CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

Exhibit 10.14

 

HspE7 COLLABORATION AGREEMENT

AMONG

STRESSGEN DEVELOPMENT CORPORATION AND

STRESSGEN BIOTECHNOLOGIES CORPORATION

AND

F.HOFFMANN-LA ROCHE LTD AND HOFFMANN-LA ROCHE INC.

June 21, 2002

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE 1

DEFINITIONS

 

ARTICLE 2

LICENSES

 

2.1

License Grant To Roche

 

2.2

Sublicensees

 

2.3

Transfer of Stressgen Know-How

 

2.4

Other HPV Fusion Proteins

 

ARTICLE 3

INITIAL AND DEVELOPMENT EVENT PAYMENTS

 

3.1

Technology Development Payment

 

3.2

Equity Investments in Stressgen

 

3.3

Development Event Payments

 

3.4

Commercial Success Payments

 

ARTICLE 4

PAYMENTS BASED ON SALES OF TARGET PRODUCTS

 

4.1

Payments to Stressgen Based upon Worldwide Net Sales

 

4.2

Termination of Sales Based Payments

 

4.3

Adjustments Related to No Valid Claims

 

4.4

Adjustments Related to Third Party Competition

 

4.5

Adjustments Related to Third Party Payments

 

4.6

Payments Under the MIT Agreement

 

4.7

Maximum Adjustments

 

4.8

Combination Products

 

ARTICLE 5

PAYMENT, REPORTING, AUDITING

 

5.1

Currency and Conversion

 

5.2

Sales-Based Payments

 

5.3

Taxes

 

5.4

Blocked Countries

 

5.5

Accounting

 

ARTICLE 6

COLLABORATION GOVERNANCE

 

6.1

Steering Committee

 

6.2

Joint Development Committee

 

6.3

Finance Subcommittee

 

 

i

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TABLE OF CONTENTS

(continued)

 

6.4

Manufacturing Transition Team

 

6.5

Meetings and Responsibilities of the Steering Committee

 

6.6

Meetings and Responsibilities of the JDC

 

6.7

Decisions

 

ARTICLE 7

DEVELOPMENT PLAN AND CONDUCT OF DEVELOPMENT ACTIVITIES

 

7.1

Development Plan

 

7.2

Goals of Development

 

7.3

Conduct and Funding of Development Activities

 

7.4

Standards of Conduct

 

7.5

Diligent Development

 

7.6

Development Limitations

 

7.7

Updating the Development Plan

 

ARTICLE 8

DEVELOPMENT — REGULATORY AND SAFETY

 

8.1

Assignment of INDs, Other Documentation to Roche

 

8.2

Responsibility for Regulatory Affairs

 

8.3

Drug Safety

 

8.4

Product Withdrawals

 

8.5

Mutual Covenants

 

ARTICLE 9

MANUFACTURE AND SUPPLY

 

9.1

[* * *]; Transition to New Manufacturing Process

 

9.2

Clinical Supplies of Process B Target Product

 

9.3

Clinical Supplies of Process A Target Product for Use in RRP and the Other
Stressgen Development Activities

 

9.4

Clinical Supplies of Process B Target Product for Use in RRP and the Other
Stressgen Development Activities

 

9.5

Commercial Supply

 

9.6

Packaging

 

ARTICLE 10

COMMERCIALIZATION

 

10.1

Responsibilities of Roche

 

10.2

Diligent Efforts by Roche; Reporting

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

ii

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TABLE OF CONTENTS

(continued)

 

10.3

Co-Promotion by Stressgen

 

10.4

Roche Competitive Products

 

ARTICLE 11

TRADEMARKS

 

11.1

Trademarks

 

ARTICLE 12

OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

 

12.1

Ownership of Intellectual Property

 

12.2

Patent Prosecution and Maintenance

 

12.3

Infringement

 

12.4

Patent Notices

 

ARTICLE 13

CONFIDENTIAL INFORMATION

 

13.1

Non-Disclosure and Non-Use

 

13.2

Exceptions

 

13.3

Authorized Disclosure

 

13.4

Survival

 

ARTICLE 14

PUBLICATION AND PRESS RELEASE

 

14.1

Publications

 

14.2

Press Release; Public Disclosure of Agreement

 

ARTICLE 15

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

15.1

Mutual Representations and Warranties

 

15.2

Stressgen Representations and Warranties

 

15.3

Roche Representations and Warranties

 

15.4

Stressgen Covenants

 

15.5

No Other Representations or Warranties

 

ARTICLE 16

TERM AND TERMINATION

 

16.1

Conditions Subsequent

 

16.2

Term

 

16.3

Breach

 

16.4

Termination by Roche Without Cause

 

16.5

Consequences of Termination

 

 

iii

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TABLE OF CONTENTS

(continued)

 

16.6

Termination for Failure to Satisfy Conditions Subsequent

 

16.7

Accrued Rights; Surviving Rights and Obligations

 

ARTICLE 17

INDEMNIFICATION

 

17.1

Indemnification by Stressgen

 

17.2

Indemnification by Roche

 

17.3

Procedure

 

17.4

Insurance

 

ARTICLE 18

DISPUTE RESOLUTIONS AND GOVERNING LAW

 

18.1

Disputes

 

18.2

Arbitration

 

18.3

Governing Law

 

ARTICLE 19

MISCELLANEOUS

 

19.1

Agency

 

19.2

Entire Agreement

 

19.3

Amendment

 

19.4

Possible Restructuring of Transaction

 

19.5

Assignment

 

19.6

Notices

 

19.7

Force Majeure

 

19.8

Severability

 

19.9

No Right to Use Names

 

19.10

Bankruptcy

 

19.11

Interpretation

 

19.12

Counterparts

 

19.13

Waiver

 

 

iv

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HspE7 Collaboration Agreement

This HspE7 Collaboration Agreement (“Agreement”) is made as of June 21, 2002
(“Execution Date”) by and among, on the one hand, Stressgen Development
Corporation, a Barbados corporation, with its principal office at Whitepark
House, White Park Road, P.O. Box 806E, Bridgetown, Barbados (“Stressgen”), and,
for the limited purposes set forth in Section 2.1, Stressgen Biotechnologies
Corporation, a corporation organized under the laws of Yukon Territory, Canada,
with its principal office at #350 — 4243 Glanford Avenue, Victoria, BC Canada
V8Z 4B9 (“SBC”), and, on the other hand, F.Hoffmann-La Roche Ltd, a Swiss
corporation, with its principal office at Grenzacherstrasse 124, CH-4070-Basel
Switzerland and Hoffmann-La Roche Inc., a New Jersey corporation, with its
principal office at 340 Kingsland Street, Nutley, New Jersey 07110
(collectively, “Roche”).

Recitals

1.             Stressgen and SBC own or control intellectual property rights
related to, among other products, HspE7 (as defined below).

2.             Roche has expertise in the development and commercialization of
pharmaceutical products.

3.             Roche and Stressgen wish to enter into a collaborative
arrangement pursuant to which the parties shall co-develop HspE7 for certain
specified indications, share in the development costs associated therewith, and
commercialize HspE7 worldwide.

4.             The Parties have prepared this Agreement to govern their
collaborative development and commercialization of HspE7.

5.             Simultaneously with the execution of this Agreement, SBC and
Roche shall execute that certain Equity Agreement between Roche Finance Ltd and
SBC (“Equity Agreement”),

 

--------------------------------------------------------------------------------

 

Agreement

Now, Therefore, in consideration of the premises and the mutual covenants and
agreements contained in this Agreement, and in the Equity Agreement, the
Parties, intending to be legally bound, do hereby agree as follows:

ARTICLE 1

DEFINITIONS

The following capitalized terms, whether used in the singular or the plural,
shall have the following meanings as used in this Agreement unless otherwise
specifically indicated:

1.1          “Affiliate” shall mean (a) an entity which owns, directly or
indirectly, a controlling interest in a Party, by stock ownership or otherwise,
(b) any entity which a Party owns a controlling interest, by stock ownership or
otherwise; or (c) any entity, under direct or indirect common control of a
Party.  For purposes of this paragraph, “controlling interest” and “control”
mean ownership of fifty percent (50%) or more of the voting stock permitted to
vote for the election of the board of directors or any other arrangement
resulting in control or the right to control the management and the affairs of
the Party. For purposes of this Agreement, Genentech, Inc., 1 DNA Way, South San
Francisco, California, shall not be deemed an Affiliate of Roche.

In addition, Roche is presently seeking permission to acquire an interest in
Chugai Pharmaceutical Company Ltd. (“Chugai”).  Nothing in this Agreement is to
be construed as binding Chugai to any of the terms and conditions contained in
this Agreement.  However, should Chugai become a Roche Affiliate it shall be
bound by the terms and conditions of this Agreement and shall have all rights
and obligations of an Affiliate under this Agreement.  If Chugai should become a
Roche Affiliate but not agree to be bound by the terms and conditions of this
Agreement, then Chugai shall have none of the rights and obligations of an
Affiliate of Roche under this Agreement, and Roche shall not grant a sublicense
to Chugai under this Agreement without prior written consent of Stressgen.

 

2

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1.2          “BLA Filing” shall mean a Biologics Licensing Application or New
Drug Application filed as a result of activities under this Agreement with the
FDA, or the equivalent application to the equivalent agency in any other
country, the filing of which is necessary to market and sell a Target Product,
including all amendments and supplements to any of the foregoing.

 

1.3          “Cost of Goods” shall mean the manufacturing cost of either bulk or
finished Target Product, as the case may be, as determined in accordance with
international accounting standards (IAS) applied consistently throughout the
organization of the Party or its Affiliate determining such costs.  Cost of
Goods shall consist of [* * *]

1.4          “Competitive Product” shall mean, with respect to a given Target
Product sold in a given country of the Territory by Roche, its Affiliate or
sublicensee, a product  sold by a Third Party in such country the regulatory
approval for which in such country specifically refers to and relies upon the
Regulatory Approval dossier for such Target Product in such country.

1.5          “Control” shall mean, with respect to any information or
intellectual property right, possession by a Party of the ability (whether by
ownership, license or otherwise) to grant access, a license or a sublicense to
such information or intellectual property right without violating the terms of
any agreement or other arrangement with any Third Party as of the time such
Party would first be required hereunder to grant the other Party such access,
license or sublicense.

1.6          “Confidential Information” shall have the meaning set forth in
Section 13.1.

1.7          “Development Activities” shall mean all activities relating to
obtaining Regulatory Approval of Target Product in the Territory which are
conducted pursuant to the Development Plan, including all activities relating to
developing the ability to manufacture the same.  This includes (a) preclinical
testing, toxicology, formulation, clinical studies, regulatory affairs and
outside regulatory services and (b) manufacturing

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

3

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process development for Target Products, and manufacturing and quality assurance
technical support activities prior to the First Commercial Sale of a Target
Product.

 

1.8          “Development Costs” shall mean the costs other than Stressgen RRP
Development Costs, arising from Development Activities undertaken by Stressgen
or on its behalf and incurred by Stressgen for (a) CMC activities related to
Process B (as defined in Article 9) and performed on or after [* * *] as the
contract manufacturer of clinical supplies of Target Product, but for the period
defined between the Execution Date and [* * *] only to the extent such costs do
not exceed [* * *], (b) TC1 studies in support of transitioning from Process A
to Process B (as defined in Article 9), but only to the extent such costs are
for activities performed on or after [* * *] and do not exceed [* * *] and
(c) any other Development Activities performed by Stressgen (other than for RRP)
on or after [* * *] at the request of the JDC.

Development Costs consist of (i) the costs for each Stressgen full-time
equivalent (“FTE”) involved in the foregoing activities; and (ii) Third Party
costs incurred by Stressgen, in each case in connection with such Development
Activities, each solely to the extent allocable to Development Activities.  FTE
costs by Stressgen shall be calculated based upon a rate of
[* * *] per FTE.

1.9          “Development Plan” shall mean the written plan describing the
non-clinical, clinical and manufacturing process development of the Target
Product to be carried out by Roche and Stressgen, as adopted pursuant to Section
7.1.

1.10        “Diligent Efforts” shall mean the use of at least an equivalent
degree of effort and resources consistent with the exercise of prudent
scientific and business judgment, as applied to other pharmaceutical products of
similar potential and market size by the Party in question, and reflecting the
competitive environment for the development and marketing of Target Product.

1.11        [* * *] shall mean [* * *] Stressgen’s contract manufacturer of
clinical supplies of Target Product as of the Execution Date, and pursuant to
that certain Bioprocessing Services Agreement, dated April 10, 2000.

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

4

--------------------------------------------------------------------------------

 

 

1.12        “Effective Date” shall mean the date that all Conditions Subsequent
under Section 16.1 have occurred.

 

1.13        “End of Phase II” shall mean, for the Phase II Clinical Trial, the
date when database closure for the Phase II Clinical Trial occurs following
enrollment of the targeted patient population and completion of the course of
therapy as per the Development Plan for all targeted patients.

1.14        “Executive Officers” shall mean, for Roche, the Head of the Roche
Pharma Division (or a designee), and for Stressgen, the Chief Executive Officer
of Stressgen (or a designee).

1.15        “FDA” shall mean the United States Food and Drug Administration.

1.16        “First Commercial Sale” shall mean, for each Target Product in each
country, the first sale to a Third Party of the Target Product in the country by
Roche or its Affiliates or sublicensees, after granting of Regulatory Approval
for the Target Product by the governing authorities of that country.

1.17        “Genital Warts” shall mean any one or more of the following
indications: internal and external genital and perianal warts, including those
urethral, intravaginal, cervical, rectal and intra-anal sites.

1.18        “HPV Indication” shall mean treatment or prevention of any human
disease or disorder caused by any type of the human papilloma virus in any
anatomical site, other than treatment of diagnosed cancer.  For example, HPV
Indication includes any one or more of the following indications (treatment
and/or prevention):  Genital Warts, benign and precancerous lesions, cervical
dysplasia, anal dysplasia, and/or recurrent respiratory papillomatosis (“RRP”).

                1.19        “HspE7” shall mean any fusion protein containing
(a) a human papilloma virus (HPV) E7 antigen, or an antigenic fragment, mutein
or conjugate thereof, and (b) a bacterial stress protein, or a fragment, mutein
or conjugate thereof, including, in particular and without limitation, that
recombinant DNA derived fusion protein containing

 

 

5

--------------------------------------------------------------------------------

 

 

 [* * *] amino acids, derived from the 65kDa heat shock protein of mycobacterium
bovis var. BCG (Hsp65) coupled at the C-terminus to the E7 protein of human
papilloma virus (HPV) type 16.  HspE7 includes nucleic acid sequences and
vectors and host cells containing nucleic acid sequences encoding such proteins
contained therein.

 

1.20        “IND” shall mean an application to the FDA, the filing of which is
necessary to commence clinical testing of Target Products in humans, or the
equivalent application to the equivalent agency in any other country or group of
countries.

