following shall not be considered Generic Products for purposes of this
Section 2.1.3(b): (X) belatacept or abatacept (and any products containing
either or both), (Y) any product containing as an active pharmaceutical
ingredient a molecule that has the same amino acid sequence as abatacept or
belatacept, and (Z) any product that is approved on the basis of being a
“generic” or “biosimilar” version of abatacept or belatacept (i.e., is approved
on the basis of similarity of its active pharmaceutical ingredient to either
abatacept or belatacept in the manner described above with respect to Generic
Products approved on the basis of similarity to the relevant Compound).
               (c) Combination Products. In the event that a Product is sold in
a particular country in the Royalty Bearing Territory for a single price in
combination with one or more other active pharmaceutical ingredients (i.e., a
chemical or biological entity for performing a therapeutic or prophylactic
function distinct from the enhancement of the activity or bioavailability
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
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of the Compound itself) for which no royalty would be due hereunder if sold
separately (a “Combination Product”), the Net Sales of the Combination Product
in such country, for the purpose of determining royalty payments hereunder,
shall be calculated by adjusting the Net Sales of such Combination Product to
equal a pro rata portion of the Net Sales of such Combination Product (or
Product bundle as the case may be) determined on the basis of the Compound’s
contribution to the fair market value of the Combination Product (or Product
bundle as the case may be), provided however, that in no event will the Net
Sales of such Combination Product be reduced by more than [****] percent
([****]%) on account of such adjustment. Fair market value of the Compound and
other active pharmaceutical ingredient shall be determined, to the extent
possible, by the comparative list prices of the Compound and such other active
pharmaceutical ingredient when sold separately and independently, or otherwise
by reference to other reasonable methods of estimating relative fair market
value.
               (d) Valid Claim. In any country in the Royalty Bearing Territory
where there is no Valid Claim that would be infringed, absent a license, by the
making of (which would infringe a composition claim to nucleic acid sequences
encoding a Compound or to a genus encompassing such nucleic acid sequences), or
the use or sale of, a particular Product (or corresponding Compound) in such
country at the time of sale of such Product in such country, or all Valid Claims
in such country that would be so infringed have expired or otherwise been
finally held invalid or unenforceable before the end of the Royalty Term (as
defined below), the Net Sales of such Product for such country for the purposes
of calculating of royalties pursuant to Section 2.1.1 hereunder with respect
hereto during the Royalty Term (both for royalty amounts owed by Astellas under
Section 2.1.1 and for determination of the Base Royalty Rates) shall be reduced
by [****] percent ([****]%) of the actual Net Sales thereof.
          2.1.4 Royalty Floor. Notwithstanding any other provision in this
Financial Exhibit (including any provisions for deductions or offsets from or
against royalty payments due to Maxygen), in no event shall the royalties
payable by Astellas to Maxygen with respect to Net Sales of Products by
Astellas, its Affiliates and Sublicensees under Section 2.1.1 be reduced
pursuant to the provisions of Section 2.1.3 to an amount that is less than
[****] percent ([****]%) of the royalties set forth in the table in
Section 2.1.1 above. For clarity, the provisions of Section 2.1.3 shall apply to
the royalties in Section 2.1.1, but not to the additional royalties payable by
Astellas to Maxygen on Net Sales of Product by Astellas, its Affiliates and
Sublicensees under Section 2.1.2.
     2.2 Royalty Term. Astellas’ obligation to pay royalties under this
Article 2 shall continue with respect to sales of Product in a particular
country within the Royalty Bearing Territory, on a Product-by-Product and
country-by-country basis until the later of: (a) the expiration of all (or the
first date when there ceases to be any) Valid Claims Controlled by Maxygen
covering such Product
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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and/or the making of (which would infringe a composition claim to nucleic acid
sequences encoding a Compound or to a genus encompassing such nucleic acid
sequences), or use or sale of, such Product (or corresponding Compound) in the
country where such Product is sold; and (b) fifteen (15) years from the first
commercial sale of such Product in such country (the “Royalty Term”). Following
the Royalty Term with respect to a particular Product and country, royalties
shall no longer be due hereunder therefor and the licenses set forth in the
Agreement shall become non-exclusive, fully-paid-up, sublicensable,
royalty-free, transferable, perpetual and irrevocable with respect to such
Product and such country. For clarity, expiration of the Royalty Term shall not
impact sharing of Distributable Profits for Co-Promotion Products or payment
obligations with respect to the purchase of Product supplied by Maxygen.
     2.3 Royalty Reports. Commencing with the first commercial sale of the first
Product with respect to which royalties are payable by Astellas under this
Article 2, within [****] days after the end of each calendar quarter, Astellas
shall deliver to Maxygen a true and accurate written report setting out in
reasonable detail (on a Product-by-Product and country-by-country basis within
the applicable Royalty Bearing Territory) the information necessary to calculate
the royalty payments due under Section 2.1 of this Financial Exhibit with
respect to Net Sales of Products during such calendar quarter, including:
               (a) units of Products sold during the relevant calendar quarter;
               (b) Gross Sales of Products in the relevant calendar quarter;
               (c) Net Sales of Products in the relevant calendar quarter;
               (d) the royalties due to Maxygen for the relevant calendar
quarter, and calculations showing how such royalties were determined, including
the royalty rates applied to calculate such royalties;
               (e) all relevant deductions or credits due to Astellas or other
adjustments applicable to the calculation of the royalties due to Maxygen for
the relevant calendar quarter, all in accordance with the terms of the Agreement
and this Financial Exhibit; and
               (f) all relevant exchange rate conversions.
     If no royalties are payable by Astellas to Maxygen in any calendar quarter
after the first commercial sale of a particular Product, Astellas shall state
the same in the royalty report for the applicable quarter.
     2.4 Timing of Royalty Payments. Simultaneously with the delivery of each
royalty report in accordance with Section 2.3 above, Astellas shall pay to
Maxygen any royalty payments due pursuant to Section 2.1 for the calendar
quarter covered by such royalty report.
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     2.5 Royalties under Existing In-Licenses. Each Party shall be responsible
for paying any amounts owed to Third Parties under any agreement between such
Party (or its Affiliate) and any such Third Party entered into on or prior to
the Effective Date (“Existing In-Licenses”) by reason of the grant to Astellas
of the licenses under the Maxygen Technology granted in the Agreement, or the
conduct by or under the authority of either Party of activities under and in
accordance with the Agreement including as a result of the Preclinical
Development, Development, Manufacture and/or Commercialization of any Product. A
list of such Existing In-Licenses of each Party is set out on Exhibit 10.5 to
the Agreement. Each Party’s payment of amounts under any Existing In-Licenses
shall be without any sharing or reimbursement under this Agreement, and shall
not be taken into account in calculating the Parties’ sharing of Preclinical
Development Costs and/or Development Costs and/or, to the extent applicable, in
determining Distributable Profits under Articles 4 and 5 below.
ARTICLE 3
COSTS AND REVENUE SHARING
     3.1 Preclinical Development Costs.
          3.1.1 Cost Sharing. Subject to the terms and conditions of the
Agreement and this Financial Exhibit, including Section 3.1.2 herein, the
Parties shall share the Preclinical Development Costs incurred in the
performance of the Preclinical Development Program in accordance with the
Preclinical Development Plan and the Budget, as follows:
               (a) Except as provided in Section 3.1.1(b) or (c) below, Astellas
shall be responsible for [****] percent ([****]%), and Maxygen shall be
responsible for [****] percent ([****]%), of all such Preclinical Development
Costs pertaining to any Compounds;
               (b) Astellas shall be responsible for one hundred percent (100%)
of (i) all such Preclinical Development Costs incurred after the designation by
the JSC of such Compound as a Clinical Candidate pursuant to Section 3.3.1 of
the Agreement pertaining to activities primarily related to Exclusive
Indications, (ii) all Preclinical Development Costs incurred for activities
designated by the JSC as solely for an Exclusive Indication as set forth in
Section 2.3(f) of the Agreement; and (iii) all Preclinical Development Costs
incurred for activities that are not for the Joint Development Territory (e.g.
specific activities necessary for countries in the ROW).
               (c) Astellas shall be responsible for fifty percent (50%), and
Maxygen shall be responsible for fifty percent (50%), of (i) all such
Preclinical Development Costs incurred after the designation by the JSC of such
Compound as a Clinical Candidate pursuant to Section 3.3.1 of the Agreement
pertaining to activities primarily related to Co-Development Indications, other
than for activities that are not for the Joint Development Territory (e.g.
specific activities necessary for countries in the ROW), and (ii) all
Preclinical Development Costs incurred for activities
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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designated by the JSC as solely for a Co-Development Indication as set forth in
Section 2.3(f) of the Agreement, other than for activities that are not for the
Joint Development Territory (e.g. specific activities necessary for countries in
the ROW).
               (d) By way of example, and not limitation, (i) toxicology studies
and/or in vivo preclinical proof of concept studies that are specific to
Co-Development Indications would be shared as set forth in Section 3.1.1(c),
(ii) toxicology studies and/or in vivo preclinical proof of concept studies that
are specific to Exclusive Indications would be shared as set forth in
Section 3.1.1(b), (iii) toxicology studies that are applicable to both Exclusive
Indications and Co-Development Indications, or which are not specific to either
Exclusive Indications or Co-Development Indications, would be shared as set
forth in Section 3.1.1(a), and (iv) toxicology studies which are necessary to
support Preclinical Development, Development or Commercialization for one or
more countries in ROW (and are not also “for” the Joint Development Territory)
would be shared as set forth in Section 3.1.1(b).
          3.1.2 Initial Preclinical Development Funding. Notwithstanding
Section 3.1.1 above, Astellas shall be responsible for payment of the first Ten
Million Dollars ($10,000,000) of Preclinical Development Costs for payments to
Third Parties and internal FTE costs of Maxygen (but not internal FTE costs of
Astellas) that would otherwise be shared by the Parties (i.e., excluding
Preclinical Development Costs, if any, which would otherwise be allocated 100%
to Astellas) incurred by the Parties in the performance of the Preclinical
Development in accordance with the Preclinical Development Plan and the Budget
pertaining to any Compound(s) or Product(s), and the Cost sharing arrangement
specified in Section 3.1.1 above shall not commence until such Preclinical
Development Costs that are incurred by the Parties in the performance of the
Preclinical Development in accordance with the Preclinical Development Plan and
the Budget and that would otherwise be shared by the Parties exceeds Ten Million
Dollars ($10,000,000). For the avoidance of doubt, Astellas’ responsibility for
the first Ten Million Dollars ($10,000,000) of such Preclinical Development
Costs of the Parties pursuant to this Section 3.1.2 shall not be creditable
against any milestone, royalty or other payments by Astellas to Maxygen under
the Agreement and shall only be taken into account for the purposes of
reconciliation and settlement of payments of each Party’s share of Preclinical
Development Costs in accordance with Article 4 of this Financial Exhibit.
          3.1.3 Disputes Regarding Allocation of Preclinical Development Costs.
In the event of any bona fide dispute between the Parties, that cannot be
resolved in accordance with Sections 14.1 of the Agreement, as to the proper
allocation between the Parties, pursuant to Section 3.1.1, of Preclinical
Development Costs incurred in the performance of the Preclinical Development in
accordance with the Preclinical Development Plan and the Budget, such Costs (to
the extent disputed) shall be shared by the Parties as described in clause (a)
of Section 3.1.1 above (i.e., Astellas shall be responsible for [****]
percent ([****]%), and Maxygen shall be responsible for [****]
percent ([****]%), of such Preclinical Development Costs), provided, however,
that if the
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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aggregate amount that is subject to such bona fide dispute exceeds [****]
Dollars ($[****]) (e.g. the potential differential for a given Party in sharing
Costs or sharing Distributable Profits would exceed [****] dollars ($[****])),
such dispute shall be resolved as set forth in Section 14.2 of the Agreement,
and such disputed amounts shall be provisionally shared as set forth in this
Section 3.1.3 pending final resolution of such dispute.
     3.2 Development Costs.
          3.2.1 Cost Sharing with respect to Development Prior to Exercise of
Maxygen Opt-Out Right. Subject to the terms and conditions of the Agreement and
this Financial Exhibit, and except as otherwise provided in Section 3.2.2 with
respect to Products for which Maxygen has exercised the Maxygen Opt-Out Right,
the Parties shall share the Development Costs incurred in the performance of the
Development activities for Compounds and Products as follows:
               (a) Except as provided in Section 3.2.1 (b) or (c), below,
Astellas shall be responsible for [****] percent ([****]%), and Maxygen shall be
responsible for [****] percent ([****]%), of all Development Costs incurred.
               (b) Astellas shall be responsible for one hundred percent (100%)
of all Development Costs incurred for (i) Development activities which are
intended primarily to support filing of a Marketing Approval Application for a
Co-Development Indication in the ROW, (ii) Development activities which are
intended primarily to support filing of a Marketing Approval Application for an
Exclusive Indication (including clinical trial supply costs and other
Development Costs for clinical trials for Exclusive Indications), and (iii) all
Development Costs incurred for activities designated by the JSC as solely for an
Exclusive Indication as set forth in Section 2.3(f) of the Agreement.
               (c) Astellas shall be responsible for fifty percent (50%), and
Maxygen shall be responsible for fifty percent (50%), of all such Development
Costs for (i) Development activities which are intended primarily to support
filing of a Marketing Approval Application for a Co-Development Indication in
the Joint Development Territory, (including clinical trial supply costs and
other Development Costs for clinical trials for Co-Development Indications), and
(ii) all Development Costs incurred for activities designated by the JSC as
solely for a Co-Development Indication for the Joint Development Territory as
set forth in Section 2.3(f) of the Agreement.
               (d) By way of example, and not limitation, (i) clinical studies
using patients for an Exclusive Indication in order to obtain information
regarding efficacy for such Indication would be shared as set forth in
Section 3.2.1(b), (ii) clinical studies using patients for a Co-Development
Indication in order to obtain information regarding efficacy for such Indication
would be shared as set forth in Section 3.2.1(c), and (iii) clinical studies
using healthy volunteers to
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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obtain preliminary safety information that is not specific to either Exclusive
Indications or Co-Development Indications would be shared as set forth in
Section 3.2.1(a).
          3.2.2 Cost Sharing with respect to Development After Exercise of
Maxygen Opt-Out Right.
               (a) In the event Maxygen provides an Opt-Out Notice to Astellas
with respect to a particular Product for a Co-Development Indication in
accordance with Section 4.1.3(b) of the Agreement, then:
                    (i) Astellas shall reimburse all of the Costs incurred by
Maxygen (and not otherwise reimbursed through sharing or otherwise hereunder) on
and from the Effective Date in the performance of Preclinical Development and/or
Development activities in accordance with the Preclinical Development and/or the
Co-Development Indication Plan and the Budget therefor (excluding for the
avoidance of doubt, Costs incurred by Maxygen prior to the Effective Date for
any activities relating to any Compound or Product), as applicable, and directed
towards such Product (and/or the Compound contained in such Product); and
                    (ii) on and from the date of such Opt-Out Notice, Astellas
shall be responsible for one hundred percent (100%) of all future Costs incurred
by or for Astellas (including costs and expenses incurred by Maxygen and its
Affiliates in conducting activities by or for Astellas to the extent provided in
Section 3.4) in the performance of Development, Manufacturing and
Commercialization activities (and Preclinical Development activities, if any)
with respect to such Compound (if Maxygen has opted out of development of all
Products for a Compound) and all Products for which Maxygen has exercised its
opt out after the date of such Opt-Out Notice, and Maxygen shall have no further
responsibility for any such Costs incurred in the performance of Development,
Manufacturing and Commercialization activities (and Preclinical Development
activities, if any) with respect to such Product(s), except as provided in
Section 3.2.2(b) below.
               (b) If: (i) Maxygen exercises the Maxygen Opt-Out Right in
accordance with Section 4.1.3(b) of the Agreement with respect to one (1) or
more Products being Developed under the Co-Development Indication Plan (any such
Product, an “Opt-Out Product”), but has not exercised the Maxygen Opt-Out Right
with respect to all Products being Developed under the Co-Development Indication
Plan (any such Product for which Maxygen has not exercised the Maxygen Opt-Out
Right, a “Continuing Product”); and (ii) JPT determines that certain Development
Costs incurred in the performance of Development activities for the Joint
Development Territory in accordance with the Co-Development Indication Plan and
Budget reasonably relate to both an Opt-Out Product and any Continuing Product;
then, such Development Costs shall be shared between the Parties in accordance
with Section 3.2.1(a) above, unless JPT agrees to an alternative allocation of
responsibility between the Parties for such Development Costs. All disputes as
to the allocation of such Development Costs shall be resolved in accordance with
Article 14 of the Agreement.
          3.2.3 Certain Terms Regarding Phase IV Clinical Trial Costs. If
(A) Maxygen has not exercised the Maxygen Opt-Out Right in accordance with
Section 4.1.3(b) of the Agreement