1.21        “Invention” shall mean any invention or discovery, whether or not
patentable, made as a result of activities of a Party or the Parties pursuant to
this Agreement, and which relates to a Target Product.  An “Invention” may be
made by employees of Stressgen solely or jointly with a Third Party (a
“Stressgen Invention”), by employees of Roche solely or jointly with a Third
Party (a “Roche Invention”), or jointly by employees of Stressgen and Roche with
or without a Third Party (a “Joint Invention”), in each instance as determined
by U.S. laws of inventorship.

1.22        “Major Market Country” shall mean the United States of America,
United Kingdom, France, Germany, [* * *.]

1.23        “Manufacturing Transfer Package” shall mean the information and
materials identified in that certain list entitled Manufacturing Transfer
Package dated as of the Execution Date and delivered to Roche.

1.24        “MIT Agreement” shall mean that certain License Agreement dated
November 3, 1992 between Massachusetts Institute of Technology and the Whitehead
Institute (collectively “MIT”) and Stressgen Biotechnologies Corporation, as
amended.

1.25        “Naïve Genital Warts” shall mean Genital Warts in adults that have
had no prior drug, ablative or surgical treatment.

1.26        “NCI Agreements” shall mean those certain Agreements dated
October 5, 1999 and June 4, 2002 between National Cancer Institute and Stressgen
Biotechnologies Corporation, as amended.

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

6

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1.27        “Net Sales” shall mean the amount remaining after deducting from
Adjusted Gross Sales an amount equal
to [* * ].

 

As used herein, the term “Adjusted Gross Sales” shall mean the gross amount
invoiced for sales of Target Products to Third Parties in the Territory by
Roche, its Affiliates and their respective sublicensees to Third Parties that
are not Affiliates or sublicensees of the selling party, less the following
items, as allocable to such Target Product (if not previously deducted from the
amount invoiced):

(a)           volume (quantity) discounts;

(b)           returns and return reserves  (including allowances actually given
for spoiled, damaged, out-dated, rejected, returned Target Product, withdrawals
and recalls;

(c)           taxes, duties or other governmental tariffs, including value added
or sales taxes, government mandated exceptional taxes and other taxes directly
linked to the gross sales amount (other than income taxes); and

(d)           rebates (including price reductions, rebates to social and welfare
systems, chargebacks or reserves for chargebacks, cash rebate incentives,
government mandated rebates and similar types of rebates, for example P.P.R.S,
Medicaid).

Notwithstanding the foregoing, amounts received by Roche or its Affiliates or
sublicensees for the sale of Target Product among Roche and its Affiliates or
sublicensees for resale shall not be included in the computation of Net Sales
hereunder.

1.28        “Other HPV Fusion Protein” shall mean a fusion protein that contains
both (a) a human papilloma virus (HPV) antigen, or an antigenic fragment, mutein
or conjugate thereof, other than an HPV E7 antigen, or antigenic fragment,
mutein or conjugate thereof, and (b) a bacterial stress protein, or a fragment,
mutein or conjugate thereof.  Other HPV Fusion Protein includes nucleic acid
sequences and vectors and host cells containing nucleic acid sequences encoding
the protein contained therein.

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

7

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1.29        “Party” shall mean, individually, Stressgen or Roche, and “Parties”
shall mean collectively, Stressgen and Roche.

1.30        “Patents” shall mean (a) United States patents, re-examinations,
reissues, renewals, extensions and term restorations, and foreign counterparts
thereof, and (b) pending applications for United States patents, including,
without limitation, provisional applications, continuations,
continuations-in-part, divisional and substitute applications, including,
without limitation, inventors’ certificates, and (c) any and all foreign
counterparts of (a) and (b).

1.31        “Phase II Clinical Trial” shall mean the dose ranging Phase II trial
(i.e., the second phase of human clinical trials required by the FDA to gain
evidence of efficacy of Target Product in a target population, and to determine
common short term side effects and risks for Target Product, as described in 21
CFR Part 312(b), as it may be amended (or its successor regulation) conducted by
Roche pursuant to the Development Plan.

1.32        “Phase III Clinical Trial” shall mean the third phase of human
clinical trials required by the FDA to gain evidence of efficacy of Target
Product in a target population, and to obtain expanded evidence of safety for
Target Product that is needed to evaluate the overall benefit-risk relationship
of Target Product and provide an adequate basis for physician labeling, as
described in 21 CFR Part 312(c), as it may be amended (or its successor
regulation), conducted by Roche pursuant to the Development Plan.

1.33        “Refractory or Recurrent Genital Warts” shall mean Genital Warts
that were partially or completely non-responsive to or have recurred after,
prior drug, ablative or surgical treatment.

1.34        “Regulatory Approval” shall mean any and all approvals, licenses,
registrations or authorizations (including pricing and reimbursement approvals)
of any national or international or local regulatory agency, department, bureau
or other governmental entity, whether or not conditional, that are necessary for
the commercial

 

 

8

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sale of a Target Product in a regulatory jurisdiction in the Territory and
obtained as a result of activities under this Agreement.

1.35        “Start of Phase III” shall mean the date that a patient is first
dosed in a Phase III Clinical Trial for Target Product for an HPV Indication, as
a result of activities under this Agreement.

1.36        “Stressgen Know-How” shall mean, to the extent necessary or useful
for the manufacture, development or commercialization of Target Products in the
Territory, all data, knowledge and information Controlled by Stressgen during
the Term, including, without limitation, materials, samples, chemical
manufacturing data, toxicological data, pharmacological data, clinical data,
formulations, specifications, quality control testing data, and submissions and
correspondence to and from governmental agencies with regard to Target Products,
but excluding Stressgen Patent Rights.

1.37        “Stressgen Patent Rights” shall mean all Patents that Stressgen
Controls as of the Execution Date or during the Term, including, without
limitation, Patents that claim Stressgen Inventions and/or Joint Inventions,
which, in the absence of the license granted to Roche under this Agreement,
would be infringed by the making, using, selling, offer for sale or importation
of Target Products in the Territory.  Exhibit A lists all Stressgen Patent
Rights existing as of the Execution Date (“Base Patents”).

1.38        “Stressgen RRP Development Cost” shall mean the costs  arising from
Development Activities incurred by Stressgen for RRP.

1.39        “Stressgen Technology” shall mean the Stressgen Know-How and the
Stressgen Patent Rights.

1.40        “Target Product” shall mean any product which contains HspE7 for the
treatment of any human condition or disease, including, without limitation, all
HPV Indications.

 

 

9

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1.41        “Target Product-Specific Base Patent” shall mean those Patents
identified in Exhibit A as “Product Specific Patents and Patent Applications.”

1.42        “Term” shall mean, for each country of the Territory, the period
commencing on the Effective Date and, unless this Agreement is terminated sooner
as provided in Article 16, ending on the date when no payment obligations under
this Agreement are or will become due with respect to Net Sales of Target
Product in such country.

1.43        “Territory” shall mean all countries of the world.

1.44        “Third Party” shall mean any Person other than a Party, its
Affiliates and sublicensee.

1.45        “Third Party Right” shall mean a Patent owned or controlled by a
Third Party under which Roche or its Affiliate obtains a license to use, offer
for sale, sell or import Target Product in the Territory following an opinion of
competent legal counsel or an agreement of the Parties that risk exists that a
court could find that the use, offer for sale, sale or import of HspE7 in the
Territory infringes such Patent in the absence of such license.

1.46        “Valid Claim” shall mean a claim in any (a) unexpired and issued
Stressgen Patent Right that has not been disclaimed, revoked or held invalid or
unenforceable by a final unappealable decision of a court of government agency
of competent jurisdiction or (b) pending patent application that is a Stressgen
Patent Right which patent application has been on file with the applicable
patent office for no more than [* * *] from the earliest date to which the
patent application claims its earliest priority.

ARTICLE 2

LICENSES

2.1          License Grant To Roche.  Subject to the terms of this Agreement,
(a) Stressgen grants, and shall cause its Affiliates to grant, to Roche the sole
and

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

10

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exclusive (except as set forth below), right and license, including a sublicense
under the MIT Agreement, under the Stressgen Technology to develop, use, offer
for sale, sell and import Target Product in the Territory excluding Canada; and
(b) SBC grants, and shall cause its Affiliates to grant, to Roche the sole and
exclusive (except as set forth below), right and license including a sublicense
under the MIT Agreement, under the Stressgen Technology to develop, use, offer
for sale, sell and import Target Product in Canada.

 

The exclusivity of the foregoing license shall be subject to the retained right
of Stressgen, SBC and their respective Affiliates to practice the Stressgen
Technology for the purpose of conducting development, manufacture and
commercialization of Target Products in the Territory to the extent expressly
contemplated by this Agreement.

Roche hereby acknowledges that Articles II, V, VII, VIII, IX, X, XII, XIII and
XV of the MIT Agreement shall be binding upon Roche, its Affiliates and their
respective sublicensees as if each of them were a party to the MIT Agreement. 
In particular, Roche agrees and understands that Stressgen’s exclusive rights,
privileges and license under the MIT Agreement, and therefore Roche’s sublicense
under the MIT Agreement shall terminate upon expiration or abandonment of all
issued patents and filed applications within the Patent Rights (as defined in
the MIT Agreement), unless the MIT Agreement is earlier terminated in accordance
with the provisions of the MIT Agreement.  Such acknowledgement is subject to
the terms and conditions of this Agreement, in particular Articles 15 and 17. 
Roche hereby acknowledges that Stressgen’s license under the MIT Agreement is
expected to terminate on [* * *]

2.2          Sublicensees.  The rights and licenses granted to Roche under
Section 2.1 shall include the right to grant sublicenses to its Affiliates and
Third Parties under such rights and licenses, in whole or in part.  If Roche
grants such a sublicense, Roche shall ensure that all of the applicable terms
and conditions of this Agreement shall apply to the Affiliate or Third Party
sublicensee to the same extent as they apply to Roche for all purposes.  Roche
assumes full responsibility for the performance of all obligations so imposed on
such Affiliate or Third Party sublicensee and will itself

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

11

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account to Stressgen for all payments due under this Agreement by reason of such
sublicense.  Any sublicenses granted under this Section 2.2 by Roche shall
terminate upon the early termination of this Agreement, to the extent this
Agreement becomes terminated; and shall convert to non-exclusive upon
expiration, in conformance with Section 16.2.

 

Notwithstanding the foregoing, Roche shall not have the right to sublicense the
rights granted pursuant to Section 2.1 above to any Third Party in a Major
Market Country, except upon the prior written approval of Stressgen, which
approval Stressgen shall not unreasonably withhold.

2.3          Transfer of Stressgen Know-How.  Following the Effective Date and
from time to time throughout the Term, as reasonably requested by Roche,
Stressgen shall make available to Roche such Stressgen Know-How then in
Stressgen’s possession or Control as is reasonably necessary for Roche to
exercise the license granted to it under this Agreement.

2.4          Other HPV Fusion Proteins.  Until the expiration or early
termination of this Agreement, on a country by country basis, neither Stressgen
nor SBC, nor any of its Affiliates, will pursue clinical development or
commercialization of any product containing an Other HPV Fusion Protein for any
or all of the HPV Indications, nor shall Stressgen or any of its Affiliates
grant any license or other rights to any Third Party with respect to the
clinical development or commercialization of any product containing an Other HPV
Fusion Protein for any or all of the HPV Indications.  Notwithstanding anything
to the contrary herein, it is further expressly understood and agreed that
Stressgen and its Affiliates shall at all times retain the right to pursue
clinical development or commercialization of products containing an Other HPV
Fusion Protein for any indication outside of the field of HPV Indication, such
as treatment of diagnosed cancer, and/or to grant licenses or other rights to
Third Parties with respect to the clinical development or commercialization of
products containing an Other HPV Fusion Protein for any such indication.

 

 

12

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ARTICLE 3

INITIAL AND DEVELOPMENT EVENT PAYMENTS

 

3.1          Technology Development Payment.  Roche shall make a payment to
Stressgen of [* * *] within ten (10) days after (a) the Effective Date and
(b) receipt by Roche of an invoice for such amount.  Such payment shall be
non-refundable and non-creditable.

3.2          Equity Investments in Stressgen.  Contemporaneously with the
execution of this Agreement, SBC and Roche or its Affiliate shall enter into the
Equity Agreement, pursuant to which Roche or its Affiliate shall purchase up to
an aggregate of Five Million dollars ($5,000,000) of common stock of Stressgen
and be issued warrants to purchase Two Million dollars ($2,000,000) of Stressgen
common stock and Three Million dollars ($3,000,000) of Stressgen common stock
(collectively, the “Warrants”) upon such terms and conditions, including price
per share, as are set forth in such Equity Agreement and the Warrants.

3.3          Development Event Payments.  In consideration for Stressgen’s
collaboration under this Agreement, including its co-development of the Target
Product, Roche shall pay to Stressgen the following one-time, nonrefundable and
non-creditable amounts, within [* * *] after the first occurrence of each of the
following events, with respect to the first Target Product to achieve the
respective event:

Event

 

Payment
(millions of dollars)

 

1

 

[*] and receipt by Roche of an invoice for such amount

 

[*]

 

2

 

[*] and receipt by Roche of an invoice for such amount

 

[*]

 

3

 

[*]

 

[*]

 

4

 

[*]

 

[*]

 

5

 

[*]

 

[*]

 

6

 

[*]

 

[*]

 

7

 

[*]

 

[*]

 

8

 

[*]

 

[*]

 

9

 

[*]

 

[*]

 

10

 

[*]

 

[*]

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

13

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Notwithstanding the foregoing, in the event US Regulatory Approval for [*] is
limited to approval only for [*], then the [*] referred to above shall instead
be adjusted as follows:  (a) in the case of [*] only, [*] and (b) in the case of
[*] [*] provided, however that in the event that indication which was not
approved at such time is later approved, then Roche would at that time pay a
separate event payment to Stressgen equal to the difference between [*] and the
amount already paid for the first of [*] or [*] to be approved.

Notwithstanding anything herein to the contrary, Roche shall make each of such
payments in this Section 3.3 only once for the first occurrence of a respective
event.  All payments made under this Section 3.3 are non-refundable and
non-creditable.

3.4          Commercial Success Payments.  In consideration for Stressgen’s
participation in the development and commercialization of Target Products
hereunder, Roche shall pay to Stressgen the following one time, nonrefundable
and non-creditable amounts, within thirty (30) days after [* * *] referred to in
the chart below for each of the following events with respect to the cumulative
worldwide Net Sales of the Target Product over [* * *]:

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

14

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Commercial Event

 

Amount (millions of dollars)

 

Where aggregate Net Sales of Target Products in the Territory reach [*] as
measured by the cumulative Net Sales during [*] ending on or prior to [*] after
First Commercial Sale

 

[*]

 

Where aggregate Net Sales of Target Products in the Territory reach [*] as
measured by the cumulative Net Sales during [*] ending on or prior to [*] after
First Commercial Sale

 

[*]

 

Where aggregate Net Sales of Target Products in the Territory reach [*] as
measured by the cumulative Net Sales during [*]

 

[*]

 

Where aggregate Net Sales of Target Products in the Territory reach [*] as
measured by the cumulative Net Sales during [*]

 

[*]

 

Notwithstanding anything herein to the contrary, Roche shall make each of such
payments in this Section 3.4 only once for the first occurrence of a respective
event.  In the event Net Sales in a given period of [*] grow from less than one
milestone threshold amount (e.g., just below [*]) past a second threshold amount
[*] then Stressgen shall be paid both milestones achieved during such [*]
period.

ARTICLE 4

PAYMENTS BASED ON SALES OF TARGET PRODUCTS

4.1          Payments to Stressgen Based upon Worldwide Net Sales.  In
consideration for Stressgen’s co-development and commercialization activities
under this collaboration and the rights of Roche to commercialize and
manufacture Target Product as provided in this Agreement, and subject to the
terms and conditions of this Agreement, Roche shall make payments to Stressgen
based upon the volume of Target Product sold by Roche, its Affiliates and
sublicensees in the Territory, as set forth in this Section 4.1, taking into
account the adjustments as provided in Sections 4.3, 4.4, and 4.5.  Accordingly,
Roche shall pay to Stressgen the following payments, based upon the worldwide
Net Sales of Target Products, which such Net Sales shall be subject to
adjustment as provided in this Article 4. Such sales-based payments shall be
calculated by multiplying the following percentages by the following incremental
annual worldwide Net Sales of Target Products in the Territory (all Net Sales
amounts in $ US million):

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

15

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Incremental annual worldwide Net Sales

 

Percent (%) of Net Sales

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

By way of illustration, assume in calendar year 2008 that (a) Net Sales of
Target Product in the Territory total [*] and (b) no adjustments or deductions
to payments under this Article 4 apply.  The sales-based payments due and
payable by Roche to Stressgen for the calendar year would be $[*], calculated as
follows:

 

Increment of Net Sales (in millions)

 

Applicable Sales-Based

Payment Percentage

 

Amount Payable (in millions)

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

 

 

 

 

[*]

 

4.2          Termination of Sales Based Payments.  Roche shall calculate and pay
sales-based payments to Stressgen under this Article 4 commencing on the First
Commercial Sale in the Territory.  The Net Sales of a given country shall be
included in aggregate world wide Net Sales until the later of (a) expiration of
the last to expire of the Stressgen Patent Rights containing a Valid Claim in
such country and (b) [* * *] from the First Commercial Sale of such Target
Product in such country (the “Sales-Based Payment Term”).

4.3          Adjustments Related to No Valid Claims.  Subject to Section 4.7,
for each country of the Territory in which no Valid Claim exists for the Target
Product, Roche shall have the right to include in aggregate worldwide Net Sales
only [* * *] of the actual Net Sales of Target Products in such country.

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

16

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4.4          Adjustments Related to Third Party Competition.  If in a country of
the Territory in which no Valid Claim of a Target Product-Specific Patent exists
for the Target Product, and (a) a Third Party is selling Competitive Product,
(b) Roche has an obligation to make payments under this Agreement with respect
to Net Sales of such Target Products in such country, and (c) in such country,
sales of units of Competitive Products in aggregate total at least [* * *] of
the aggregate sales of units of Competitive Products and Target Products as
measured at the end of [* * *], then Roche shall have the right to calculate
sales-based payments by including only [* * *] of the amount Roche would have
otherwise included for such country to calculate sales-based payments if no
Competitive Product existed in such country, subject to Section 4.7.

4.5          Adjustments Related to Third Party Payments.  Roche or its
Affiliate shall pay and be responsible for the entire consideration owed to any
Third Party pursuant to the terms of any licensing arrangement related to a
Third Party Right, but shall keep Stressgen informed as reasonably requested by
Stressgen regarding progress of negotiations with such Third Party regarding
such licensing arrangement.  Roche shall have the right to deduct a maximum of
[* * *] of the consideration actually paid to a Third Party with respect to such
Third Party Right (“Deductible Consideration”) from payments otherwise due and
payable by Roche to Stressgen under this Article 4, solely to the extent such
Deductible Consideration is allocable to HspE7.  In no event shall the
sales-based payment owed to Stressgen under this Article 4 be reduced in any
given year below the greater of (a) [* * *] of that otherwise due and owing or
(b) [* * *] of worldwide Net Sales in the Territory.

4.6          Payments Under the MIT Agreement.  Notwithstanding anything to the
contrary herein, the Parties acknowledge that Stressgen and MIT have entered
into the MIT Agreement, as it is and may be further amended.  Subject to Section
4.2, Stressgen or SBC, as the case may be, shall directly pay MIT any amounts
due to MIT under such agreement, and such amounts shall not affect or be offset
against the sales-based payments owing from Roche to Stressgen under this
Agreement.

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

17

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4.7          Maximum Adjustments.  In no event shall Roche, for any Target
Product in any country in the Territory, reduce the amount payable to Stressgen
hereunder to less than [* * *] of Net Sales of such Target Product, on account
of adjustments under this Article 4.

4.8          Combination Products.  In the event Roche or its Affiliates sell a
product which is comprised of the Target Product as well as, other
pharmaceutically active agent(s) (a “Combination Product”), the Parties shall
meet approximately one (1) year prior to the anticipated commercial launch of
such Combination Product to negotiate in good faith and agree to an appropriate
adjustment to Net Sales to reflect the relative significance and value of the
Target Product and the other pharmaceutically active agent(s) contained in the
Combination Product.  If, after good faith negotiations (not to exceed ninety
(90) days), the Parties cannot agree to an appropriate adjustment, Net Sales
shall equal Net Sales of the Combination Product multiplied by a fraction, the
numerator of which is the reasonable fair market value of the Target Product and
the denominator of which is the reasonable fair market value in the aggregate,
of all pharmaceutically active agents contained in the Combination Product;
provided, however, that, for the purposes of the foregoing calculation, in no
event shall the fair market value of the Target Product in any Combination
Product be less than [* * *] of the fair market value of all pharmaceutically
active agents contained in such Combination Product.

ARTICLE 5

PAYMENT, REPORTING, AUDITING

5.1          Currency and Conversion.

(a)           All payments under this Agreement shall be in U.S. Dollars.

(b)           Whenever calculation of Net Sales requires conversion from any
foreign currency, Roche shall convert the amount of Net Sales in foreign
currencies as computed in the Roche’s central Swiss Francs Sales Statistics for
the countries concerned.  Roche shall first convert the amount of Net Sales into
Swiss Francs and

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

18

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then into U.S. Dollars, using the average year-to-date rate of exchange for such
currencies as retrieved from the Reuters’ system for the applicable period, in
accordance with Roche’s then current standard practices.

 

(c)           For sublicensees in a country, when calculating the Net Sales, the
sublicensee shall report to Roche the amount of such sales within thirty (30)
days from the end of the reporting period, after having converted each
applicable monthly sales in foreign currency into Swiss Francs using the average
rate of exchange published in the Wall Street Journal (or some other source
agreed upon by the Parties for any particular country) for each respective month
of the reporting period.

5.2          Sales-Based Payments.  After the First Commercial Sale of the
Target Product in any country of the Territory, Roche shall calculate
sales-based payments set forth in Article 4 quarterly as of March 31, June 30,
September 30 and December 31 (each being the last day of a reporting period). 
Roche shall pay such payments quarterly within sixty (60) days after the end of
each reporting period in which Net Sales occur during the Term.

With each such payment, Roche shall deliver to Stressgen the following
information split between U.S. and rest of world:

(a)           Adjusted Gross Sales for Target Product;

(b)           Net Sales for  Target Product;

(c)           the sales-based payments due to Stressgen for the reporting
period;

In the event Roche does not pay to Stressgen any amounts due under this
Agreement within the applicable time period set forth herein, such payment shall
bear interest, to the extent permitted by applicable law, at [* * *] calculated
on the number of days such a payment is overdue.

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

19

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5.3          Taxes.

(a)           Stressgen or SBC, as the case may be, shall pay all applicable
taxes levied on account of payments accruing or made to Stressgen under this
Agreement.

(b)           If provision is made in law or regulation of any country for
withholding of taxes of any type, levies or other charges with respect to any
amounts payable under this Agreement to Stressgen, Roche shall promptly pay such
tax, levy or charge for and on behalf of Stressgen to the proper governmental
authority, and shall promptly furnish Stressgen with receipt of such payment. 
Roche shall have the right to deduct any such tax, levy or charge actually paid
from payment due Stressgen or be promptly reimbursed by Stressgen if no further
payments are due Stressgen.  Each Party agrees to assist the other Party in
claiming exemption from such deductions or withholdings under double taxation or
similar agreement or treaty from time to time in force and in minimizing the
amount required to be so withheld or deducted.

5.4          Blocked Countries.  If by reason of law Roche is unable to convert
to U.S. dollars a portion of the amount due by Roche under this Agreement, then
Roche shall notify Stressgen in writing and Stressgen shall have the right to
receive such portion and, upon written request from Stressgen, Roche shall pay
to Stressgen such portion, in the currency of any other country designated by
Stressgen and legally available to Roche.

5.5          Accounting.

                (a)           Roche shall maintain and cause its Affiliates and
sublicensees to maintain books of account containing all particulars that may be
necessary for the purpose of calculating all payments under this Agreement. 
Such books of account shall be kept at their principal place of business.
Stressgen shall have the right to engage Roche’s independent, certified public
accountant to perform, on behalf of Stressgen, an audit, conducted in accordance
with International Accounting Standards (“IAS”), of such books and records of
Roche and its Affiliates and sublicensees as is necessary to

 

 

 

20

--------------------------------------------------------------------------------

 

 

confirm any amounts payable to Stressgen under this Agreement for the period or
periods requested by Stressgen and the correctness of any report or payments
made under this Agreement.

 

(b)           Such audits shall be conducted during normal business hours upon
reasonable prior written notice from Stressgen (minimum of thirty (30) days) in
such a manner as to not unnecessarily interfere with Roche’s normal business
activities, and shall include results of no more than [* * *] preceding calendar
years prior to audit notification.  Stressgen shall have a right to request from
the independent certified public accountant full access to review all work
papers and supporting documents pertinent to such audit.

(c)           Such audit shall not occur more frequently than once per calendar
year nor more frequently than once with respect to records covering any specific
period of time.  Notwithstanding the preceding, if Stressgen reasonably
believes, after reviewing information received from Roche’s independent public
accountant, that an additional audit is appropriate to address an apparent
discrepancy between Roche’s returns and other information as is necessary for
reporting hereunder, Stressgen shall have the right, by an audit specialty firm
acceptable to Roche, employed by Stressgen and at Stressgen’s own expense, to
perform such necessary audit procedures.

(d)           The use of all information, data, documents and abstracts referred
above shall be for the sole purpose of verifying  statements or compliance with
this Agreement, shall be treated as Roche Confidential Information subject to
the obligations of this Agreement and, except in the event of a dispute between
the Parties regarding amounts payable hereunder or the results of any audit,
need not be retained more than [* * *] from the end of the calendar year to
which each shall pertain.  Audit results shall be shared by Roche and Stressgen.

(e)           If any audit hereunder reveals an underpayment, Roche shall
promptly make up such underpayment, and if such underpayment is more than [* *
*], together with accrued interest calculated in accordance with Section 5.2. 
Stressgen shall bear the full cost of any audit under this Section 5.5, unless
such audit discloses

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

21

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an underpayment by Roche of more than [* * *] of the amount owed hereunder, in
which case Roche shall bear the full cost of such audit as performed by Roche’s
independent, certified public accountant, and/or such independent audit firm as
may be used pursuant to Subsection (c) above.

 

(f)            The failure of Stressgen to request verification of any payment
calculation during which corresponding records are required to be retained under
this Section 5.5 shall be considered acceptance of such reporting by Stressgen.

ARTICLE 6

COLLABORATION GOVERNANCE

6.1          Steering Committee.  In furtherance of their collaboration, the
Parties shall establish a Steering Committee of three (3) representatives from
each Party.  Each Party shall within thirty (30) days after the Execution Date
select its initial representatives and set a date shortly thereafter for the
first meeting of such Steering Committee.  Each Party may replace its
representatives at any time on prior written notice to the other Party.  The
Chairperson of the Steering Committee shall alternate between the Parties on
annual calendar year (January 1 — December 31) basis, with the first chairperson
being from Roche and having a term running until December 31, 2002.  The
Chairperson shall be responsible for providing an agenda for each meeting at
least ten (10) days in advance of such meeting.  The Party not chairing the
Steering Committee shall prepare written draft minutes of all meetings in
reasonable detail and distribute such draft minutes to all members of the
Steering Committee for comment and review within twenty (20) days after the
relevant meeting.  The Steering Committee members shall have ten (10) days to
provide comments.  The Party preparing the minutes shall incorporate timely
received comments and distribute finalized minutes to all members of the
Steering Committee within thirty (30) days of the relevant meeting.

6.2          Joint Development Committee.  In addition, in order to coordinate
the activities of the Parties in the development for commercialization of the
Target Product, the Parties shall establish a Joint Development Committee
(“JDC”).  The JDC will consist of three (3) representatives from each Party. 
Each Party shall within thirty (30)

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

22

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days after the Execution Date select its initial representative(s) and set a
date shortly thereafter for the first meeting of such JDC.  Each Party may
replace its representative(s) at any time on prior written notice to the other
Party.  The Chairperson of the JDC shall alternate between the Parties on annual
calendar year (January 1 — December 31) basis, with the first chairperson being
from Stressgen and having a term running until December 31, 2002.  The
Chairperson shall be responsible for providing an agenda for each meeting at
least five (5) days in advance of such meeting.  The Party not chairing the JDC
shall prepare written draft minutes of all meetings in reasonable detail and
distribute such draft minutes to all members of the JDC for comment and review
within ten (10) days after the relevant meeting.  The JDC members shall have ten
(10) days to provide comments.  The Party preparing the minutes shall
incorporate timely received comments and distribute finalized minutes to all
members of the JDC and the Steering Committee within thirty (30) days of the
relevant meeting.

 

6.3          Finance Subcommittee.  Each Party shall also appoint a
representative with expertise in financial accounting, cost allocation,
budgeting and financial reporting (“Finance Subcommittee”) to work under the
direction of the Steering Committee and provide services and consult with the
Steering Committee addressing financial, budgetary and accounting issues that
arise in connection with the collaboration hereunder, in particular with respect
to the Development Plan.

6.4          Manufacturing Transition Team.  Each Party shall also appoint
representatives with expertise in pharmaceutical manufacturing (“Manufacturing
Transition Team”) to work under the direction of the JDC and coordinate
transition of the Manufacturing Transfer Package to Roche.