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with respect to a particular Product for Co-Development Indication, and
(B) Maxygen’s share of Development Costs for Phase IV Clinical Trials of such
Product which are postmarketing study commitments (as set forth in Section 506B
of 21 U.S.C. 356b) required by the FDA with respect to such Product and foreign
equivalents of such study commitments in the Joint Development Territory
(“Maxygen Phase IV Development Costs”) for countries which are not Co-Promotion
Countries exceed in any given quarter the amount of additional royalties due
pursuant to Section 2.1.2 of this Financial Exhibit with respect to such Product
during such quarter (or, in the event that such Maxygen Phase IV Development
Costs are for one or more countries in either North America or Europe, but not
countries in both, then to the extent such Maxygen Phase IV Development Costs
exceed the additional royalties due pursuant to Section 2.1.2 of this Financial
Exhibit with respect to sales of such Product in North America or Europe, as
applicable, but not in both), then Maxygen shall not be obligated to pay
Astellas that portion of the Maxygen Phase IV Development Costs for the
applicable quarter which exceed the additional royalties due pursuant to
Section 2.1.2 of this Financial Exhibit with respect to such Product, (such
excess amount referred to herein as a “Phase IV Carry-Over Amount”), nor shall
any payments to Maxygen under Section 4.5.2(a) and (b) below, or as running
royalties pursuant to Article 2 of this Financial Exhibit, be reduced on account
of such Phase IV Carry-Over Amount; provided, however, that Astellas shall be
entitled to carry forward such Phase IV Carry-Over Amount plus accrued interest
calculated at the [****] rate effective as of the last Business Day of each
calendar quarter during which any Phase IV Carry-Over Amount remains to be
recovered by Astellas, as published by The Wall Street Journal, Internet Edition
(or comparable publication if not available), on such date (or, if unavailable
on such date, the first date thereafter on which such rate is available), or, if
lower, the maximum rate permitted by applicable Law until such Phase IV
Carry-Over Amount is fully recouped as Maxygen Phase IV Development Costs in
successive quarters. For clarity, in the event that Development Costs for
Phase IV Clinical Trials of a Product are incurred for both Co-Promotion
Countries and for other countries in the Joint Development Territory, the
Maxygen Phase IV Development Costs which are allocable to the Co-Promotion
Countries shall be accounted for in the Calculation of Distributable Profits
subject to, and in accordance with, the provisions of Section 4.5.2(c) of this
Financial Exhibit, and that portion of Maxygen Phase IV Development Costs which
are allocable to countries in the Joint Development Territory which are not
Co-Promotion Countries shall treated as set forth in this Section 3.2.3.
     3.3 Distributable Profits.
          3.3.1 If Maxygen Exercises its Co-Promotion Option. Subject to the
terms and conditions of the Agreement and this Financial Exhibit, if Maxygen
exercises its Co-Promotion Option for a particular Product for a Co-Development
Indication in the Co-Promotion Country(ies) in accordance with Section 5.2 of
the Agreement, then:
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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               (a) Astellas and Maxygen shall share Distributable Profits for
such Product for a Co-Development Indication in each Co-Promotion Country as
follows: [****] percent ([****]%) to Astellas, and [****] percent ([****]%) to
Maxygen.
               (b) Maxygen and Astellas shall not share any Costs incurred with
respect to, or Distributable Profits from, (in each case to the extent allocable
to) the Commercialization of such Product for a Co-Development Indication for
countries other than the Co-Promotion Countries, and Astellas shall pay to
Maxygen running royalties with respect to Net Sales of all Product for a
Co-Development Indication, as applicable, outside the Co-Promotion Countries
(i.e., in the Royalty Bearing Territory) in accordance with Article 2 of this
Financial Exhibit.
          3.3.2 If Maxygen Does Not Exercise its Co-Promotion Option. Subject to
the terms and conditions of the Agreement and this Financial Exhibit, if Maxygen
does not exercise its Co-Promotion Option for a particular Product for a
Co-Development Indication in any countries of the Joint Commercialization
Territory in accordance with Section 5.2 of the Agreement, then Astellas shall
bear (and Maxygen and Astellas shall not share) any Costs (including all related
Operating Expenses) with respect to, or Distributable Profits from, the
Commercialization of such Product anywhere in the Territory incurred by or for
Astellas (including costs and expenses incurred by Maxygen and its Affiliates in
conducting activities by or for Astellas to the extent in the Budget or approved
by Astellas in writing in advance as provided in Section 3.4), and Astellas
shall pay to Maxygen running royalties with respect to Net Sales of such Product
for a Co-Development Indication in accordance with Article 2 of this Financial
Exhibit.
          3.3.3 Costs for Commercialization of Products for Exclusive
Indications. For the avoidance of doubt: (a) Astellas shall be solely
responsible for all Costs incurred by or on behalf of Astellas with respect to
the Commercialization of Products solely for Exclusive Indications throughout
the Territory; and (b) Astellas shall pay to Maxygen running royalties with
respect to Net Sales of Products for Exclusive Indications in accordance with
Article 2 of this Financial Exhibit.
     3.4 Astellas’ Exclusive Costs. For activities hereunder for which Astellas
is one hundred percent (100%) responsible for costs and expenses, Astellas shall
be obligated to reimburse all of Maxygen’s costs and expenses for such
activities, except to the extent such activities are not provided in the
applicable Plan(s) and were not requested in writing by Astellas (in which case
Astellas shall have no obligation to reimburse any such costs and expenses).
Unless Astellas’ written approval of Maxygen’s cost and expenses clearly states
that it applies retroactively to prior costs and expenses of Maxygen, such
written approval shall only apply to prospective costs and expenses of Maxygen
incurred after the date of such approval.
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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ARTICLE 4
REPORTING AND RECONCILIATION
     4.1 Principles of Reporting.
          4.1.1 Determination of Distributable Profits for a Co-Promotion
Product in Co-Promotion Countries and of Development Costs and Pre-Clinical
Development Costs for Products for Co-Development Indications will be based on
each Party’s respective financial information. Each Party shall provide
financial statements containing the financial information required to perform
the reconciliation and settlement of payments set forth in Section 4.5 in the
form as mutually agreed by the Parties. The interpretation of defined terms in
such report shall be in accordance with Accounting Standards, the Agreement and
this Financial Exhibit.
          4.1.2 The Parties shall calculate all Costs under this Financial
Exhibit and the Agreement without duplication of any item in any of the
categories of Costs defined in Article 5 below.
          4.1.3 The Parties shall calculate all Distributable Profits under this
Financial Exhibit and the Agreement without duplication of any item in any of
the categories of revenue defined in Article 5 below.
     4.2 Frequency of Reporting.
          4.2.1 The fiscal year for the Agreement and this Financial Exhibit
will be a Fiscal Year as defined in Section 1.35 of the Agreement.
          4.2.2 Reporting will occur at the times set forth in the following
Report Table, with submissions due on the date indicated or the next Business
Day if such date is not a Business Day:

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          Report   Frequency   Timing of Submission          
Actuals
  Quarterly   Within [****] days after the end of the applicable calendar
quarter    
One Fiscal Year Forecasts
  Semi-annually   By the end of [****] and the end of [****], respectively    
Consolidation & Variances
  Quarterly   Within [****] days after the end of the applicable calendar
quarter.    
Final Budgets
  Annually   [****] days prior to the start of the applicable Fiscal Year (one
Fiscal Year)    
[****]
  Annually   [****] days prior to the start of the applicable Fiscal Year [****]
   
[****]
  Annually   [****] days prior to the start of the applicable Fiscal Year [****]

          4.2.3 The Parties may agree to modify the reporting cycles and
deadlines set forth in the Report Table in Section 4.2.2 above. In the event
that a Party substantially or materially changes its internal reporting cycles
and deadlines generally, then the Parties shall discuss, in good faith,
appropriate revisions to such reporting cycles and deadlines to reasonably
accommodate such change.
          4.2.4 Each Party shall report its actual results compared to the
applicable Plan and Budget to the JPT, which shall coordinate with, and report
results to, the JSC, on a quarterly basis, in accordance with Section 4.5 of
this Financial Exhibit.
          4.2.5 Astellas shall record sales in the Territory. If Maxygen
exercises its Co-Promotion Option with respect to one (1) or more Products in
accordance with Section 5.2 of the Agreement, Astellas shall supply to Maxygen,
on a calendar quarterly basis, each calendar quarter’s Gross Sales and Net Sales
of Co-Promotion Products in each of the Co-Promotion Countries therefor,
including the basis for calculation of such amounts, in Product units and
Dollars. Each such report shall be provided as early as possible, but no later
than [****] after the last day of the calendar quarter in question. Each such
report shall provide calendar quarterly and year to date cumulative figures for
Co-Promotion Products in the Co-Promotion Countries therefor.
          4.2.6 The representatives from the Parties on the JPT shall meet as
appropriate, but at least quarterly to review the following (to the extent
applicable in light of the stage of Development or Commercialization of Products
for Co-Development Indication for the Joint
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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Development Territory and any exercise by Maxygen of its Co-Promotion Option
with respect to any applicable Product for the Co-Promotion Countries for such
Product):

  -   actual results for Preclinical Development Costs, Process Development
Costs, Development Costs and Operating Expenses     -   forecasts for
Preclinical Development Costs, Process Development Costs, Development Costs and
Operating Expenses     -   Budgets for Preclinical Development Costs, Process
Development Costs, Development Costs and Operating Expenses     -   long range
Plans for Preclinical Development Costs, Process Development Costs, Development
Costs and Operating Expenses     -   inventory levels     -   Gross Sales     -
  Reserve for Sales Returns and Allowances     -   Marketing Costs and Sales
Cost     -   other financial matters, including each Party’s methodologies for
determining costs, actual amounts, forecasts, budgets and long range plans and
the results of applying such methodologies.