6.5          Meetings and Responsibilities of the Steering Committee.  The
Steering Committee shall meet at least two (2) times per year during the Term,
with at least one (1) meeting during each year in person (the location of each
meeting in person to alternate between the offices of each Party), for so long
as the Development Plan contemplates clinical development of Target Product in
the Territory for the purpose of obtaining, expanding or maintaining Regulatory
Approval in a country of the

 

 

 

23

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Territory and continuing until completion of all commercial launches of the
Target Product in the Territory.  The Steering Committee shall have the
authority to determine  the following:

(a)           decide upon updates and modifications to the Development Plan, as
necessary;

(b)           decide upon budget issues, including addressing significant
variances from the approved annual budget and assessing actual costs incurred to
date vs. budget;

(c)           decide upon strategy with respect to each clinical and regulatory
issue related to Target Product in any country of the Territory;

(d)           decide upon a plan for each clinical trial program for Target
Product prior to the start of any such clinical trial, subject to Section 7.3;

(e)           as necessary, decide to allow permission for a Third Party
clinical investigator to conduct proof of concept clinical trials for Target
Product not called for under the Development Plan, including for additional
indications for Target Product not then currently under the Development Plan;

(f)            decide upon standards for calculating, accounting for and
auditing Development Costs, and Stressgen RRP Development Costs;

(g)           if necessary, decide whether to use Stressgen as a secondary
source of supply;

(h)           resolve any matters discussed and not agreed upon at the JDC; and

(i)            perform such other functions as the Parties may agree in writing.

6.6          Meetings and Responsibilities of the JDC.  The JDC shall
communicate frequently and outside formal meetings.  The JDC will meet in person
at least two (2)

 

24

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times per year during the Term, for so long as the Development Plan contemplates
clinical development of Target Product in the Territory for the purpose of
obtaining, expanding or maintaining Regulatory Approval in a country of the
Territory.  The location of the in-person meetings shall alternate between the
offices of each Party.  At each meeting, the JDC shall discuss and make
recommendations to the Steering Committee, and/or if indicated below, determine
or approve, the following, among other matters:

(a)           clinical development endpoints, including deciding upon a clinical
development endpoint for identification and validation of a pharmacodynamic
marker;

(b)           managing of clinical and regulatory activities;

(c)           managing CMC activities;

(d)           allocation of clinical supply for clinical trials across the
Territory;

(e)           direct the Manufacturing Transition Team and coordinate transition
of the Manufacturing Transfer Package;

(f)            possible updates or modifications to the Development Plan,
including review of the initial Development Plan;

(g)           review of possible Inventions made in the conduct of the
Development Plan;

(h)           provide input to, analyze the progress of, and otherwise approve
the continuation of, the Other Stressgen Development Activities (as defined in
Section 7.3(d);

(i)            determining whether, and when to include any of the Other
Stressgen Development Activities in the Development Plan, as necessary;

 

 

25

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(j)            approving Third Parties proposed to perform Development
Activities for RRP;

(k)           with respect to the Other Stressgen Development Activities,
defining procedures to ensure required reporting of any adverse events from
these trials;

(l)            as necessary, consider and request Stressgen to conduct Roche
Development Activities; and

(m)          performance of such functions as the Parties agree in writing are
appropriate for the JDC to perform.

6.7          Decisions.

(a)           Unanimous Decisions.  All decisions made by the JDC and the
Steering Committee must be by unanimous vote, with each Party’s representatives
collectively having one vote.

(b)           JDC Disputes.  If a dispute or issue arises regarding any matter
for which the JDC has the right to make a decision, and such matter is not
resolved within ten (10) days, the JDC shall submit such dispute or issue for
resolution to the Steering Committee.

(c)           Steering Committee Disputes.  If a dispute or issue arises
regarding any matter for which the Steering Committee has the right to make a
decision, and such matter is not resolved within thirty (30) days by the
Steering Committee, it shall submit the dispute or issue for resolution by the
Executive Officers.  The Executive Officers shall have a period of thirty (30)
days from submission to resolve the dispute or issue.

(d)           Final Decision Making Authority.  If the Executive Officers are
unable to resolve the dispute or issue within the thirty (30) day period, then
final decision regarding the dispute or issue shall [* * *].

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

26

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ARTICLE 7

DEVELOPMENT PLAN AND CONDUCT OF DEVELOPMENT ACTIVITIES

 

7.1          Development Plan.  The Parties have held initial discussions with
respect to and preliminarily agreed upon an initial Development Plan.  Only the
Steering Committee shall have the right to modify the Development Plan
(including work and timelines), as described below.  The Parties anticipate that
promptly following the Execution Date and the formation of the JDC and the
Steering Committee, the JDC shall review the initial Development Plan in detail
and propose appropriate revisions thereto for adoption by and approval of the
Steering Committee.  The Development Plan shall govern all development of Target
Products in the Territory, except as provided in Section 7.3(d).

7.2          Goals of Development.  The Parties hereby acknowledge and agree
that goals for development of Target Products hereunder will be to obtain
Regulatory Approval for (i) the treatment of [* * *] (ii) such [* * *][* * *],
(iii) other
[* * *], and (iv) Target Products for the treatment of [* * *].

7.3          Conduct and Funding of Development Activities.

(a)           Roche Obligations.  Subject to Sections 7.3(c) and 7.3(d),
commencing on the Effective Date, Roche will conduct all Development Activities
(the “Roche Development Activities”).  To the extent Roche wishes to use a Third
Party to conduct any such Development Activity, the JDC shall first consider
Stressgen to perform such Activity.

(b)           Development Costs.  To the extent Roche conducts Development
Activities by itself or using a Third Party, Roche shall bear all costs
associated with the Roche Development Activities.  In addition, Roche shall
reimburse Stressgen Stressgen’s Development Costs, on a quarterly basis, within
thirty (30) days of receipt of invoice from Stressgen.  Such invoice shall
include reasonable documentation which itemizes and explains the Development
Costs incurred by Stressgen.  Any undisputed amount which is not paid by such
thirty (30) days from receipt of invoice shall bear

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

27

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interest, to the extent permitted by applicable law, at [* * *], calculated on
the number of days such a payment is overdue.

(c)           RRP Indication.  Stressgen will conduct Development Activities
related to RRP which are other than preparation and submission of regulatory
dossiers.  Stressgen shall bear all Stressgen RRP Development Costs  up to a
maximum of [* * *].  To the extent Stressgen RRP Development Costs exceed [* *
*], the Parties must agree in writing for a plan for sharing the excess costs
associated with such Development Activities or such Development Activities shall
cease.  Roche shall be responsible for the preparation and submission of
regulatory dossiers with respect to RRP and shall bear all associated costs. 
Stressgen shall not be responsible for reimbursement to Roche of any costs
incurred in connection with the development of RRP, including any activities
with respect to clinical, regulatory or other development activities.  The
Finance Subcommittee shall recommend for adoption by the Steering Committee
standards with respect to accounting for and auditing such Stressgen RRP
Development Costs, with the proviso that such standards shall be easily
implemented within the constraints of Stressgen’s reporting and accounting
system.

(d)           Other Stressgen Development Activities.  The Parties agree and
acknowledge that, as of the Execution Date, (i) Stressgen or its Affiliate is a
party to the NCI Agreements under which Stressgen has agreed to supply National
Cancer Institute (NCI) clinical grade HspE7 materials for clinical trials for [*
* *] to be sponsored and conducted by NCI, provided the trials conducted by NCI
are pursuant to protocols approved by Stressgen; (ii) Stressgen has granted
permission to a Third Party clinical investigator, as set forth on Exhibit B, to
conduct clinical trials for cervical dysplasia, and (iii) Stressgen is in the
process of itself conducting, and subject to JDC approval (such approval not to
be unreasonably withheld in the event such decision escalates to Roche for final
decision), shall have the right to continue to conduct, clinical trails related
to [* * *] specifically set forth on Exhibit B (collectively, the “Other
Stressgen Development Activities”).  For such activities, which are not part of
the Development Plan and so not a Development Activity, Stressgen shall be
responsible for all associated costs, including costs associated with the
conduct of clinical trials and

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

28

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as per Article 9, for the supply of clinical grade Target Product necessary
therefor in connection with such Other Stressgen Development Costs.  If the JDC
decides to include one or more of such Other Stressgen Development Activities in
the Development Plan, then (i) thereafter they shall be deemed to be Roche
Development Activities and funded entirely by Roche and (ii) Roche shall
reimburse Stressgen all of Stressgen’s costs associated with the Other Stressgen
Development Activities to the extent such activity occurred after the Execution
Date.  Stressgen shall have the right, at any time following the Execution Date,
to terminate any or all of the Other Stressgen Development Activities, without
the approval or consent of Roche.  Pursuant to the NCI Agreements or otherwise,
there is no obligation on the part of Stressgen to use the data resulting from
any clinical trial conducted thereunder in support of a BLA Filing.

 

(e)           Use of Third Parties.  Subject to JDC approval, Stressgen shall
have the right to use, Third Parties to provide or perform Development
Activities for RRP.  Payments to such Third Parties shall be included in the
Stressgen RRP Development Costs.  Stressgen shall remain liable for the
performance of its obligations hereunder which it delegates to any such Third
Party provider.

(f)            Accounting Disputes.  Any accounting disputes arising between the
parties with respect to Development Costs shall be submitted to the Finance
Subcommittee for resolution.  In the event the Finance Subcommittee cannot
resolve such matter in thirty (30) days, it shall be referred to the Steering
Committee.

7.4          Standards of Conduct.  Each Party or its third party contractors
shall perform the Development Activities for which it is responsible under the
Development Plan in good scientific manner and in compliance with applicable
laws, rules and regulations.  At each JDC meeting, each Party will keep the JDC
fully informed regarding the progress and results of such Party’s development
activities with respect to Target Products in the Territory.

7.5          Diligent Development.  Roche shall use Diligent Efforts to achieve
the goals set forth in Section 7.2.  Each of the Parties agrees to cooperate
with the other in carrying out the Development Plan.

 

 

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7.6          Development Limitations.  Except for any trials conducted pursuant
to the NCI Agreement or the independent investigator referenced in Section
7.3(d), neither Party may conduct or have conducted on its behalf, or enable any
Third Party to conduct, any clinical activities for Target Product not approved
under the Development Plan or by the JDC.  Notwithstanding the preceding,
(a) the Steering Committee shall have the right to decide to allow permission
for any other Third Party clinical investigator to conduct proof of concept
clinical trials for Target Product not called for under the Development Plan,
including for additional indications for Target Product not under the
Development Plan, (b) Roche shall have the right to, for a given country,
conduct or have conducted on its behalf post Regulatory Approval clinical
studies for a Target Product for an indication that was the subject of
Regulatory Approval in such country, provided such studies are other than to
obtain, expand and/or maintain Regulatory Approval of such indication in such
country for the Target Product, and (c) Stressgen shall have the right to
conduct or have conducted Other Stressgen Development Activities.

7.7          Updating the Development Plan.  The Steering Committee may decide
to update the Development Plan on a rolling basis whenever needed if changes in
the Development Plan so require such update.  In any event, on an annual basis
by October 15 of each year until the date when the Steering Committee no longer
intends to develop Target Product in the Territory,  the Steering Committee
shall confirm or change the Development Plan.  Any proposed change shall
include, for the appropriate time period as determined by the Steering
Committee, a plan of development activities, their associated budget, and
timelines for performing such development activities.

ARTICLE 8

DEVELOPMENT — REGULATORY AND SAFETY

8.1          Assignment of INDs, Other Documentation to Roche.  Promptly
following the Effective Date, Stressgen shall provide Roche with copies of all
correspondence with the regulatory agencies regarding Target Products.  Within
thirty (30) days after the Effective Date, Stressgen shall transfer and assign
to Roche all INDs

 

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in its possession and control with respect to Target Product.  In addition,
Stressgen shall transfer and assign to Roche any drug master files or other
regulatory dossiers containing information necessary or useful to Roche in
connection with its regulatory filings for Target Product, within thirty (30)
days after the Effective Date.  Stressgen shall provide Roche with all
historical adverse event reports on the Target Product at the time of IND
transfer.

8.2          Responsibility for Regulatory Affairs.  From and after the date of
transfer of the INDs to Roche, and consistent with the Development Plan, Roche
shall be responsible for all regulatory affairs in the Territory related to
Target Product, including the preparation and filing of applications for
Regulatory Approval, as well as any or all governmental approvals required to
manufacture, or have manufactured, Target Product.  Roche shall file all such
applications in its own name, or that of its Affiliate.  Roche and shall provide
a copy of any BLA filing for RRP in the US for a Target Product to Stressgen for
its comment prior to filing with the FDA.  In addition, Roche shall provide to
Stressgen reasonable written notice of all meetings and conference telephone
calls with the FDA related to Target Products for the United States and for RRP
Stressgen shall have a right have one person attend as a silent observer.  Roche
shall provide to Stressgen copies of all correspondence and final filings
(including, without limitation, IND filings and BLA Filings) related to Target
Product with regulatory authorities in all countries of the Territory promptly
(and in any event within thirty (30) days) following receipt or filing, as
applicable.

                8.3          Drug Safety.  Roche shall be responsible for
reporting, at its expense, to appropriate authorities in accordance with local
requirements all adverse events related to use of Target Product worldwide,
except that prior to Stressgen transferring ownership of IND(s) to Roche
pursuant to Section 8.1, Stressgen shall be responsible for the reporting of
such adverse events, at Stressgen’s expense.  Adverse events related to the use
of Target Product worldwide shall be in a single database, centralized, held and
owned by Roche.  The Parties shall develop procedures by which the Parties shall
have coordinated efforts to assure proper reporting of all adverse events.  With
respect to the Other Stressgen Development Activities, the JDC shall

 

 

 

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promptly define procedures to ensure required reporting of any adverse events
from these trials.

 

8.4          Product Withdrawals.  In the event that any regulatory agency in
the Territory threatens or initiates any action to remove a Target Product from
the market, Roche shall promptly notify Stressgen in writing of receipt of such
notice by Roche.

8.5          Mutual Covenants.  Each Party covenants the following:

(a)           That it shall comply in all material respects with all federal,
state, provincial, territorial, governmental and local laws, rules and
regulations applicable to the development, manufacture and commercialization of
Target Product by such Party.

(b)           That it shall disclose immediately to the other Party all
information in its possession or control and as to which it becomes aware
concerning side effects, injury, toxicity or sensitivity reaction and incidents
or severity thereof with respect to Target Product.

ARTICLE 9

MANUFACTURE AND SUPPLY

9.1          [* * *] Transition to New Manufacturing Process. Roche understands
and acknowledges that as of the Execution Date, pursuant to an agreement with
Stressgen, [* * *] manufacturer for clinical supplies of Target Product.  In
addition, the Parties understand and acknowledge that, as of the Execution Date,
Stressgen is in the process of transitioning the manufacture of clinical grade
Target Product from an earlier process (“Process A”) to a newer process
(“Process B”), working in conjunction with [* * *].  As used in this Article 9,
clinical grade Target Product manufactured using Process A shall be referred to
as the “Process A Target Product,” and clinical grade Target Product
manufactured using Process B (or any subsequent process or variant thereof)
shall be referred to as “Process B Target Product.”

9.2          Clinical Supplies of Process B Target Product. Roche shall supply
in finished form all clinical supply of Process B Target Product and placebo to
be used in the Territory during the Term, either by itself, or through a Third
Party.  Stressgen shall

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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maintain in full force and effect all agreements and relationships with [* * *]
and any other Third Party necessary to ensure that Roche has uninterrupted
access to clinical supply, under terms no less favorable than in existence as of
the Execution Date, prior to and during any manufacturing transition.

Stressgen shall use Diligent Efforts to provide, and shall, to the extent within
its control, cause [* * *] to Roche or its designee, the Manufacturing Transfer
Package [* * *].  Stressgen shall cooperate with Roche at Roche’s cost for
reasonable out-of-pocket expenses incurred by Stressgen with respect to
implementing the necessary transfer of manufacturing know how to Roche.

9.3          Clinical Supplies of Process A Target Product for Use in RRP and
the Other Stressgen Development Activities.  To the extent it has not already
done so as of the Execution Date, Stressgen shall be responsible for obtaining
all of its requirements for clinical supply of Process A Target Product, and
placebo, in finished form to be used in the Territory during the Term, either by
itself, or through a Third Party, for RRP as well as the Other Stressgen
Development Activities. Costs incurred by Stressgen for clinical supply of
Process A Target Product and placebo for use in RRP clinical trials shall be
included within Stressgen RRP Development Costs.

9.4          Clinical Supplies of Process B Target Product for Use in RRP and
the Other Stressgen Development Activities.

(a)           Roche shall use Diligent Efforts to supply, either by itself or
through a Third Party, Stressgen all Process B Target Product and placebo
requested by Stressgen for Development Activities related to RRP and Other
Stressgen Development Activities, in the form and formulation specified by
Stressgen.  Notwithstanding the above, Roche shall have no obligation to supply
to Stressgen (i) [* * *], (ii) a number of units of placebo in excess of the
units of Target Product supplied by Roche, or (iii) any form or formulation of
Process B Target Product that Roche is not otherwise manufacturing for the Roche
Development Activities.  In the event Stressgen requests Target Product in a
form or formulation that Roche is not otherwise manufacturing for

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

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the Roche Development Activities, Roche shall be obligated to supply to
Stressgen only [* * *].

(b)           Promptly after the Effective Date, Roche and Stressgen shall agree
in writing on (i) the amount of Target Product and placebo to be supplied by
Roche to Stressgen for the first year after the Effective Date, which amounts
Stressgen shall receive as soon as practicable but in any event not later than a
mutually agreed upon period after the Effective Date, and (ii) procedures for
Stressgen submitting its requirements and Roche supplying Process B Target
Product and placebo thereafter.  Such procedures shall include Stressgen
providing (a) annual non-binding [* * *] forecasts of its requirements and (b)
firm purchase commitments no less than [* * *] prior to the time the order must
be delivered to Stressgen by or on behalf of Roche.

(c)           Amounts paid by Stressgen to Roche for clinical supply of Process
B Target Product and placebo for use in RRP clinical trials shall be included
within Stressgen RRP Development Costs.

9.5          Commercial Supply.

(a)           Roche’s Rights to Supply.  Roche shall be solely and exclusively
responsible at its own expense for the manufacture and supply of Target Product
for sale in the Territory, either by itself or through Third Parties.  Roche
agrees and acknowledges that its rights to supply Target Product for sale in the
U.S. are subject to Section 2.2 of the MIT Agreement.  If Roche decides to
engage one or more secondary suppliers to ensure there are multiple, stable
sources of Target Product for sale in the Territory, then Roche shall notify
Stressgen in writing and Stressgen shall have a right to present itself as a
potential secondary source of commercial supply of Target Product.  In such
event, the decision of whether to use Stressgen as a secondary source of supply
shall rest with the Steering Committee.

(b)           Manufacturing License Grant.  Subject to the terms of this
Agreement, and in order to effectuate Roche’s grant of rights to be the primary
supplier of Target Product for commercial sale in the Territory (a) [* * *]; and
(b) [* * *].  Roche

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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agrees and understands that the license set forth above, to the extent it
contains within it a sublicense under the MIT Agreement, shall terminate as
provided in Article 16, but in no event shall the term thereof extend beyond the
term of the MIT Agreement.  Such acknowledgement is subject to the terms and
conditions of this Agreement, in particular Articles 15 and 17.  The rights and
licenses granted to Roche under this Section shall include the right to grant [*
* *] to its Affiliates and Third Parties under such rights and licenses, in
whole or in part.  If Roche grants such a [* * *], Roche shall ensure that all
of the applicable terms and conditions of this Agreement shall apply to the
Affiliate or Third Party [* * *] to the same extent as they apply to Roche for
all purposes.  Roche assumes full responsibility for the performance of all
obligations so imposed on such Affiliate or Third Party [* * *] and will itself
account to Stressgen for all payments due under this Agreement by reason of such
[* * *].  Any [* * *] granted under this Section 9.5(b) by Roche shall terminate
upon the early termination of this Agreement, and will revert to non-exclusive
upon expiration of the Term.

The foregoing rights are subject to the limited retained rights of Stressgen to
make, or have made, Process A Target Product for its use in clinical trials as
provided in Section 9.3.

9.6          Packaging.  To the extent in compliance with legal and commercial
requirements on a country-by-country basis, Roche agrees that the packaging of
all Target Products sold by Roche, its Affiliates or sublicensees shall identify
Stressgen as licensor in a manner approved in advance in writing by Stressgen. 
From time to time, Stressgen shall provide to Roche in writing the form and
manner in which Stressgen approves of the use of Stressgen’s name in connection
with, or in relation to any such packaging.

ARTICLE 10

COMMERCIALIZATION

10.1        Responsibilities of Roche.  Except as expressly set forth in this
Article 10, Roche, at its own expense, shall have sole responsibility and
decision making authority for the marketing, promotion, sale and distribution of
Target Product in the

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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 Territory, including post-registration clinical and marketing studies which are
not conducted in order to obtain, expand and/or maintain Regulatory Approval of
a Target Product in the Territory.

10.2        Diligent Efforts by Roche; Reporting.  During the Term, upon written
request of Stressgen not to exceed once per year, Roche will fully inform
Stressgen regarding the commercialization of Target Products in the Territory by
Roche, its Affiliates and sublicensees.  Roche, directly or through its
Affiliates and/or sublicensees, shall use Diligent Efforts to pursue the
commercialization of Target Products throughout the Territory.  If Stressgen
believes in good faith that Roche has failed to utilize Diligent Efforts with
respect to commercialization of Target Product, then Stressgen may give Roche
written notice of such alleged failure, identifying the countries at issue and
specific detailed reasons of such allegation.  Stressgen recognizes that Roche
does seek to market its products in all countries of the Territory, and may not
seek to commercialize Target Product in every country of the Territory.  Within
[* * *] days following Roche’s receipt of any such notice from Stressgen, Roche
shall have the right to  provide Stressgen with a written response specifying,
in reasonable detail, how it is using or has begun to use such Diligent Efforts.

If Roche does not provide a written response which demonstrates, in reasonable
detail, how it has complied with its obligation to use Diligent Efforts within
[* * *] days after the receipt of such notice, then, effective upon the
expiration of such [* * *] day period, Stressgen shall have the right to
terminate this Agreement for the country(ies) at issue upon written notice to
Roche; provided, however, that in the event of a dispute between the Parties
with respect to whether Roche has failed to utilize Diligent Efforts with
respect to commercialization of Target Product in a country, then such dispute
shall be resolved in accordance with Article 18.  The consequences of any
termination pursuant to this Article 10 shall be as set forth in Section 16.4.

10.3        Co-Promotion by Stressgen.  Stressgen shall have the right to
co-promote Target Products in the U.S. (to be more fully described in a written
co-promotion plan to be agreed upon by the Parties reasonably in advance of the

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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anticipated launch of the first Target Product in the U.S.) as follows: (a)
detailing of Target Products to [* * *] using approximately   [* * *] Stressgen
sales representative FTEs; and (b) if Roche wishes to seek a partner to detail
Target Product to [* * *], then detailing of Target Products to [* * *] using
approximately [* * *] Stressgen sales representative FTEs.  Stressgen shall be
responsible for the training and compensation of all such Stressgen FTEs devoted
to promoting Target Products, and Roche shall [* * *].

10.4        Roche Competitive Products.  In the event that Roche, at any time
during the term of this Agreement, acquires rights, whether by reason of its own
effort or under license from a Third Party, to a Roche Competitive Product (as
defined below), then such Roche Competitive Product shall be [* * *].  As used
in this Section 10.4, “Roche Competitive Product” shall mean (a)  [* * *]
whether or not such product is owned by or licensed to Roche or (b)  [* * *]. 
In the event Roche terminates this Agreement pursuant to Section 16.4 and by the
end of [* * *] following the effective date of such termination, any such Roche
Competitive Product is [* * *]: (i) [* * *]; (ii) [* * *]; and (iii) [* * *]. 
After the [* * *] of such effective date of termination, Roche would no longer
be obligated to [* * *] under this Section 10.4.

ARTICLE 11

TRADEMARKS

11.1        Trademarks.  Roche shall own worldwide all trademarks on and in
connection with Target Products (excluding trade names of Stressgen used on and
in connection with Target Products), and shall, at its cost, be responsible for
procurement, maintenance and enforcement of all worldwide trademarks
registration on and in connection with Target Products.

ARTICLE 12

OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

                12.1        Ownership of Intellectual Property.  As between the
Parties, Stressgen shall own all Stressgen Inventions, Roche shall own all Roche
Inventions,

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

 

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 and Stressgen and Roche shall jointly own all Joint Inventions. Except to the
extent any Joint Invention is exclusively licensed by one Party to the other
Party hereunder, each Party shall have the right to practice Joint Inventions,
and to grant licenses to Affiliates and Third Parties under Patents claiming
Joint Inventions, without the other party’s consent and without any duty to
account to the other Party with respect thereto.  Each Party shall require all
of its employees to assign all inventions related to Target Products made by
them to such Party.

 

12.2        Patent Prosecution and Maintenance.

(a)           Base Patents.  To the extent any Base Patents or other Stressgen
Patent Rights are licensed to Stressgen under the MIT Agreement (collectively,
“MIT Patents”), the provisions of this Section 12.2 shall be subject to all
applicable terms and conditions of the MIT Agreement, and this Section 12.2
shall in no event be construed to confer on Roche any right with respect to the
Handling (as defined below) of any such MIT Patents.  Stressgen shall prepare,
file, prosecute (including interference and opposition proceedings) and maintain
(including interferences, re-examination and opposition proceedings)
(collectively, “Handle”) the Base Patents (excluding any MIT Patents), at
Stressgen’s expense.

Stressgen shall use reasonable efforts to consult with Roche as to the Handling
of all Base Patents in sufficient time (for example 30 days for instances where
actions are due within 3 months of a communication from a Patent Office) before
any action is due to allow Roche to provide comments thereon, which comments
Stressgen must reasonably consider if provided to Stressgen at least thirty (30)
days before such action is due.  Should Stressgen decide that it does not desire
to Handle a Target Product-Specific Base Patent in a given country, it shall
advise Roche thereof no less than sixty (60) days prior to the date when the
Target Product-Specific Base Patent would become abandoned in such country.  At
the written request of Roche, Stressgen shall then, at no cost to Stressgen,
assign to Roche such Target Product-Specific Base Patent in such country, and
Roche may thereafter Handle the same in Roche’s name, at Roche’s own cost, to
the extent that Roche desires to do so.  For purposes of clarification, as
between the Parties Stressgen shall have sole control over, and decision-making

 

 

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authority with respect to, the Handling of Base Patents to the extent the scope
of claims relates to subject matter other than Target Product.

(b)           Stressgen Inventions.

(i)            Priority Applications.  Stressgen promptly will notify Roche in
writing (“Patent Notice”) of any Stressgen Inventions on which Stressgen intends
to file a patent application.

Within sixty (60) days after receipt of the Patent Notice, Roche will notify
Stressgen in writing if Roche has an interest in having a priority patent
application filed.  If Roche timely notifies Stressgen in writing of interest in
having a priority application filed (“Stressgen Invention Priority
Application”), then:

(A)          Roche will reimburse Stressgen for fifty percent (50%) of the
reasonable and documented external costs for preparing, filing and prosecuting
the Stressgen Invention Priority Application and maintaining any resulting
Stressgen Patents within thirty (30) days of invoice by Stressgen;

(B)          Stressgen promptly will prepare and send to Roche a draft of the
Stressgen Invention Priority Application for Roche’s comment and approval; and

(C)          Roche shall confirm receipt of the draft Stressgen Invention
Priority Application and provide its comments on the draft to Stressgen within
thirty (30) days after receipt thereof (“Comment Period”).

After reasonably considering Roche’s comments, Stressgen shall file the
Stressgen Invention Priority Application.  If Roche fails to provide comments on
a draft within the Comment Period, Stressgen shall be free to file the
Application at the end of the Comment Period or later.

If Roche does not timely notify Stressgen in writing of interest in a Stressgen
Invention Priority Application, Stressgen shall be free to file the application
at its sole expense and discretion.

 

 

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(ii)           Corresponding Application in Foreign Countries.  Within six (6)
months after the filing of a Stressgen Invention Priority Application, Stressgen
shall provide Roche a written list of countries (“Country List”) in which
Stressgen intends to file patent applications that claim priority from the given
Stressgen Invention Priority Application.  Roche, as promptly as practicable,
shall notify Stressgen in writing of those countries on the Country List and any
additional countries (“Additional Countries”) where Roche requests that patent
applications be filed.  In turn, Stressgen promptly shall notify Roche if it
agrees with the filing of applications in such Additional Countries selected by
Roche.

Stressgen shall file patent applications at least in those countries where Roche
and Stressgen agree to the filing of patent applications (“Mutually Agreed to
Countries”) as well as in Additional Countries selected by Roche that are not
within the Mutually Agreed to Countries.  Stressgen shall have the option of
filing an international application designating at least the Mutually Agreed to
Countries, to be followed by national filings in the desired countries.

Stressgen shall be responsible for the filing and prosecution of the patent
applications and the maintenance of the granted patents as to the Mutually
Agreed to Countries.  As to the Mutually Agreed to Countries, Roche and
Stressgen each will pay fifty percent (50%) of the reasonable external costs
relating to the preparation, filing and prosecution of the patent applications
and the maintenance of the granted patents.

As to those countries where Roche or Stressgen do not agree to the filing of
patent applications, the Party requesting the filing in said country shall be
responsible for all costs relating to the filing and prosecution of the patent
applications and the maintenance of the granted patents in said countries.