     4.3 Budgets, Variances and Long Range Plans.
          4.3.1 Plans and Budgets shall be prepared, updated and approved in
accordance with the provisions of Sections 2.3, 3.2, 4.1.2 and 5.2.2 of the
Agreement. Plans and Budgets, once approved by the JSC, shall only be changed in
accordance with the provisions of the Agreement.
          4.3.2 The JPT shall be responsible for identifying, analyzing and
reporting all significant line item budget variances and total budget variances
for the Preclinical Development Plan and Budget, the Co-Development Indication
Plan and Budget and, if applicable, the Co-Promotion Plan and Budget. On a
Fiscal Year basis, only unfavorable total budget variances of the foregoing
Budgets incurred by a Party for specific activities for which such Party is
responsible under an applicable Plan and Budget that are less than either
(i) [****] U.S. Dollars ($[****]), in aggregate for such Fiscal Year, or
(ii) [****] percent ([****]%) of the total amounts set forth for such specific
activities (on a “line-item” basis) in the applicable Plan and Budget, in
aggregate (with respect to such activities) for such Fiscal Year, shall be
chargeable in connection with calculating the amounts set forth herein;
provided, however, greater budget variances may be chargeable if agreed to by
both Astellas and Maxygen (in their sole discretion).
          4.3.3 A long range financial plan for Development and Manufacture of
Products for Co-Development Indications for the Joint Development Territory, and
for Commercialization of
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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such Co-Promotion Products in the Co-Promotion Countries, shall be established
under the direction of the JSC and submitted to Astellas and Maxygen as
specified in the Report Table.
     4.4 Responsibility for Reporting.
          4.4.1 Party Reports. By the date specified in the Report Table in
Section 4.2.2 of this Financial Exhibit for the Actuals report, each Party shall
provide to the JPT (with a copy to other Party) a financial statement of such
Party’s activities prepared in accordance with the provisions of this Financial
Exhibit, substantially in the form established in accordance with Section 4.1.1,
accompanied by the supporting documentary evidence required pursuant to
Section 8.4 of the Agreement, for the applicable calendar quarter and include
such level of detail as may be established by the JPT from time to time.
          4.4.2 Consolidation & Variances Report. The JPT shall prepare, on a
quarterly basis, a Consolidation & Variances report, which report shall include:
(a) a consolidated operating income statement with respect to the Parties’
Preclinical Development, Development, and/or Manufacture activities for the
Joint Development Territory and Commercialization (with respect to a
Co-Promotion Product only) and/or Co-Promotion activities in the Co-Promotion
Countries, as applicable, for the relevant calendar quarter, for those Products
for which the Parties are sharing Preclinical Development Costs, Development
Costs and/or Distributable Profits, as applicable for the relevant calendar
quarter; such statement to be substantially in the form established in
accordance with Section 4.1.1, and include such level of detail as may be
established by the JPT from time to time; (b) a separate report showing the
variances between actual results compared to the applicable Plan and Budget; and
(c) a calculation of the sharing, and determination of the cash settlement
payment due to a Party (if any), in accordance with Section 4.5. Variances from
the total overall Budgets, and significant variances in Budget line items, shall
only be included in the calculation of Preclinical Development Costs,
Development Costs, and/or Distributable Profits, as applicable, to the extent
provided in the second paragraph of Section 4.3.2 of this Financial Exhibit. The
JPT shall submit the Consolidation & Variances report to the JSC and the Parties
by the date specified in the Report Table set out in Section 4.2.2 above.
     4.5 Reconciliation and Settlement of Payments between the Parties.
          4.5.1 JPT Determination. The JPT shall prepare and submit to the JSC a
determination of balancing settlement payments (if any), based on actual results
(if applicable, adjusted for reimbursement of the net expenses to Maxygen and
amounts to be paid by Astellas), to compensate the appropriate Party for
purposes of sharing: (a) Preclinical Development Costs and/or Development Costs
so long as Maxygen and Astellas are sharing such Costs under Section 3.1 and/or
Section 3.2 of this Financial Exhibit; and (b) if Maxygen exercises its
Co-Promotion Option, Distributable Profits and Operating Expenses incurred with
respect to any such Co-Promotion Product within the Co-Promotion Countries; all
as set forth in the Agreement and this Financial Exhibit.

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          4.5.2 Settlement Calculations. The JPT shall perform the activities
set out in this Section 4.5.2 on a quarterly basis.
               (a) Preclinical Development Costs and Development Costs. Other
than with respect to Preclinical Development Costs and Development Costs
incurred by each Party prior to the first commercial sale of each Product for an
Exclusive Indication (after the designation by the JSC of the applicable
Compound as a Clinical Candidate pursuant to Section 3.3.1 of the Agreement) or
for a Co-Development Indication in relation to which Maxygen has exercised the
Maxygen Opt-Out Right in accordance with Section 5.2 of the Agreement, the JPT
shall determine the amount of Preclinical Development Costs and Development
Costs incurred by each Party separately, and on a consolidated basis, for the
applicable calendar quarter, and shall determine the amount of any payment
required to be made from one Party to the other in settlement of such amounts,
so that the Parties share such Costs in accordance with Sections 3.1 and/or 3.2
of this Financial Exhibit, as applicable; subject to Astellas’ responsibility
for the first Ten Million Dollars ($10,000,000) of certain Preclinical
Development Costs incurred by the Parties as provided in Section 3.1.2 above.
               (b) Pre-Launch Operating Expenses for Co-Promotion Products. With
respect to any Products in relation to which Maxygen has exercised its
Co-Promotion Option in accordance with Section 5.2, the Operating Expenses
incurred by either Party in the Co-Promotion Countries prior to the first
commercial sale of each Co-Promotion Product in each country of the Co-Promotion
Countries (“Pre-Launch Costs”) shall be shared [****] by the Parties. The JPT
shall determine the amount of Operating Expenses incurred by each Party
separately, and on a consolidated basis, for the applicable calendar quarter,
and shall determine each Party’s share of such consolidated Operating Expenses.
The Pre-Launch Costs of each Party shall be included in the calculation of
Distributable Profits pursuant to Section 4.5.2(c) below. For clarity, Operating
Expenses incurred by the Parties after the first commercial sale of a
Co-Promotion Product in the Co-Promotion Countries shall be taken into account
in the calculation of Distributable Profits, as set forth in Section 4.5.2(c)
below.
               (c) Calculation of Distributable Profits; Reimbursement of
Expenses. Beginning with the calendar quarter in which first commercial sale of
each Co-Promotion Product occurs in the Co-Promotion Countries, the JPT shall
perform the calculations set forth in this Section 4.5.2(c). The [****]
calculated in accordance with Section 4.5.2(b) above, for each Party separately
and on a consolidated basis, for the applicable calendar quarter (where, for the
avoidance of doubt, Pre-Launch Costs calculated in accordance with
Section 4.5.2(b) above shall be allocated to the first quarter of the first
commercial sale of the applicable Product without regard to when the Pre-Launch
Costs were incurred by a Party). For clarity, no amounts paid by either Party to
the other pursuant to Section 4.5.2(a) above, nor any amounts paid by Astellas
to Maxygen pursuant to Section 8.1.1 of the Agreement and/or Articles 1 and/or 2
of this Financial Exhibit, shall be taken
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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into account for purposes determining Distributable Profits or other amounts set
forth in this Financial Exhibit.
                    (i) Reimbursement of Operating Expenses. The JPT shall
determine the amount of payment required to be made from Astellas to Maxygen to
reimburse Maxygen for all Operating Expenses solely for Co-Promotion Products in
Co-Promotion Countries in accordance with the applicable Co-Promotion Plan and
Budget, incurred by Maxygen in the applicable calendar quarter.
                    (ii) Settlement of Distributable Profits. The JPT shall
determine the amount of Distributable Profits, on a consolidated basis, from
Gross Sales of Co-Promotion Products in the Co-Promotion Countries in the
applicable calendar quarter.
                         (A) In the event that the Distributable Profits for the
applicable calendar quarter is positive (i.e., Net Sales of Co-Promotion
Products in the Co-Promotion Countries exceed Operating Expenses in the
applicable calendar quarter), then the JPT shall determine the amount of payment
required to be made from Astellas to Maxygen to pay Maxygen its [****] percent
([****]%) share of Distributable Profits; provided, however, that such payment
shall be reduced, if applicable, to account for Maxygen’s share of Co-Promotion
Product Loss (plus accrued interest) not paid by Maxygen as set forth in this
Section 4.5.2(c)(ii)(B).
                         (B) In the event that the Distributable Profits for the
applicable calendar quarter is negative, (i.e., the Operating Expenses exceed
Net Sales of the Co-Promotion Products in the Co-Promotion Countries in the
applicable calendar quarter), then Maxygen shall not be obligated to pay
Astellas for Maxygen’s share of the amount by which those Costs, combined,
exceed Net Sales of Co-Promotion Products in the Co-Promotion Countries in the
applicable calendar quarter (such amount referred to herein as a “Co-Promotion
Product Loss”), nor shall any payments to Maxygen under Section 4.5.2(a) and
(b) above, or as running royalties pursuant to Article 2 of this Financial
Exhibit, be reduced on account of such Co-Promotion Product Loss; provided,
however, that Astellas shall be entitled to carry forward such Co-Promotion
Product Loss plus accrued interest calculated at the [****] rate effective as of
the last Business Day of each calendar quarter during which any Co-Promotion
Product Loss remain to be recovered by Astellas, as published by The Wall Street
Journal, Internet Edition (or comparable publication if not available), on such
date (or, if unavailable on such date, the first date thereafter on which such
rate is available), or, if lower, the maximum rate permitted by applicable Law,
and offset such amounts (plus accrued interest) from future sharing of
Distributable Profits pursuant to the preceding sentence of this
Section 4.5.2(c)(ii) until such Co-Promotion Product Loss is fully recouped;
provided, however, that, if Maxygen terminates its Co-Promotion with respect to
a particular Co-Promotion Product pursuant to Section 5.2.9 of the Agreement and
such Co-Promotion Product Loss with respect to such Co-Promotion Product has not
been fully recouped on or before such termination,
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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then Maxygen shall pay Astellas the amount not yet fully recouped (plus accrued
interest) within [****] after the date of such termination; provided, however,
that if such amounts exceed [****] as of the effective date of termination, then
that portion in excess of [****] shall be paid within [****] after the date of
such termination.
               (d) Net Settlement Payment. The JPT shall determine a net
settlement payment to be made from one Party to the other to account for the
various payments, if any, calculated to be owed by one Party to the other under:
(i) Section 4.5.2(a) [Preclinical Development Costs and Development Costs];
(ii) Section 4.5.2(c)(i) [Post-launch Reimbursement of Operating Expenses];
and/or (iii) Section 4.5.2(c)(ii) [Settlement of Distributable Profits].
          4.5.3 Timing of Payments. The net settlement payment determined
pursuant to Section 4.5.2(d) shall be made to the appropriate Party by the other
Party within [****] days of deadline specified in the Report Table in
Section 4.2.2 of this Financial Exhibit for submission of the Consolidation &
Variance report. A report specifying how each settlement amount specified in
Section 4.5.2 above, and the net settlement payment under Section 4.5.2(d), was
calculated shall also be submitted to each Party at such time. In the event any
payment is made after such payment is due, the paying Party shall increase the
amount otherwise due and payable by adding interest thereon, computed at the
Interest Rate calculated on the number of days such payment is past due.
          4.5.4 Disputes Regarding Financial Matters. For the avoidance of
doubt, disputes with respect to the accounting matters set forth in this
Financial Exhibit (including without limitation, disputes as to calculation of
amounts under Section 4.5.2, amounts to be included for purposes of such
calculations, and/or amounts to be paid from one Party to the other) which
cannot be resolved by the JSC (and if necessary designated executive officers)
in accordance with Section 14.1 of the Agreement, may be referred by either
Party to arbitration for resolution in accordance with Section 14.2 of the
Agreement.
     4.6 Accounting. Each Party shall maintain a project cost accounting system
and shall report its information and calculations hereunder in a manner
consistent with its project cost accounting system, as each Party consistently
applies such system to all its projects and products. For Marketing Costs and
Sales Costs, each Party shall report costs based on actual spending in its
marketing and sales organizations. The Parties acknowledge that the
methodologies used shall be based on systems in place and as such systems are
consistently applied to all products. The JPT shall mutually review the costing
rates and methodologies to be used to calculate such Costs.
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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     4.7 Start of Operations and Effective Accounting Date Termination. Except
as otherwise expressly provided in the Agreement, determination of the amounts
set forth in this Article 4 will be deemed to commence:
          4.7.1 With respect to Preclinical Development Costs and Development
Costs, on: the Effective Date of the Agreement, pursuant to Sections 3.1 and/or
3.2 of this Financial Exhibit, as applicable and shall continue until the
earlier of (a) the effective date of termination of all Preclinical Development
of Compounds under the Preclinical Development Plan and/or all Development of
Products under the Co-Development Indication Plan or (b) with respect to a
particular Product (or Compound), the date of the applicable Opt-Out Notice
issued by Maxygen pursuant to Section 4.1.3(b) of the Agreement, provided that
Astellas shall be responsible for the first Ten Million Dollars ($10,000,000) of
certain Preclinical Development Costs incurred by the Parties as provided in
Section 3.1.2 above of this Financial Exhibit; and
          4.7.2 With respect to Distributable Profits: the first time Maxygen
exercises its Co-Promotion Option pursuant to Section 5.2 of the Agreement and
shall continue until the Commercialization of all Co-Promotion Products ceases
or, if earlier with respect to a particular Co-Promotion Product, the date of
termination of Maxygen’s Co-Promotion of such Co-Promotion Product pursuant to
Section 5.2.9 of the Agreement, provided that Astellas shall have the right to
include all Operating Expenses attributable and fairly allocable to such
Co-Promotion Product for Co-Development Indications incurred prior to such
exercise in the Distributable Profits to be shared by the Parties in accordance
with Section 3.3.
     4.8 Principles of Reporting.
          4.8.1 If necessary a Party will make appropriate adjustments to the
financial information it supplies under this Financial Exhibit to conform to the
format of reporting results and operations set out in Section 4.1.
          4.8.2 In addition, the following general principles shall apply with
respect to the defined terms and phrases set forth in Article 5 of this
Financial Exhibit:
               (a) each of the Costs (as defined in Article 5 below) shall be
tracked and calculated on a Product-by-Product and Indication-by-Indication
basis, for applicable Product for Co-Development Indications;
               (b) Costs shall be determined in accordance with applicable
Accounting Standards, as consistently applied internally by a Party for all its
products;
               (c) all Costs shall exclude any costs and/or expenses included in
the deductions used to determine Gross Sales and/or Net Sales;
               (d) all Costs shall exclude any and all amounts recovered and
reimbursed to or paid to the applicable Party by a Third Party;