Should Roche not respond to Stressgen within thirty (30) days after the date
Stressgen provides the Country List, then Stressgen shall be free to initiate
patent filings, at Stressgen’s sole expense and discretion, in the countries
Stressgen has selected or still selects.

 

 

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Stressgen’s failure to notify Roche to the contrary within thirty (30) days
after the date upon which Roche notifies Stressgen of the Additional Countries
will be deemed an agreement on the part of Stressgen to file patent applications
in all such Additional Countries and to pay fifty percent (50%) of the
reasonable external costs associated with such filings.

(iii)         Withdrawal of Funding/Lack of Further Interest.  If, in a country,
at any time, Roche decides not to continue funding the prosecution of a patent
application or maintenance of a patent under Subparagraphs (i) or (ii) above,
Roche shall notify Stressgen in writing (“Withdrawal Notice”), and Roche shall
be relieved from paying any further expenses with regard to the patent filing in
the country.  After receiving the Withdrawal Notice, Stressgen may but is not
obligated, at its sole expense and discretion, to continue to prosecute and
maintain the patent filing in the country.

If, in a country, at any time, Stressgen decides not to continue the prosecution
of a patent application or maintenance of a patent under Subparagraphs (i) or
(ii) above, that is Target Product-Specific, and such patent application or
patent is not one as to which Roche has already sent a Withdrawal Notice, then
Stressgen shall notify Roche in writing no less than sixty (60) days prior to
the date when the patent application or patent would become abandoned in such
country.  At Roche’s written request and no cost to Stressgen, Stressgen shall
then assign to Roche such patent application or patent in such country, and
Roche may thereafter continue to prosecute and maintain the patent filing in the
country, at Roche’s own cost and in Roche’s name, to the extent Roche desires to
do so.

(iv)          Copies of Communications with Patent Offices.  For the Mutually
Agreed to Countries and Additional Countries, Stressgen shall consult with Roche
as to the prosecution and maintenance of all patent applications and patents
claiming Stressgen Inventions in sufficient time (for example thirty (30) days
for instances where actions are due within three (3) months of a communication
from a Patent Office) before any action is due to allow Roche to provide
comments thereon, which comments Stressgen must reasonably consider.

 

 

 

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(c)           Joint Inventions.

(i)            Priority Applications.  For Joint Inventions, the Parties shall
agree which Party shall have the right to prepare and file a priority patent
application (“Priority Filing Party”). If both Parties wish to have a priority
application filed (“Joint Invention Priority Application”), then:

(A)          Each Party will pay one half (1/2) of the reasonable external costs
for preparing, filing and prosecuting the Joint Invention Priority Application
and maintaining any resulting patents;

(B)          The Priority Filing Party promptly will prepare and send to the
other Party a draft of the Joint Invention Priority Application for the other
Party’s comment and approval; and

(C)          The other Party shall confirm receipt of the draft Joint Invention
Priority Application and provide its comments to the Priority Filing Party on
the draft within thirty (30) days after receipt thereof (“Comment Period”).

After incorporating the other Party’s reasonable comments, the Priority Filing
Party shall file the Joint Invention Priority Application.  If the other Party
fails to provide comments on a draft within the Comment Period, the Priority
Filing Party shall be free to file the Application at the end of the Comment
Period or later.

If a Party does not have an interest in having a Joint Invention Priority
Application filed, the other Party shall be free to file the application at its
sole expense and discretion.

(ii)           Corresponding Application in Foreign Countries.  Within six (6)
months after the filing of an Joint Invention Priority Application, the Priority
Filing Party shall provide the other Party a written list of countries (“Country
List”) in which the Priority Filing Party intends to file patent applications
that claim priority from the given Joint Invention Priority Application.  The
other Party, as promptly as practicable, shall notify the Priority Filing Party
in writing of those countries on the Country List and

 

 

 

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 any additional countries (“Additional Countries”) where the other Party
requests that patent applications be filed.  In turn, the Priority Filing Party
promptly shall notify the other Party if it agrees with the filing of
applications in such Additional Countries selected by the other Party.

The Priority Filing Party shall file patent applications at least in those
countries where the Parties agree to the filing of patent applications
(“Mutually Agreed to Countries”).

The Priority Filing Party shall be responsible for the filing and prosecution of
the patent applications and the maintenance of the granted patents as to the
Mutually Agreed to Countries.  As to the Mutually Agreed to Countries, each
Party will pay one-half of the reasonable external costs relating to the
preparation, filing and prosecution of the patent applications and the
maintenance of the granted patents.

As to those countries where Roche or Stressgen do not agree to the filing of
patent applications, the Party requesting the filing in said country shall have
right, but not the obligation, in its name to file and prosecute the patent
applications and maintain the granted patents in said countries to the extent it
desires to do so, and shall be responsible for all costs relating to the filing
and prosecution of the patent applications and the maintenance of the granted
patents in said countries.

Should the other Party not respond to the Priority Filing Party within thirty
(30) days after the date the Priority Filing Party provides the Country List,
then the Priority Filing Party shall be free to initiate patent filings, at its
sole expense and discretion, in the countries it has selected or still selects.

The Priority Filing Party’s failure to notify the other Party to the contrary
within thirty (30) days after the date upon which the other Party notifies the
Priority Filing Party of the Additional Countries will be an agreement of the
Priority Filing Party to file patent applications in all such Additional
Countries and to pay one half of the reasonable external costs associated with
such filings.

 

 

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(iii)         Withdrawal of Funding/Lack of Further Interest.  If, in a country,
at any time, a Party decides not to continue funding the prosecution of a patent
application or maintenance of a patent under Subparagraphs (i) or (ii) above or
not to continue the prosecution of a patent application or maintenance of a
patent under Subparagraphs (i) or (ii) above, then such Party shall notify the
other Party in writing no less than sixty (60) days prior to the date when the
patent application or patent would become abandoned in such country (“Withdrawal
Notice”), and such Party shall be relieved from paying any further expenses with
regard to the patent filing in the country.  After receiving the Withdrawal
Notice, the other Party may but is not obligated, at its sole expense and in its
own name, to continue to prosecute and maintain the patent filing in the country
to the extent it desires to do so.

(iv)          Copies of Communications with Patent Offices.  For the Mutually
Agreed to Countries, the Priority Filing Party shall consult with the other
Party as to the prosecution and maintenance of all patent applications and
patents claiming Joint Inventions in sufficient time (for example thirty (30)
days for instances where actions are due within three (3) months of a
communication from a Patent Office) before any action is due to allow the other
Party to provide comments thereon, which comments the Priority Filing Party must
reasonably consider.

(d)           Cooperation.  The Parties agree to cooperate in the preparation,
prosecution and maintenance of all patent applications filed under
Sections 12.2(b) and (c), including obtaining and executing necessary powers of
attorney and assignments by the named inventors, providing relevant technical
reports to the filing Party concerning the invention disclosed in such patent
application, obtaining execution of such other documents which shall be needed
in the filing and prosecution of such patent applications, and, as requested,
updating each other regarding the status of such patent applications.

12.3        Infringement.  Each Party shall promptly provide written notice to
the other Party during the Term of any known infringement or suspected
infringement by a Third Party of any Stressgen Patent Right.

 

 

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Roche shall have the first right to bring and control any action or proceeding
with respect to infringement of any Target Product-Specific Base Patent at its
own expense and by counsel of its own choice, and Stressgen shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice.  If Roche fails to bring any such action or proceeding with
respect to infringement of any such Target Product-Specific Base Patent within
(a) sixty (60) days following the notice of alleged infringement or (b) ten (10)
days before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, Stressgen
shall have the right to bring and control any such action at its own expense and
by counsel of its own choice, and Roche shall have the right, at its own
expense, to be represented in any such action by counsel of its own choice.

Subject in any event to all applicable provisions of the MIT Agreement, as
between the Parties, Stressgen shall have the sole right to bring and control
any action or proceeding with respect to infringement of any Stressgen Patent
Right that is not Target Product-Specific Base Patent at its own expense and by
counsel of its own choice, and, with respect to infringement of any such
Stressgen Patent Right that is likely to have a material adverse effect on any
Target Product being developed or commercialized by Roche, Roche shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice.

A Party that elects to bring and control an infringement action pursuant to this
Section 12.3 shall provide prompt written notice to the other Party of any such
suit commenced or action taken by such Party.

Upon written request, the Party bringing suit or taking action (“Initiating
Party”) shall keep the other Party informed of the status of any such suit or
action and shall provide the other Party with copies of all substantive
documents communications filed in such suit or action.  The Initiating Party
shall have the sole and exclusive right to select counsel for any such suit or
action.

The Initiating Party shall, except as provided below, pay all expenses of the
suit or action, including, without limitation, the Initiating Party’s attorneys’
fees and court

 

 

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costs.  After deducting the Parties’ attorneys fees and court costs in
connection with any such suit or action, any damages, settlement fees or other
consideration received as a result of such suit or action shall belong to the
Initiating Party, except to the extent such damages, settlement fees or other
consideration are attributable to lost profits with respect to Target Products
in the Territory, which shall form part of the Net Sales for determining amounts
due to Stressgen in any calendar year.

If the Initiating Party believes it reasonably necessary, upon written request
to the other Party, the other Party shall join as a party to the suit or action
but shall be under no obligation to participate except to the extent that such
participation is required as the result of its being a named party to the suit
or action.  At the Initiating Party’s written request, the other Party shall
offer reasonable assistance to the Initiating Party at no charge to the
Initiating Party except for reimbursement of reasonable out-of-pocket expenses
incurred by the other Party in rendering such assistance.  The other Party shall
have the right to participate and have its own representation in any such suit
or action at its own expense.

The Initiating Party shall have the right to control settlement; provided,
however, that no settlement shall be entered into without the written consent of
the other Party, not to be unreasonably withheld.

12.4        Patent Notices.  All notices provided under this Article 12 to Roche
shall be given to:

F.Hoffmann-La Roche Ltd

Grenzacherstrasse 124

CH-4070 Basel, Switzerland

Attn: Head, Patent Law

with copies of all notices relating to U.S. cases to:

Hoffmann-La Roche Inc.

340 Kingsland Street

Nutley, New Jersey  07110

Attn: Chief Patent Counsel.

All notices provided under this Article 12 to Stressgen shall be given to:

 

 

 

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Stressgen Biotechnologies, Inc.

10241 Wateridge Circle Drive

Suite C200

San Diego, California  92121

USA

Attn: General Counsel

with copies to:

Stressgen Biotechnologies Corporation

350-4243 Glanford Avenue

Victoria, B.C. V87 4B9

Canada

Attn: Executive Director, Intellectual Property & Licensing

 

ARTICLE 13

CONFIDENTIAL INFORMATION

13.1        Non-Disclosure and Non-Use.  In carrying out rights and obligations
under this Agreement, the Parties will share proprietary information
(“Confidential Information”) with each other.  A Party receiving Confidential
Information under this Agreement (“Recipient”) from the other disclosing Party
(“Discloser”) shall maintain such Confidential Information as follows:

During the Term, the Recipient receives a given item of Confidential
Information, the Recipient agrees:

(a)           not to use such Confidential Information for any purpose other
than in connection with the purpose of carrying out its rights and obligation
under this Agreement;

(b)           to treat such Confidential Information as it would its own
information of the same nature and importance, and in any event, to use no less
than a reasonable degree to care to protect the proprietary nature of such
Confidential Information; and

(c)           to take all reasonable precautions to prevent the disclosure of
such Confidential Information to any non-Affiliate Third Party without the prior
written consent of the Discloser.

 

 

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13.2        Exceptions.  A Recipient shall be relieved of any and all
obligations under Section 13.1 regarding Confidential Information which:

(a)           was known to the Recipient or its Affiliate prior to receipt
hereunder; or

(b)           as demonstrated by the Recipient by competent written proof, is
independently generated by the Recipient or its Affiliate by persons who have
not had access to or knowledge of the Confidential Information disclosed
hereunder; or

(c)           at the time of disclosure by the Discloser to the Recipient, was
generally available to the public, or which after disclosure hereunder becomes
generally available to the public through no fault attributable to the
Recipient; or

(d)           is hereafter made available to the Recipient or its Affiliate for
use and unrestricted disclosure by the Recipient from any Third Party having a
right to do so.

13.3        Authorized Disclosure.  Nothing in this Agreement shall prohibit
disclosure by a Party of Confidential Information to its consultants,
sublicensees, advisors, clinical investigators and contract manufacturer, if
any, but only on a need to know basis for purposes provided for in this
Agreement, provided such disclosure occurs pursuant to a written confidentiality
agreement containing provisions substantially as protective as those of this
Article.

The restrictions set forth in this Article shall not prevent Roche from
disclosing any Confidential Information specifically related to Target Product
to the extent

 

 

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reasonably necessary to promote the marketing of Target Product in a country
upon or after imminent Regulatory Approval of Target Product in the country.

The restrictions set forth in this Article shall not prevent disclosure to the
extent required pursuant to a judicial or governmental order, provided that the
Recipient gives the Discloser sufficient notice to permit the Discloser to seek
a protective order or other similar order with respect to such Confidential
Information.

This Agreement supercedes the Confidentiality Agreement between Roche and SBC
dated February 13, 2001.  All information exchanged thereunder shall be deemed
Confidential Information under this Agreement and shall be subject to this
Article 13.

13.4        Survival.  This Article 13 shall survive any termination or
expiration of this Agreement for a period of
[* * *] years.

ARTICLE 14

PUBLICATION AND PRESS RELEASE

14.1        Publications.

(a)           Each Party agrees that it shall not publish or present the results
of non-clinical studies or clinical trials related to Target Product without the
opportunity for prior review by the other Party.  If a Party (“Publishing
Party”) wishes to publish or present the results of non-clinical studies or
clinical trials related to Target Product, then it shall provide to the other
Party (“Non-Publishing Party”) the opportunity to review any of the Publishing
Party’s proposed abstracts, manuscripts or presentations (including information
to be presented verbally) which relate to Target Product at least ninety (90)
days prior to their intended submission for publication or presentation as the
case may be.  The Publishing Party agrees, upon written request from the
Non-Publishing Party, not to submit such abstract or manuscript for publication
or to make such presentation until the Non-Publishing Party is given up to
thirty (30) days from the date of such written request to seek appropriate
patent protection for any material in such publication or presentation which it
reasonably believes is patentable. The Non-Publishing Party also shall have the
right to require deletion of its Confidential

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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Information that may be in any such proposed publication, prior to such
publication.  In the event that either Party submits any manuscript or other
publication relating to any Target Product, it shall consider and acknowledge
the contributions of the other Party, including, as appropriate, co-authorship.

 

(b)           Notwithstanding the above, Roche shall have the right to publish
or present the results of non-clinical studies or clinical trials related to
Target Product without prior review by Stressgen to the extent reasonably
necessary to promote the use and sale of Target Product in a country upon or
after Regulatory Approval of Target Product in the country.