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               (e) all Costs shall only include those amounts described in
Articles 4 and 5 of this Financial Exhibit (e.g., shall not include any payments
to Maxygen pursuant to Section 8.1.1 of the Agreement and/or Articles 1 and/or 2
of this Financial Exhibit); and
               (f) where Costs relate to or provide benefit to more than one
Product (or product), Indication and/or country or geographic region, such Costs
shall be tracked and allocated reasonably between such Products (or products),
Indications and/or countries or regions, as provided in this Financial Exhibit
and otherwise in accordance with guidelines agreed by the Parties in good faith.
          4.8.3 For the determination of Preclinical Development Costs,
Development Costs and/or Distributable Profits, as applicable, the presentation
of results and budgets of operations for the Parties in connection with the
applicable Preclinical Development, Development, Manufacture and/or
Commercialization of Products will be based on each Party’s respective financial
information presented separately for Maxygen and for Astellas (and, if the
Parties so agree, using one consolidated pro forma financial statement for each
Party and its Affiliates and (Sub)licensees in the applicable portion of the
Territory) and on a consolidated basis, in substantially the same form
established in accordance with Section 4.1.1.
     4.9 Treatment of Overhead. The Parties acknowledge that the calculation of
Internal Costs for Preclinical Development, Development and Manufacturing
activities on an FTE basis is intended to represent a reasonable amount for and
overhead allocable to Preclinical Development, Development and Manufacture of
the Product and the Parties Preclinical Development and Development activities
hereunder; accordingly, Preclinical Development Costs, Manufacturing Costs and
Development Costs (and the various components thereof) shall not include any
allocation of overhead beyond that included in the FTE Rate except to the extent
(if any) as the Parties may otherwise agree with respect to Manufacturing Costs
in one or more commercial supply agreements entered into by the Parties as set
forth in Section 6.1.3(a) of the Agreement. For clarity, the following types of
overhead expense shall not otherwise be included in the calculation of
Preclinical Development Costs, Manufacturing Costs and Development Costs (except
to the extent included in the FTE Rate): costs and expenses attributable to a
Party’s occupancy, activities, facilities and equipment (including charges for
unused or underutilized occupancy, facilities and equipment), information
technology and other general office support, other costs allocated to company
departments or functions based on space occupied or headcount or other
activity-based methods, as well as all costs attributable to general corporate
activities including, by way of example, investor relations and business
development (but excluding, where applicable, allocable management and legal
affairs costs), and any equity-based or non-cash compensation.
ARTICLE 5
DEFINITIONS
     5.1 “Allocable Overhead” means Costs incurred by a Party that are
attributable to a Party’s occupancy, activities, facilities, information
technology and equipment (excluding charges for unused or underutilized
occupancy, facilities and equipment) and, in each case, which are reasonably

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allocated to company departments or functions utilized to support activities
under the Agreement based on space occupied or headcount or other activity-based
methods consistently applied by a Party, or a standard rate if agreed to by the
Parties. Allocable Overhead shall not include any costs attributable to general
corporate activities including, by way of example, investor relations and
business development (but including, where applicable, allocable management,
legal affairs (other than patent related) and finance costs). Neither Allocable
Overhead nor any other category of cost or expense described in this Financial
Exhibit shall include any other equity-based or non-cash compensation (except
stock option expense).
     5.2 “Costs” means those Internal Costs and External Expenses actually
incurred by either Party in accordance with the applicable Budget in the case of
Co-Development Activities or in accordance with the applicable plans in the case
of activities other than Co-Development Activities, in each case in the conduct
of the Alliance in accordance with the Agreement. For the avoidance of doubt,
(i) Costs shall include those Internal Costs and External Expenses incurred by
Maxygen for activities other than Co-Development Activities to the extent
expressly provided for Maxygen to incur in any Plan (or in other written plans
of Astellas for Preclinical Development, Development or Commercialization for
Exclusive Indications) or requested and approved in writing by Astellas, and
Maxygen shall be entitled to reimbursement from Astellas for such Costs,
(ii) Costs shall exclude those internal and external costs and expenses incurred
by Maxygen for activities other than Co-Development Activities to the extent
neither expressly provided for Maxygen to incur in any Plan (or in other written
plans of Astellas for Preclinical Development, Development or Commercialization
for Exclusive Indications) nor requested and approved in writing by Astellas,
and Maxygen shall not be entitled to reimbursement from Astellas for such costs
and expenses, and (iii) Costs shall exclude those internal and external costs
and expenses incurred by Astellas for activities other than (A) Co-Development
Activities provided for in any Plan or applicable written plans (other than
written plans of Astellas for Preclinical Development, Development or
Commercialization solely for Exclusive Indications) or (B) activities requested
and approved in writing by Maxygen, and Astellas shall not be entitled to take
into account for purposes of calculating expenses and reimbursement hereunder
amounts other than as set forth in (A) and/or (B).
     5.3 “Development Costs” means the Costs incurred by Astellas or Maxygen, as
applicable, for Development activities, from the date of filing of the first IND
for an applicable Compound (or Product containing such Compound), directly
attributable to the following:
               (a) The conduct of Development including clinical, non-clinical,
diagnostic and other studies of the applicable Product commencing after the
filing of the IND for the applicable Product, all to the extent pertaining to
such Product ;
               (b) Manufacture and distribution of clinical supplies of the
applicable Products for clinical trials and studies described in item (a) above,
provided that such Costs for Manufacturing shall be limited (for the purposes of
calculating Development Costs) solely to Costs meeting the definition of
Manufacturing Costs hereunder;