(c)           Notwithstanding the above, Roche acknowledges and understands that
nothing in this Agreement shall be construed as limiting in any way the rights
of NCI or the US Government or its designee to publish any results of the
clinical trials undertaken by the NCI pursuant to the NCI Agreements.

14.2        Press Release; Public Disclosure of Agreement.  The Parties shall
issue a mutually agreed upon joint press release promptly following the
Execution Date.  Stressgen and Roche will jointly discuss and agree in writing
on any statement to the public regarding this Agreement or any aspect of this
Agreement, subject in each case to disclosure otherwise required by law or
regulation as determined in good faith by each Party.  When a Party elects to
make any such statement it will give the other Party at least five (5) day’s
notice, unless disclosure is required by law, or any listing or trading
agreement concerning its publicly traded securities, in a shorter period of
time, to the other Party to review and comment on such statement. 
Notwithstanding the foregoing, either Party shall have the right to publicly
disclose information regarding this Agreement or the Parties’ activities
hereunder, to the extent such information has already been made publicly
available in a manner consistent with this Section 14.2.

 

ARTICLE 15

REPRESENTATIONS, WARRANTIES AND COVENANTS

15.1        Mutual Representations and Warranties.  Each Party hereby represents
and warrants, that, as of the Execution Date:

 

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(a)           Such Party has the full right and authority to enter into this
Agreement, and that it is not aware of any impediment that would inhibit its
ability to perform its obligations under this Agreement; and

(b)           Such Party has disclosed to the other Party (i) the results of all
preclinical testing and human clinical testing of Target Product in its
possession or control, to the extent same has been requested by the other Party;
and (ii) all information in its possession or control concerning side effects,
injury, toxicity or sensitivity reaction and incidents or severity thereof with
respect to Target Product.

15.2        Stressgen Representations and Warranties.  Stressgen warrants and
represents that:

(a)           During the course of negotiation of this Agreement prior to the
Execution Date, Roche, or representatives of Roche, have had the opportunity to
ask questions of and receive answers from representatives of Stressgen
concerning, and to obtain information, documents, records and books relative to,
Stressgen, its business, HspE7 and Target Products, and Stressgen represents and
warrants that it did not knowingly withhold any material information from Roche
in response to Roche’s inquiries or otherwise in connection with the subject
matter of this Agreement.

(b)           To the best of its knowledge as of the Execution Date, Stressgen
has (i) no knowledge of any patent or patent application owned by or licensed to
any Third Party that claims the making, using, offering for sale, selling or
importing of HspE7, except as disclosed to Roche in response to Roche’s
inquiries and (ii) not received written notice that the manufacture, use, sale,
offer for sale or import of Target Products in the Territory infringes or may
infringe any patent or patent application owned by or licensed to any Third
Party, except as disclosed to Roche in response to Roche’s inquiries.  To the
best of its knowledge as of the Execution Date, Stressgen is not in possession
of information which it reasonably believes could render invalid and/or
unenforceable any claims that are in any of any Base Patent.

 

 

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(c)           To the best of its knowledge, Stressgen and/or SBC, as the case
may be, has the right to grant Roche the rights and licenses described in this
Agreement.

15.3        Roche Representations and Warranties.  Roche represents that during
the course of this transaction and prior to the Execution Date, Roche has had an
opportunity to ask questions of, and to receive answers from, Stressgen and its
representatives, with respect to Stressgen, its business, HspE7 and Target
Products.

15.4        Stressgen Covenants.  Stressgen covenants that it shall promptly
notify Roche of any changes or modifications to the MIT Agreement and shall not
take, cause or approve any action that might adversely affect Roche’s rights as
a sublicensee under the MIT Agreement without prior written consent of Roche,
which consent Roche may withhold for any reason.

15.5        No Other Representations or Warranties.  EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT, THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN
LIEU OF, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY AND ALL REPRESENTATIONS AND
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR
ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.  IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT; provided,
however, that the foregoing shall not be construed to limit either Party’s
indemnification obligations under Article 17.

ARTICLE 16

TERM AND TERMINATION

16.1        Conditions Subsequent.

 

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(a)           The effectiveness of this Agreement and the transaction
contemplated hereunder and under the Equity Agreement shall be subject to and
shall be contingent upon the satisfaction of the following conditions subsequent
to the execution hereof by December 31, 2002 (“Conditions Subsequent”):

(i)            the earlier to occur of (A) approval of the transaction by the
Federal Trade Commission or the appropriate United States anti-trust authorities
or (B) the expiration or termination of all applicable waiting periods, requests
for information (and any extensions thereof) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (“HSR Act”); and

(ii)           the payment of Five Million dollars ($5,000,000) to Stressgen or
its Affiliate under the Equity Agreement and delivery to Roche or its Affiliate
of the Stressgen common stock purchased under the Equity Agreement for such
payment.

(b)           Subject to the terms and conditions of this Agreement, each Party
shall use all reasonable efforts to take, or cause to be taken, all reasonable
actions and to do, or cause to be done, all things necessary and appropriate to
satisfy each of the Conditions Subsequent and to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof.

(c)           Each Party shall cooperate with the other Party in the
preparation, execution and filing of all documents that are required or
permitted to be filed on or before the Effective Date for the purpose of
consummating this transaction, including, without limitation, filings pursuant
to the HSR Act.  Each Party shall bear its own costs with respect to preparing,
executing and filing such documents.

16.2        Term.  The Term of this Agreement shall commence upon the Effective
Date.  Unless this Agreement is terminated sooner as provided in this Article,
this Agreement shall continue in full force and effect until the end of the
Term, at which time all the rights and licenses granted to Roche by Stressgen
under this Agreement for the Target Product shall automatically become
non-exclusive, irrevocable and fully-paid.

 

 

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16.3        Breach.  A Party (“non-breaching party”) shall have the right, in
addition to any other rights and remedies, to terminate this Agreement in the
event the other Party (“breaching party”) is in breach of any of its material
obligations under this Agreement.  The non-breaching party shall provide written
notice to the breaching party, which notice shall identify the breach and the
countries in which the non-breaching party intends to have this Agreement
terminate.  The breaching party shall have a period of sixty (60) days after
such written notice is provided to cure such breach.  If such breach is not
cured within the relevant period, the non-breaching Party shall have the right
to terminate this Agreement.

The waiver by either Party of any breach of any term or condition of this
Agreement shall not be deemed a waiver as to any subsequent or similar breach.

16.4        Termination by Roche Without Cause.  At any time during the Term,
Roche shall have the right to terminate this Agreement in its entirety, or on a
country-by-country and Target Product-by-Target Product basis, at any time by
providing [* * *] prior written notice to Stressgen identifying, as applicable,
the Target Product and countries in which Roche intends to terminate this
Agreement.  The effective date of such termination shall be [* * *] after the
date Roche provides such written notice; provided, however, that Roche shall
have no obligation to pay any Development Event Payments pursuant to Section 3.3
that may be triggered by events occurring during such [* * *] period prior to
the effective date of such termination, where such termination is of the
Agreement in its entirety.  In the event of such termination, Roche shall,
however, continue to be obligated to during the termination notice period to
perform all of its other obligations hereunder, including its obligation to pay
all Development Costs or reimburse Stressgen for same.

16.5        Consequences of Termination.  Upon (a) any termination of this
Agreement in its entirety pursuant to this Article 16, (b) termination of this
Agreement by Roche of this Agreement in its entirety or in a country or in
respect of a Target Product pursuant to Section 16.3, or (c) termination of this
Agreement by Stressgen in a country pursuant to Article 10, all rights and
licenses granted by Stressgen to Roche under this

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

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Agreement (or, as applicable, in the country or with respect to that Target
Product) shall terminate on the effective date of termination.  In the event of
any such termination, the following shall apply:

(a)           Roche shall, upon Stressgen’s written request, assign and transfer
to Stressgen, [* * *].  Stressgen shall, upon such transfer, have the right to
disclose such [ * * *].

(b)           In addition, [* * *].

(c)           Roche shall supply, or cause to be supplied, to Stressgen, upon
Stressgen’s written request,

[* * *].

(d)           Roche shall agree to take such actions and execute such
instruments, agreements and documents as are necessary to affect the foregoing.

16.6        Termination for Failure to Satisfy Conditions Subsequent.  Either
Party may terminate this Agreement in its entirety, upon ten (10) days’ prior
written notice to the other Party if both of the Conditions Subsequent under
Section 16.1 have not been fulfilled by December 31, 2002, in which case upon
termination there shall be no liability or obligations on the part of Stressgen
or Roche or their respective Affiliates, officers, directors or shareholders
except that Article 13 shall survive such termination.  Within thirty (30) days
of any such termination, Stressgen shall pay to Roche any amounts received from
Roche as of such date pursuant to this Agreement, unless otherwise agreed upon
in writing by the Parties.

                16.7        Accrued Rights; Surviving Rights and Obligations. 
Subject to Section 16.7, expiration or termination of this Agreement by a Party,
for any reason, will not relieve either Party of any obligation accruing prior
to such expiration or termination.  Except as set forth below or as expressly
set forth elsewhere in this Agreement, the obligations and rights of the Parties
under the following provisions of this Agreement shall survive expiration or
termination of this Agreement to the extent that the survival of such rights or
obligations are necessary to permit their complete fulfillment or discharge:

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

 

 

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Section 5.5, Article 11, Section 12.1, 12.2 (c), Article 13, Article 16, Article
17,  and Article 18.

 

ARTICLE 17

INDEMNIFICATION

17.1        Indemnification by Stressgen.  Unless otherwise provided herein,
Stressgen agrees to indemnify, hold harmless and defend Roche and its directors,
officers, employees and agents from and against any and all suits, claims,
actions, demands, liabilities, expenses and/or loss, cost of defense (including
without limitation attorneys’ fees, court costs, witness fees, damages,
judgments, fines and amounts paid in settlement) (“Losses”) and any other
amounts Roche becomes legally obligated to pay to a Third Party, including MIT,
because of any claim or claims against it to the extent that such claim or
claims arise out of (a) a breach of a representation or warranty or covenant by
Stressgen under Article 15 or (b) the use, development, handling or
commercialization of Target Product by or on behalf of Stressgen, its Affiliates
or agents, but only to the extent such Losses result from (i) any Other
Stressgen Development Activity which has not been included under the Development
Plan as provided in Section 7.3(d); (ii) any co-promotion activity by Stressgen
under Section 10.3, or (iii) the negligence or misconduct or failure to act of
Stressgen, its agents or sublicensees, and do not result from the negligence or
misconduct or failure to act of Roche, its agents or sublicensees.

17.2        Indemnification by Roche.  Unless otherwise provided herein, Roche
shall indemnify, hold harmless and defend Stressgen and its directors, officers,
employees and agents from and against any and all Losses, and any amounts
Stressgen becomes legally obligated to pay to a Third Party, including MIT,
because of any claim or claims against it to the extent that such claim or
claims arise out of (a) a breach of a representation or warranty by Roche under
Article 15 or (b) the use, development, handling, storage, manufacture, sale or
other disposition of Target Product conducted by or on behalf of Roche, its
Affiliates or sublicensees, other than Stressgen, except to the extent such
losses, expenses and costs are due to the negligence or misconduct or failure to
act of Stressgen.

 

 

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17.3        Procedure.  In the event of a claim by a Third Party against a Party
entitled to indemnification under this Agreement (“Indemnified Party”), the
Indemnified Party shall promptly notify the other Party (“Indemnifying Party”)
in writing of the claim and the Indemnifying Party shall undertake and solely
manage and control, at its sole expense, the defense of the claim and its
settlement.  The Indemnified Party shall cooperate with the Indemnifying Party,
including, as requested by the Indemnifying Party entering into a joint defense
agreement.   The Indemnified Party may, at its option and expense, be
represented in any such action or proceeding by counsel of its choice.  The
Indemnifying Party shall not be liable for any litigation costs or expenses
incurred by the Indemnified Party without the Indemnifying Party’s written
consent.  The Indemnifying Party shall not settle any such claim unless such
settlement fully and unconditionally releases the Indemnified Party from all
liability relating thereto, unless the Indemnified Party otherwise agrees in
writing.

17.4        Insurance.  Each Party, at its own expense, shall maintain product
liability insurance in an amount consistent with industry standards during the
Term.  Each Party shall provide fifteen (15) days prior written notice to any
cancellation of its insurance program.

ARTICLE 18

DISPUTE RESOLUTIONS AND GOVERNING LAW

18.1        Disputes.  Unless otherwise set forth in this Agreement, in the
event of a dispute arising under this Agreement between the Parties, the Parties
shall refer such dispute to the respective Executive Officers, and such
Executive Officers shall attempt in good faith to resolve such dispute.

18.2        Arbitration.  If the Parties are unable resolve a given dispute
pursuant to Section 18.1 within sixty (60) days of referring such dispute to the
Executives, either Party may have the given dispute settled by binding
arbitration in the manner described below:

 

 

 

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(a)           Arbitration Request.  If a Party intends to begin an arbitration
to resolve a dispute arising under this Agreement, such Party shall provide
written notice (the “Arbitration Request”) to the other Party of such intention
and the issues for resolution.  From the date of the Arbitration Request and
until such time as the dispute has become finally settled, the running of the
time periods as to which Party must cure a breach of this Agreement becomes
suspended as to the subject matter of the dispute.

(b)           Additional Issues.  Within ten (10) business days after the
receipt of the Arbitration Request, the other Party may, by written notice, add
additional issues for resolution.

(c)           No Arbitration of Patent/Confidentiality Issues.  Unless otherwise
agreed by the Parties, disputes relating to patents and non-disclosure, non-use
and maintenance of Confidential Information shall not be subject to arbitration,
and shall be submitted to a court of competent jurisdiction.

(d)           Arbitration Procedure.  Discovery shall be under the U.S. Federal
Rules of Civil Procedure.  The Arbitration shall be held in the continental U.S.
under the rules of the American Arbitration Association (“AAA”).  The
arbitration shall be conducted by three (3) arbitrators who are knowledgeable in
the subject matter at issue in the dispute.  One (1) arbitrator will be selected
by Stressgen, one (1) arbitrator will be selected by Roche and the third
arbitrator will be selected by mutual agreement of the two (2) arbitrators
selected by the Parties.  The arbitrators may proceed to an award,
notwithstanding the failure of either Party to participate in the proceedings. 
The arbitrators shall, within fifteen (15) calendar days after the conclusion of
the arbitration hearing, issue a written award and statement of decision
describing the essential findings and conclusions on which the award is based,
including the calculation of any damages awarded.  The arbitrators shall be
authorized to award compensatory damages, but shall NOT be authorized to award
non-economic damages or punitive damages, or to reform, modify or materially
change this Agreement or any other agreements contemplated hereunder.  The
arbitrators also shall be authorized to grant any temporary, preliminary or
permanent equitable remedy or relief the arbitrators deem

 

 

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just and equitable and within the scope of this Agreement, including, without
limitation, an injunction or order for specific performance.  The award of the
arbitrators shall be the sole and exclusive remedy of the Parties.  Judgment on
the award rendered by the arbitrators may be enforced in any court having
competent jurisdiction thereof, subject only to revocation on grounds of fraud
or clear bias on the part of the arbitrators.  Notwithstanding anything
contained in this Section 18.6 to the contrary, each Party shall have the right
to institute judicial proceedings against the other Party or anyone acting by,
through or under such other Party, in order to enforce the instituting Party’s
rights hereunder through specific performance, injunction or similar equitable
relief.