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               (c) preparing, reviewing and submitting data or information for
the purpose of submission to a Regulatory Authority to obtain, maintain (through
postmarketing study commitments (as set forth in Section 506B of 21 U.S.C. 356b)
required by the FDA and foreign equivalents of such study commitments) and/or
expand Marketing Approval of the applicable Product and meeting and
corresponding with such Regulatory Authority; and
               (d) Process Development for the applicable Product.
     Except as expressly set forth otherwise in the following paragraph, for
each of the items indicated above, Development Costs shall consist of such Costs
to the extent required to obtain, maintain and/or expand the authorization
and/or ability to Manufacture, ship and/or to sell Product.
     5.4 “Distributable Profits” means Net Sales of the Co-Promotion Product in
the Co-Promotion Countries less Operating Expenses attributable and fairly
allocable to such Co-Promotion Product for Co-Development Indications; provided,
however, that Pre-Launch Costs shall be taken into account for purposes of
determining Distributable Profits as provided in Sections 4.5.2(b) and
(c) above; and further provided that no amounts deducted from Gross Sales in
determining Net Sales shall be deducted as Operating Expenses in determining
Distributable Profits.
     5.5 “Distribution Costs” shall mean, with regard to a particular
Co-Promotion Product in its finished form for Commercialization, all Costs
incurred in the distribution of such Co-Promotion Product in the Co-Promotion
Countries by or for Astellas and/or its Affiliates and/or Sublicensees
(including costs and expenses incurred by Maxygen and its Affiliates in
conducting such activities by or for Astellas and/or its Affiliates and/or
Sublicensees to the extent authorized in writing by Astellas or in accordance
with the applicable written plan) including customer services, collection of
data about sales to hospitals and other end users, order entry, billing,
shipping logistics, credit and collection and other similar activities.
     5.6 “External Expenses” shall mean amounts paid to non-employee Third
Parties, including vendors, suppliers, contractors and the like, for services,
products or materials provided by them (including amounts, if any, paid for
pass-through costs of their subcontractors and including amounts invoiced by the
Third Party for related taxes, shipping, handling and the like) in their
performance of the applicable Plan and Budget (or other written plans of
Astellas for Preclinical Development, Development or Commercialization for
Exclusive Indications or Commercialization of Co-Promotion Products). For
clarity, External Expenses do not include payments for salaries or benefits,
facilities, utilities, general office or laboratory supplies, insurance (other
than product liability insurance expressly included in Other Operating
Income/Expenses), information technology, and the like (except to the extent
included in the amount invoiced by the Third Party).
     5.7 “FTE” shall mean a full-time equivalent person year, on or directly
related to performing applicable activities hereunder. Notwithstanding the
foregoing, neither Party (nor their Affiliates) shall charge more than one FTE
(or pro-rata portion thereof for the applicable period) for the time worked by
any individual.

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     5.8 “FTE Costs” means the product of: (a) that number of FTEs
(proportionately, on a per-FTE basis) used by a Party or its Affiliates to
perform such Party’s obligations under and in accordance with the applicable
Plan and Budget or other written plans, as specified therein, multiplied by
(b) the applicable FTE Rate determined in accordance with Section 5.9 below. For
clarity if applicable, costs with respect to sales representative of a Party or
its Affiliates promoting Products in the Co-Promotion Countries shall be
calculated in accordance with the separate definitive agreement to be entered
into by the Parties as set forth in Section 5.2.6 of the Agreement. In addition,
the Parties may agree to a different treatment of costs with respect to
Manufacturing in one or more commercial supply agreements entered into by the
Parties as set forth in Section 6.1.3(a) of the Agreement, in which event that
provisions of such commercial supply agreement(s) shall govern with respect to
such Manufacturing Costs.
     5.9 “FTE Rate” shall initially be [****] dollars ($[****]) per FTE per
year. Beginning with the fourth full calendar year following the Effective Date,
and every third calendar year thereafter, the FTE Rate shall be adjusted to
reflect changes, if any, for such period in the Producer Price Index [****], as
reported by the United States Department of Labor, Bureau of Labor Statistics
(available as of the Effective Date at [****]), and such adjusted rate shall
apply until the next such adjustment.
     5.10 “Gross Sales” means the amount invoiced by Astellas, its Affiliates
and/or Sublicensees for sales of Product to Third Parties in arms-length
transactions. Consideration for sales of Product for other than cash shall be
valued at fair market value at the time of final sale. Notwithstanding anything
to the contrary herein, sale(s) of Products by and between Astellas and its
Affiliates and Sublicensees shall be excluded from Gross Sales and Net Sales,
provided that any subsequent resale of such Products to a Third Party shall be
included in Gross Sales and Net Sales. Notwithstanding the foregoing, Gross
Sales shall not include amounts (whether actually existing or deemed to exist
for purposes of calculation) for Products distributed for use in clinical trials
or for promotional purposes, or for compassionate use except, for purposes of
calculating Distributable Profits, to the extent monetary consideration is
received for such Product.
     5.11 “Interest Rate” means a rate equal to the lesser of: (a) the prime
rate as reported in The Wall Street Journal, Internet Edition, on the last
Business Day of the applicable quarter in which such payment is due, plus an
additional [****] percent ([****]%); or (b) [****], with interest calculated on
the number of days such payment is delinquent.
     5.12 “Internal Costs” means internal costs and expenses incurred by a Party
or its Affiliate in their performance of the applicable Plan and Budget (or
other written plans of Astellas for Preclinical Development, Development or
Commercialization for Exclusive Indications), to the extent reasonably allocable
to the Product or applicable activities to be performed under the Agreement with
respect to Preclinical Development Costs, Development Costs and Manufacturing
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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Costs except to the extent (if any) the Parties may agree to a different
treatment of costs with respect to Manufacturing in one or more commercial
supply agreements entered into by the Parties as set forth in Section 6.1.3(a)
of the Agreement (in which event that provisions of such commercial supply
agreement(s) shall govern with respect to such Manufacturing Costs), shall be
calculated on an FTE basis, using the FTE Rate. The Parties acknowledge and
agree that such calculation of Internal Costs on an FTE basis is intended to
represent a fair amount to include all applicable Allocable Overhead of the
Parties in connection with the various Development and Manufacturing activities
hereunder. For other purposes, Internal Costs shall be based on actual internal
costs, including applicable salary, benefits and Allocable Overhead.
     5.13 “Manufacturing Cost” means [****] percent ([****]%) of the Costs
incurred by the Party Manufacturing a Product that are attributable and fairly
allocable to such Party’s Manufacture of Bulk Drug Substance and/or Finished
Drug Product, as applicable, for use in the applicable portion of the Territory,
which shall consist of the actual cost of goods produced, as determined in
accordance with Accounting Standards, or purchased (or otherwise paid) by the
Party Manufacturing or contracting with a Third Party for each stage of the
Manufacturing process, including applicable Costs for product quality
assurance/control, but in each case excluding allocable overhead except to the
extent included in the calculation of Internal Costs on an FTE basis as set
forth herein, or to the extent (if any) as the Parties may otherwise agree in
one or more commercial supply agreements entered into by the Parties as set
forth in Section 6.1.3(a) of the Agreement. Costs associated with successful
pre-launch validation lots used for obtaining Marketing Approval shall be
capitalized as inventory with respect to Compound or Products from such
successful validation lots and expensed as Operating Expense when sold or when
no longer able to be sold (for obsolescence or otherwise); provided, however,
that if a batch fails, the Costs allocable to such failed batch shall be
expensed as Development Costs (and, for purposes of determining such sharing,
shall be deemed to have been used in Development with respect to the
Indication(s) for which Marketing Approval was anticipated at the time such
batch was made). For clarity, on and from the time that Astellas assumes
responsibility for Manufacturing Finished Drug Product pursuant to Article 6 of
the Agreement in relation to a particular Product, Astellas’ Manufacturing Costs
shall include amounts paid to Maxygen pursuant to Article 6 of the Agreement (or
pursuant to a separate commercial supply agreement as described in
Section 6.1.3(a) of the Agreement) for supply of Bulk Drug Substance for use in
Development and/or Commercialization, as applicable, of such Product (and, for
further clarity, Maxygen’s receipt of such payments shall not be taken into
account, as income or otherwise, in calculating the sharing of Costs or
Distributable Profits hereunder).
     5.14 “Marketing Costs” means the Costs incurred by a Party that are
attributable and fairly allocable to marketing of a Co-Promotion Product in the
Co-Promotion Countries, including promotion, advertising, promotional materials,
cost of samples to physicians and other Third Parties, professional education,
product related public relations, relationships with opinion leaders and
professional societies, market research (before and after Product approval),
marketing management,
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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healthcare economics studies, clinical trials not required to maintain Marketing
Approvals for a Co-Promotion Product commencing after a Marketing Approval has
been obtained (e.g., investigator sponsored trials, product registries and
medical information), activities related to obtaining reimbursement from payers
and costs of obtaining sales and marketing data, and other similar activities
the costs of which were approved as a part of the Co-Promotion Plan and Budget.
The Costs shall include both internal costs (e.g., salaries, benefits, travel,
supplies and materials) and outside services and expenses (e.g., consultants,
agency fees and meeting costs), in each case only as applicable to a specific
Co-Promotion Product. Marketing Costs shall also include marketing expenses
incurred in the conduct of Commercialization activities prior to Marketing
Approval of a Co-Promotion Product related to the above activities in the
Co-Promotion Countries performed before the first commercial sale of such
Co-Promotion Product in each country of the Co-Promotion Countries. Marketing
Costs shall specifically exclude the costs of activities that promote either
Party’s business as a whole without being product specific (e.g., corporate
image advertising).
     5.15 “Net Sales” means Gross Sales of Product less applicable Reserve for
Sales Returns and Allowances. This definition of Net Sales shall be used in
calculating applicable royalties due pursuant to Article 2 of this Financial
Exhibit, and shall also be used for purposes of calculating Distributable
Profits in the event that Maxygen exercises its Co-Promotion Option for an
applicable Product in the Joint Commercialization Territory pursuant to
Section 5.2 of the Agreement
     5.16 “Operating Expenses” means the following internal and external costs
incurred (or amounts received, as applicable), by Astellas and Maxygen and their
Affiliates, during the applicable period: Manufacturing Costs, Marketing Costs,
Sales Costs, Other Operating Income/Expenses, Third Party Payments under a Third
Party License entered into in accordance with Section 10.4 of the Agreement
and/or Distribution Costs, in each case to the extent directly attributable and
fairly allocable to the Pre-Clinical Development, Development, Manufacture,
and/or Commercialization of Products for Co-Development Indications for the
Joint Development Territory, or for Co-Promotion Products in the Co-Promotion
Countries, for the relevant period and the categories of Costs being shared by
the Parties in accordance with the Agreement during such period.
     For each of the items indicated above, Operating Expenses shall include
Costs to the extent attributable to obtaining, maintaining and/or expanding the
authorization and/or ability to and to otherwise conduct the Manufacture,
shipping and/or to sell, market, promote or otherwise Commercialize Products for
Co-Development Indications for the Joint Development Territory, or Co-Promotion
Products for the Co-Promotion Countries, as applicable, and shall exclude any of
the foregoing amounts to the extent attributable to: (a) activities directed
solely toward seeking Marketing Approval outside the Joint Development
Territory; and/or (b) Manufacturing, or Commercialization of Products for
Co-Development Indications for markets outside the Co-Promotion Countries.
Operating Expenses shall include Allocable Overhead of a Party except to the
extent otherwise agreed to by the Parties in a separate definitive agreement
entered into by the Parties as set forth in Sections 5.2.6 or 6.1.3(a) of the
Agreement. Operating Expenses shall only include costs allocable to a Product
for Co-Development Indications, or a Co-Promotion Product, as applicable, in
accordance with Accounting Standards.