Each Party shall bear its own attorneys’ fees, costs, and disbursements arising
out of the arbitration, and shall pay an equal share of the fees and costs of
the arbitrators; provided, however, that the arbitrators shall be authorized to
determine whether a Party is the prevailing Party, and if so, to award to that
prevailing Party reimbursement for its reasonable attorneys’ fees, costs and
disbursements (including, for example, expert witness fees and expenses,
photocopy charges and travel expenses), and/or the fees and costs of the
arbitrators.  Absent the filing of an application to correct or vacate the
arbitration award as permitted by applicable law, each Party shall fully perform
and satisfy the arbitration award within fifteen (15) days of the service of the
award.

By agreeing to this binding arbitration provision, the Parties understand that
they are waiving certain rights and protections which may otherwise be available
if a dispute between the Parties were determined by litigation in court,
including, without limitation, the right to seek or obtain certain types of
damages precluded by this provision, the right to a jury trial, certain rights
of appeal, and a right to invoke formal rules of procedure and evidence.

 

 

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18.3        Governing Law.  The Parties have made this Agreement in accordance
with the laws of [* * *], which laws shall govern this Agreement and under which
laws construction of this Agreement shall occur, without regard to its choice of
law principles.

ARTICLE 19

MISCELLANEOUS

19.1        Agency.  Neither Party is an employee, agent or representative of
the other Party for any purpose.  Each Party is an independent contractor, not
an employee or partner of the other Party.  Neither Party shall have the
authority to speak for, represent or obligate the other Party in any way without
prior written authority from the other Party.

19.2        Entire Agreement.  This Agreement, including all Exhibits, embodies
the entire understanding of the Parties with respect to the subject matter
hereof and supercedes all previous communications, representations or
understandings, and agreements, whether oral or written, between the Parties
relating to the subject matter hereof.

19.3        Amendment.  No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by authorized signing
officers of both Parties expressly stating that it is intended to amend or
modify this Agreement.

19.4        Possible Restructuring of Transaction.  In order to address certain
corporate finance and taxation objectives of either Party, at the request of
either Party [* * *], Roche and Stressgen shall discuss in good faith any
amendment and restatement of this Agreement proposed by a Party in order to
achieve such objectives.  In no event shall any such amendment or restatement in
order to achieve such objectives disadvantage either Party with respect to the
financial arrangement of this Agreement.

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

60

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19.5        Assignment.  This Agreement shall not be assigned or transferred in
part or in whole by any Party without the prior written consent of the other;
provided, however, that either Party, without notice and at any time for any
reason, may assign or transfer this Agreement in whole or in part to (a) any of
its Affiliates who agree to be bound by the terms and conditions of this
Agreement or (b) any successor of such Party as part of consolidation or merger,
corporate reorganization or sale of all or substantially all of its business
assets to which this Agreement relates (provided that intellectual property
rights of the acquiring party to such transaction, if other than one of the
Parties to this Agreement, shall not be included in the technology licensed
hereunder).  In the event of assignment or transfer to an Affiliate, the Party
making the assignment will remain liable and responsible for the performance and
observance of all its duties and obligations hereunder.  The rights and
obligations of the Parties under this Agreement shall be binding upon and inure
to the benefit of the successors and permitted assigns of the Parties.  Any
assignment not in accordance with this Agreement shall be void.

19.6        Notices.  Any notice or other communication under this Agreement,
unless otherwise specified, shall be in writing and provided when delivered to
the addressee at the address listed below (a) on the date of delivery if
delivered in person or (b) three (3) days after mailing to the other Party by
express mail or overnight delivery service, which obtains a signed receipt:

In the case of Stressgen or SBC:

Stressgen Biotechnologies, Inc.

10241 Wateridge Circle Drive

Suite C200

San Diego, California  92121

USA

Attn: General Counsel

With a copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attn: Barbara A. Kosacz, Esq.

 

 

61

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In the case of Roche:

F.Hoffmann-La Roche Ltd

Grenzacherstrasse 124

CH-4070

Basel, Switzerland

Attn:  Corporate Law

and

Hoffmann-La Roche Inc.

340 Kingsland Street

Nutley, New Jersey 07110

Attn: Corporate Secretary

Either Party may change its address for communications by a notice in writing to
the other Party in accordance with this Section.

 

19.7        Force Majeure.  Any prevention, delay or interruption of performance
(collectively “Delay”) by any Party under this Agreement shall not be a breach
of this Agreement if and to the extent caused by occurrences beyond the
reasonable control of the Party affected by the force majeure, including but not
limited to acts of God, embargoes, governmental restrictions, terrorism, strikes
or other concerted acts of workers, fire, flood, earthquake, explosion, riots,
wars, civil disorder, rebellion or sabotage.  The affected Party shall
immediately notify the other Party upon the commencement and end of the Delay. 
During the Delay, any time for performance hereunder by either Party shall
extend by the actual time of Delay. If the Delay resulting from the force
majeure exceeds six (6) months, the other Party, upon written notice to the
affected Party, may elect to (a) treat such Delay as a material breach, or
(b) extend the term of this Agreement for an amount of time equal to the Delay.

19.8        Severability.  If a court of competent jurisdiction holds any term
or condition of this Agreement unenforceable for any reason, interpretation of
such term or condition shall, if possible, achieve the intent of the Parties to
this Agreement.  If not capable of such interpretation, the Parties shall in
good faith seek to agree on an alternative provision reflecting the intent of
the Parties which is enforceable.  In such

 

 

62

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event, all other terms, conditions and provision of this Agreement shall be
valid and enforceable to the full extent.

19.9        No Right to Use Names.  Except as otherwise provided herein, this
Agreement provides no grant of right to a Party, express or implied, to use in
any manner the housemarks or trademarks of the other Party or its Affiliates.

19.10      Bankruptcy.  All rights and licenses granted under or pursuant to
this Agreement by Roche or Stressgen are, and will otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code.  The Parties agree that the Parties, as licensees of such rights under
this Agreement, will retain and may fully exercise all of their rights and
elections under the U.S. Bankruptcy Code.  The Parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against either
Party under the U.S. Bankruptcy Code, the Party hereto that is not a party to
such proceeding will be entitled to a complete duplicate of (or complete access
to, as appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in their possession, will be
promptly delivered to them (a) upon any such commencement of a bankruptcy
proceeding upon their written request therefor, unless the Party subject to such
proceeding elects to continue to perform all of its obligations under this
Agreement, or (b) if not delivered under (a) above, following the rejection of
this Agreement by or on behalf of the Party subject to such proceeding upon
written request therefor by the non-subject Party.

19.11      Interpretation.  All headings are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
This Agreement incorporates all exhibits as a part of this Agreement by
reference.  The term “including” (or any variation thereof such as “include”)
shall be without limitation.  All dollar amounts referred to in this Agreement
are in US dollars.

 

 

63

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19.12      Counterparts.  The Parties may execute this Agreement in
counterparts, each of which the Parties shall deem an original, but all of which
together shall constitute one and the same instrument.

19.13      Waiver.  A waiver of any default, breach or non-compliance under this
Agreement is not effective unless signed by the Party to be bound by the
waiver.  No waiver will be inferred from or implied by any failure to act or
delay in acting by a Party in respect of any default, breach, non-observance or
by anything done or omitted to be done by the other Party.  The waiver by a
Party of any default, breach or non-compliance under this Agreement will not
operate as a waiver of that Party’s rights under this Agreement in respect of
any continuing or subsequent default, breach or non-compliance (whether of the
same or any other nature).

[This space is intentionally left blank.]

 

 

64

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IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.

STRESSGEN DEVELOPMENT CORPORATION
THE CORPORATE SEVENTY LIMITED

 

F. HOFFMANN-LA ROCHE LTD

 

 

 

By:

/s/ Donna Stoute

 

By:

/s/ M. Mulqueen

 

/s/ B. Bollon

 

 

 

 

 

Name:

Donna Stoute

 

Name:

M. Mulqueen

 

/s/ B. Bollon

 

 

 

 

 

Title:

Assistant Secretary

 

Title:

Head of Operations, EVP PL

 

 

 

 

 

STRESSGEN BIOTECHNOLOGIES CORPORATION

 

HOFFMANN-LA ROCHE INC.

 

 

 

By:

/s/ Daniel L. Korpolinski

 

By:

/s/ Dennis E. Burns

 

 

 

 

 

Name:

Daniel L. Korpolinski

 

Name:

Dennis E. Burns

 

 

 

 

 

Title:

President & Chief Executive Officer

 

Title:

V.P. Global Head of Business Development

 

 

COLLABORATON AGREEMENT

SIGNATURE PAGE

 

 

--------------------------------------------------------------------------------

 

Exhibit A

Base Patents as of Execution Date

A.            Product Specific Patents and Patent Applications

A1.          Immune Responses Against HPV Antigens Elicited by Compositions
Comprising an HPV Antigen and a Stress Protein or an Expression Vector Capable
of Expression of These Proteins

Country

Serial No.

Filing Date

Patent No

Issue Date

US Provisional

60/054,835

Aug. 5, 1997

 

 

[*]

[*]

[*]

 

 

PCT

CA98/00246

WO99/07860

Mar. 20, 1998

 

 

EP

98910557.2

Mar. 20, 1998

 

 

AU

64924/98

Mar. 20, 1998

 

 

BR

P19812272-0

Mar. 20, 1998

 

 

CA

2,298,840

Mar. 20, 1998

 

 

CN

98809121.6

Mar. 20, 1998

 

 

CZ

PV422-2000

Mar. 20, 1998

 

 

HU

P0003601

Mar. 20, 1998

 

 

HK

00107543.7

 

 

 

IL

134,341

Mar. 20, 1998

 

 

JP

2000-50634

Mar. 20, 1998

 

 

KR

10-2000-7001231

Mar. 20, 1998

 

 

MX

0001299

Mar. 20, 1998

 

 

NZ

502568

Mar. 20, 1998

 

 

PL

P-338478

Mar. 20, 1998

 

 

SG

200000450-7

Mar. 20, 1998

 

 

VN

S2000 0175

Mar. 20, 1998

 

 

 

A2.          Human Papilloma Virus Treatment

Country

Serial No.

Filing Date

Patent No

Issue Date

US Provisional

60/214,202

June 26, 2000

 

 

[*]

[*]

[*]

 

 

PCT

US 01/20240

WO 02/00242

June 26, 2001

 

 

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

A-1

--------------------------------------------------------------------------------

 

B.            Non-Product Specific Patents and Patent Applications

B1.           Immune Responses Using Compositions Comprising Stress Proteins

Country

Serial No.

Filing Date

Patent No

Issue Date

US

08/756,621

Nov. 26, 1996

 

 

[*]

[*]

[*]

 

 

[*]

[*]

[*]

 

 

PCT

CA97/00897

WO98/23735

Nov. 25, 1997

 

 

AU

51120/98

Nov. 25, 1997

736318

July 26, 2001

CA

2,272,536

Nov. 25, 1997

 

 

EP

97945684.5

Nov. 25, 1997

 

 

HK

00101484.1

Nov. 25, 1997

 

 

JP

10-524081

Nov. 25, 1997

 

 

 

B2.           Induction of a Th1-Like Response in Splenocytes by Fusion Proteins
Comprising a Stress Protein Moiety

Country

Serial No.

Filing Date

Patent No

Issue Date

US Provisional

60/143,757

July 8, 1999

 

 

[*]

[*]

[*]

 

 

PCT

US 00/18828

July 10, 2000

 

 

CA

2,378,097

July 10, 2000

 

 

CN

00811166.9

July 10, 2000

 

 

EP

00945300.2

July 10, 2000

 

 

JP

2001-509547

July 10, 2000

 

 

SG

200108092-8

July 10, 2000

 

 

 

(the following patents are [*], patents)

 

B3.           Stress Proteins And Uses Therefor

Country

Serial No.

Filing Date

Patent No

Issue Date

US

07/207,298

June 15, 1988

 

 

[*]

[*]

[*]

 

 

[*]

[*]

[*]

 

 

PCT

US89/02619

WO89/12455

June 15, 1989

 

 

CA

602,924

June 15, 1989

1,338,778

Dec. 10, 1996

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

A-2

--------------------------------------------------------------------------------

 

 

B4.          Stress Proteins And Uses Therefor

Country

Serial No.

Filing Date

Patent No

Issue Date

US

08/073,381

June 4, 1993

 

 

US

08/336,251

Nov. 3, 1994

6,338,952

Jan. 15, 2002

[*]

[*]

[*]

 

 

US

08/461,722

June 5, 1995

6,335,183

Jan. 1, 2002

[*]

[*]

[*]

 

 

[*]

[*]

[*]

 

 

PCT

US94/06362

WO94/29459

June 6, 1994

 

 

CA

2,164,298

June 6, 1994

 

 

EP

94919384.1

June 6, 1994

700,445 B1

Jan. 23, 2002

EP

01203598.6

Sept. 21, 2001

 

 

JP

7.502024

June 6, 1994

 

 

 

B5.          Use of Heat Shock Proteins to Deliver Moieties

Country

Serial No.

Filing Date

Patent No

Issue Date

US Provisional

60/038,059

Feb. 18, 1997

 

 

US Provisional

60/066,288

Nov. 25, 1997

 

 

US

09/025,178

Feb. 18, 1998

 

 

[*]

[*]

[*]

 

 

[*]

[*]

[*]

 

 

CA

2,282,426

Feb. 18, 1998

 

 

EP

98906495.1

Feb. 18, 1998

 

 

 

B6.           In Vivo CTL Elicitation by Heat Shock Protein Fusion Proteins Maps
to a Discrete Domain and is CD4+ T Cell-Independent

Country

Serial No.

Filing Date

Patent No

Issue Date

US Provisional

60/176,143

Jan. 14, 2000

 

 

[*]

[*]

[*]

 

 

PCT

US00/32831

Dec. 01, 2000

 

 

 

 

[*]=CONFIDENTIAL TREATMENT REQUEST(ED).

 

 

A-3

--------------------------------------------------------------------------------

 

EXHIBIT B

OTHER STRESSGEN DEVELOPMENT ACTIVITIES

 

 

1. [***]

 

2. [***]

 

3. [***]

 

 

[*]—CONFIDENTIAL TREATMENT REQUEST(ED).

 

B-1

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