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     5.17 “Other Operating Income/Expense” means the following operating income
or expense from or to Third Parties that is not otherwise part of the primary
business activity of the Parties related to the Preclinical Development,
Development and/or Manufacture of Compounds or Products for Co-Development
Indications for the Joint Development Territory, or Manufacture and
Commercialization of Co-Promotion Products in the Co-Promotion Countries, as
applicable:
               (a) Third Party indemnification expenses;
               (b) product liability insurance to the extent the Parties obtain
a joint policy; and
               (c) other Costs approved by the Parties.
     “Other Operating Income/Expense” shall not include any amounts included in
Preclinical Development Costs, Development Costs, Marketing Costs, Sales Costs,
Manufacturing Costs or Distribution Costs, or Allocable Overhead (except to the
extent otherwise agreed to by the Parties in a separate definitive agreement
entered into by the Parties as set forth in Sections 5.2.6 or 6.1.3(a) of the
Agreement) for any of the foregoing categories, and in every case shall only
include Costs directly attributable to the applicable Product for
Co-Developments Indications for the Joint Development Territory, or Co-Promotion
Product in the Co-Promotion Countries, as applicable, in accordance with
Accounting Standards.
     5.18 “Preclinical Development Costs” means the Costs incurred by a Party
after the Effective Date that are attributable to Preclinical Development
activities performed in accordance with the Preclinical Development Plan and
Budget pertaining to any Compounds, including the Costs of (a) processes and
activities, whether in vitro or in vivo, conducted to discover, screen,
optimize, clone, express, purify, formulate, characterize or enhance any
Compound, including synthesis or Shuffling of any Compound, conjugation thereof,
or similar activities; (b) the conduct of IND Enabling Studies with respect to a
Compound; (c) processes and activities conducted to discover, develop, optimize,
characterize or enhance technologies and tools including assays, screens,
biological models, software and databases reasonably necessary for the support
of any of the activities described in clauses (a) and (b) above, or Development
or Manufacture of Compounds, and (d) Manufacture of Compounds or Products for
such activities.
     5.19 “Reserve for Sales Returns and Allowances” means the following,
determined in accordance with Accounting Standards with respect to sales of
applicable Products: (a) trade, cash and quantity discounts or rebates on such
Products (including government required discounts and allowances (such as, for
example and without limitation, Medicaid rebates), institutional rebates,
chargebacks, retroactive price adjustments), inventory management fees paid to
Third Parties, and wholesaler’s fees, and other reductions, concessions and
allowances that effectively reduce the selling price (provided such other
reductions, concessions and allowances are actually booked as a reduction in
selling price in accordance with applicable Accounting Standards and consistent
with the manner such items are deducted from gross sales to arrive at net sales
when such net sales are publicly reported), in each case that are actually
granted or incurred and which are included in the

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determination of Gross Sales; (b) credits, refunds or allowances given or made
for rejection or return of (including withdrawals and recalls), and for
uncollected amounts on, previously sold Products or for damaged Products or for
price adjustments, billing errors and retroactive price reductions (including
Medicare and similar types of government mandated rebates and chargebacks);
(c) sales and value added taxes, duties, tariffs and other taxes or other
governmental charges (but excluding income tax) levied on or measured by the
billing amount for such Products that are non refundable; and (d) charges for
freight, shipping, handling and insurance directly related to the shipment or
return of such Products and not otherwise paid for by the customer outside of
the invoiced amount. In addition, the reported Reserve for Sales Returns and
Allowances shall include a periodic adjustment of the foregoing to reflect
amounts actually incurred for items (a), (b), (c), and (d), above. The Reserve
for Sales Returns and Allowances, and any adjustments as described in the
preceding sentence, shall be reviewed by the JPT. For clarity, amounts within
the Reserve for Sales Returns and Allowances shall be excluded from,
Distribution Costs, Marketing Costs, Sales Costs and Operating Expenses.
     5.20 “Sales Costs” means Costs which are approved as a part of the Budget
incorporated in the Co-Promotion Plan, incurred by the Parties or for their
account that are attributable to the sales efforts for Co-Promotion Products in
the Co-Promotion Countries, including costs associated with compensation,
travel, and training of sales personnel, in each case as directly applicable to
Co-Promotion Products in the Co-Promotion Countries as may be further defined in
a separate definitive agreement entered into by the Parties as set forth in
Section 5.2.6 of the Agreement.
ARTICLE 6
BOOKS AND RECORDS; AUDITS
     6.1 Books and Records. Each Party shall keep, and shall require its
Affiliates, (Sub)licensees and subcontractors, to keep, complete, true and
accurate books of account and detailed records (including financial and other
records) reasonably sufficient to determine and establish the accuracy of such
Party’s payments, reimbursements and sharing under the Agreement and this
Financial Exhibit. Such books and records shall also document all costs and
expenses incurred or paid and, if applicable to a Party, its Affiliates or
(Sub)licensees, Gross Sales of Products received in connection with the
Agreement and this Financial Exhibit, including such other information as
reasonably necessary to verify the financial reports to be provided under this
Financial Exhibit, including pursuant to Sections 2.3 and 4.4 above. All such
books and records shall be maintained until the later to occur of (a) five
(5) years following the relevant Fiscal Year to which such records pertain, or
(b) the expiration of any applicable period required by Law with respect
thereto.
     6.2 Audit Rights. Each Party shall have the right to inspect and audit any
of the other Party’s (or of any of its Affiliates’, or, subject to the
provisions of this Section 6.2, its (Sub)licensees’ or subcontractors’) books
and records, at the location(s) where the books and records are maintained by
the Party (or its Affiliate, Sublicensee or subcontractor), relating to the
Alliance for purposes of ascertaining the accuracy of the other Party’s
payments, reimbursements and sharing under the Agreement and this Financial
Exhibit, provided that any (i) such audit shall take place by (and no

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later than) the third calendar year following the calendar year containing the
period in question (i.e. an audit of any portion of 2009 must take place by the
end of 2012), (ii) once such an inspection and audit of the books and records of
a Party for a given time period has been completed and any discrepancies or
potential discrepancies identified in such audit with respect to payments,
reimbursements or sharing under the Agreement and this Financial Exhibit have
either been resolved or determined in reasonable detail in connection with such
audit, the books and records for such time period will not be subject to
re-audit under this Section 6.2 (for the avoidance of doubt, the books and
records for a given time period may be reviewed more than once during an audit
to verify the accuracy of the relevant payments), and (iii) such inspection and
audits shall be performed on behalf of the auditing Party by an independent
third party auditor selected by such auditing Party and reasonably acceptable to
the audited Party. Each Party shall obtain for itself rights to audit its
(Sub)licensees and subcontractors in its agreements with its (Sub)licensees and
subcontractors that are substantially similar to the rights provided to the
Parties in this Section 6.2 and, at the request of the other Party, shall
exercise such audit rights with respect to such Sublicensees or subcontractors
and provide the results of such audit for inspection by the other Party pursuant
to this Section 6.2. Such audits shall be conducted during the normal business
hours of the Party being audited upon at least [****] days advance notice to the
Party to be audited and shall be made no more than once each four consecutive
calendar quarters, unless otherwise agreed by the Parties, provided that if a
non-compliance resulting in an underpayment of greater than [****] percent
([****]%) of the amount paid for the period covered by the audit is identified,
then an additional audit may be conducted during the same four consecutive
calendar quarters. The auditor selected by the auditing Party shall be required
to execute a reasonable confidentiality agreement prior to commencing any such
audit and shall only disclose to the auditing Party (a) whether or not the
relevant payments were accurate, or the reasons why the accuracy of the relevant
payments could not be determined, and any recommended actions needed to ensure
the accuracy of relevant future payments, and (b) if the payments were not
accurate, the amount of any under- or over-payment, as well as detail concerning
the nature, scope and circumstances of the discrepancy so that such discrepancy
can be equitably resolved. With respect to audits of financial and accounting
records, the results of such audits shall be delivered in writing to each Party.
The auditing Party shall bear the costs and expenses of audits conducted under
this Section 6.2, unless a variation or error producing an underpayment
exceeding either (a) [****] percent ([****]%) of the amount paid for the period
covered by the audit or (b) [****] Dollars ($[****]) is established in the
course of any such audit, whereupon all reasonable out-of-pocket costs paid to
Third Parties relating to such audit shall be paid by the audited Party.
 
*   Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.38
AUTOIMMUNE DISEASES AND CONDITIONS
[****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.46
MAJOR MARKET COUNTRIES

•   [****]   •   [****]   •   [****]   •   [****]   •   [****]   •   [****]   •
  [****]   •   [****]

 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 1.50.2
MAXYGEN PATENTS
[****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 2.5
INITIAL COMMITTEE MEMBERSHIP
Joint Steering Committee

         
 
  For Astellas:   [To be provided within [****] after the Effective Date]
 
       
 
  For Maxygen:   [****]

Joint Program Team

         
 
  For Astellas:   [To be provided within [****]after the Effective Date]
 
       
 
  For Maxygen:   [****]

 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 3.2
Initial Preclinical Development Plan
[****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 3.3
CLINICAL CANDIDATE CRITERIA
Each Compound must meet each of the following criteria to be classified as a
Clinical Candidate:
          [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 6.1.3(a)
COMMERCIAL SUPPLY TERMS AND CONDITIONS
          The Commercial Supply Agreement shall include terms and conditions
substantially consistent with the following (as well as additional mutually
agreed reasonable terms and conditions customary in agreements for supply of
pharmaceutical products):
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 6.4
INSURANCE REQUIREMENTS
General liability insurance coverage
          For Astellas: in an amount not less than [****] dollars ($[****])
          For Maxygen: in an amount not less than [****] dollars ($[****])
Product liability insurance coverage
          For Astellas: in an amount not less than [****] dollars ($[****])
          For Maxygen: beginning upon [****], in an amount not less than [****]
dollars ($[****]), provided that if Maxygen exercises its Co-Promotion Option
for a Co-Promotion Product, Maxygen [****].
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 10.3.1
CORE COUNTRIES
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 11.2
EXISTING AGREEMENTS
The following Third Party and corresponding agreement are referred to under
Section 11.2:
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 11.5
FORM MUTUAL PRESS RELEASE

      (MAXYGEN LOGO) [f50408f5040801.gif]   (ASTELLAS LOGO) [f50408f5040802.gif]

For Immediate Release
Maxygen and Astellas Announce Global Agreement to Develop New
Therapies for Autoimmune Diseases and Transplantation
-Astellas to Receive Rights to Commercialize MAXY-4 CTLA4-Ig Candidates-
-Maxygen to Receive $10 Million Up-front Payment, Up to $160 Million in
Milestone
Payments, Percentage of Sales -
REDWOOD CITY, Calif. and TOKYO, Japan, September 19 2008 – Maxygen, Inc.
(Nasdaq: MAXY) and Astellas Pharma Inc. today announced a global agreement under
which Astellas will receive worldwide rights to commercialize MAXY-4 lead
candidates for all autoimmune diseases and transplant rejection. MAXY-4 is
Maxygen’s preclinical program to create a next-generation CTLA4-Ig protein for
rheumatoid arthritis, transplant rejection and other autoimmune indications.
Under the agreement, the companies will co-develop MAXY-4 candidates for
rheumatoid arthritis and other autoimmune diseases and Astellas will exclusively
develop MAXY-4 candidates for transplant rejection. In addition, Maxygen has an
option to co-promote any autoimmune therapeutic products developed under this
alliance in North America. Regardless of indication, Astellas will manufacture
the finished product using active drug substance provided by Maxygen and market
and sell such product globally.
As consideration, Maxygen will receive a $10 million initial payment and is
eligible to receive up to an additional $160 million in pre-launch milestone
payments. Maxygen is also eligible to receive tiered double-digit royalties on
all sales. If Maxygen exercises its option to co-promote, revenues from any such
therapeutic product will be subject to a profit-sharing arrangement between the
parties instead of royalty payment.
In addition to the $10 million up-front payment, Astellas will pay for the first
$10 million of certain preclinical costs related to development of MAXY-4
candidates, after which the companies will share preclinical and development
costs of MAXY-4 candidates for autoimmune disease indications in North America
and European countries. Astellas will be responsible for development costs for
autoimmune disease indications in the rest of the world and for transplant
rejection indication worldwide.
“We are pleased to initiate a great partnership with Maxygen,” stated Hirofumi
Onosaka, Astellas’s senior corporate executive. “I believe that Maxygen has a
very strong suite of technologies to develop improved versions of protein drugs.
Astellas is committed to solidifying immunology as one of our prioritized
therapeutic areas, and this partnership should become a driving force to enhance
our leadership position in the transplantation

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      (MAXYGEN LOGO) [f50408f5040801.gif]   (ASTELLAS LOGO) [f50408f5040802.gif]

franchise. Moreover, it will further provide additional treatment options for
physicians and autoimmune disease patients and is expected to improve their
quality of life.”
“Our MolecularBreeding™ platform has yielded promising candidates for the
treatment of autoimmune disease and transplant rejection,” said Russell Howard,
chief executive officer of Maxygen. “Astellas is an excellent partner to help us
develop and commercialize this program. Their experience with immunology
therapeutics, particularly their development expertise in the field of
transplantation and successful commercialization of Prograf®, will complement
our expertise in protein pharmaceutical discovery and development.”
About MAXY-4
MAXY-4 is Maxygen’s preclinical program to create next-generation CTLA4-Ig
therapeutics with improved potency. By binding to human B7 ligands with high
avidity, CTLA4-Ig fusion proteins inhibit B7-mediated co-stimulation of T cells
via the CD28 receptor, thereby decreasing activation of T cells and thus
decreasing immune system activation. Maxygen used its MolecularBreedingTM
directed evolution platform to generate a library of novel CTLA4 proteins with
significantly higher specific binding to human B7 ligands.
About MolecularBreeding™ Directed Evolution Platform
Maxygen’s MolecularBreeding™ directed evolution platform uses a process of gene
shuffling in a test tube to create libraries of recombinant genes containing
varying levels of genetic diversity. The protein products from these recombined
genes are then screened for the targeted drug properties. Genes that encode the
selected proteins can then be reshuffled and screened in an iterative process
that ultimately results in the identification of proteins with the desired
product profiles. This novel platform allows scientists to exploit naturally
occurring genetic variation, which can result in the discovery of novel
therapeutic protein candidates.
About Maxygen
Maxygen is a biopharmaceutical company focused on developing improved versions
of protein drugs. The company’s lead program, MAXY-G34, is designed to be an
improved long-acting G-CSF for the treatment of neutropenia. MAXY-G34 is
currently in Phase II clinical trials. Maxygen also has a MAXY-4 program, under
which it is exploring new CTLA4-Ig product candidates for the treatment of a
broad array of autoimmune disorders and transplantation rejection. Maxygen uses
its proprietary DNA shuffling technology and extensive protein modification
expertise to pursue the creation of biosuperior proteins. www.maxygen.com
About Astellas
Astellas Pharma Inc., located in Tokyo, Japan, is a pharmaceutical company
dedicated to improving the health of people around the world through the
provision of innovative and reliable pharmaceutical products. Astellas has
approximately 13,700 employees worldwide. The organization is committed to
becoming a global category leader by

 

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      (MAXYGEN LOGO) [f50408f5040801.gif]   (ASTELLAS LOGO) [f50408f5040802.gif]

rapidly establishing a business model in Urology, Immunology and Inflammatory,
Diabetes, CNS/Pain, Infectious diseases (virus) and Cancer. We have discovered
an over-active bladder (OAB) medication, Vesicare® and an immunosuppressive
agent, Prograf® (tacrolimus), which have enabled us to become an established
leader in both Urology and Transplant. For more information on Astellas Pharma
Inc., please visit our website at www.astellas.com.
Maxygen Forward Looking Statements Disclaimer
This news release contains forward-looking statements regarding an agreement
between us and Astellas and about our MAXY-4 program and technology platform,
including our plans or the plans of Astellas to commence or continue the
development of any of our MAXY-4 product candidates for any indication and the
timing and status of any such development, including the filing of any IND or
other regulatory submission; whether we or Astellas will achieve any development
milestones under the agreement and whether we will receive any future milestone
payments from Astellas related to such development; the potential utility of our
MAXY-4 product candidates for the treatment of any autoimmune disorders or
transplantation rejection and the market potential of such products; the
potential potency or advantages of such products over existing or future
products; the effectiveness of our MolecularBreeding™ directed evolution
platform and other technologies and processes; and the success or continuation
of our alliance with Astellas. These and other risk factors are more fully
discussed in Maxygen’s Annual Report on Form 10-K for the year ended
December 31, 2007, including under the caption “Risk Factors,” and in Maxygen’s
other periodic reports filed with the SEC, all of which are available from
Maxygen or from the SEC’s website (www.sec.gov). Maxygen disclaims any
obligation to update or revise any forward-looking statement contained herein to
reflect any change in Maxygen’s expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement is based.
MolecularBreeding™ and Maxygen are U.S. trademarks used by Maxygen, Inc.
###
Contact Maxygen:
Michele Boudreau
Investor and Public Relations
+1-650-279-2088
michele.boudreau@maxygen.com
Contact Astellas:
Corporate Communications
+81-3-3244-3201
http://www.astellas.com

 

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EXHIBIT 11.5.2
PRESS RELEASE EVENTS
     [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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EXHIBIT 12.2.7
EXISTING THIRD PARTY LICENSES
The following Existing Third Party Agreement is referred to under
Section 12.2.7:
     1. [****]
 
*    Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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